Growth in sub-Saharan Africa has been downgraded to 2,3% for last year which is down from 2,5% in 2017, according to the April issue of Africa’s Pulse, the World Bank’s bi-annual analysis of the state of African economies. Economic growth remains below population growth for the fourth consecutive year, and although regional growth is expected to rebound to 2,8% this year, it will have remained below 3% since 2015. This issue of Africa’s Pulse also looks at how fragility is holding sub-Saharan Africa back, and how the digital economy can help the continent move forward.
“Digital transformation can increase growth by nearly two percentage points per year and reduce poverty by nearly one percentage point per year in sub-Saharan Africa alone. This is a game-changer for Africa,” said Albert Zeufack, chief economist of the World Bank in Africa.
The slower-than-expected overall growth reflects ongoing global uncertainty, but increasingly comes from domestic macro-economic instability including poorly managed debt, inflation and deficits; political and regulatory uncertainty and fragility. These factors all have visible negative impacts on some African economies. However there is stronger performance in several smaller economies that continue to show steady growth.
In Nigeria, growth reached 1,9% last year, up from 0,8% in 2017, reflecting a modest pick-up in the non-oil economy. South Africa came out of recession in the third quarter of last year, but growth was subdued at 0,8% over the year, as policy uncertainty held back investment. Angola, the region’s third largest economy, remained in recession, with growth falling sharply as oil production stayed weak.
Growth picked up in some resource-intensive countries like the DRC and Niger, as stronger mining production and commodity prices boosted activity alongside a rebound in agricultural production and public investment in infrastructure. In other countries, like Liberia and Zambia, growth was subdued, as high inflation and elevated debt levels continued to weigh on investor sentiment. In the Central African Economic and Monetary Community, a fragile recovery continued as reform efforts to reduce fiscal and external imbalances slowed in some countries. Non-resource-intensive economies such as Kenya, Rwanda, Uganda and several in the West African Economic and Monetary Union, including Benin and Côte d’Ivoire recorded solid economic growth last year.
Africa’s Pulse found that fragility in a handful of countries is costing sub-Saharan Africa over half a percentage point of growth per year. This adds up to 2,6 percentage points over five years.
“The drivers of fragility have evolved over time, and so too must the solutions,” said Cesar Calderon, lead economist and lead author of the report. “Countries have a real opportunity to move from fragility to strength by cooperating across borders to tackle instability, violence and climate change.” – World Bank