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Africa Economic Growth Rebounds

-World Bank Report

April 19, 2018 By Hassan G. Koroma

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The seventeenth edition of Africa Plus, a bi-annual analysis World Bank Report, has indicated that economic growth in Sub-Saharan Africa has rebound and projected to reach 3.1 percent in 2018, and to an average of 3.6 percent in 2019 and 2020 respectively.

According to the report, the growth forecasts were premised on expectations that oil and metals prices will remain stable, and that governments in the region will implement reforms to address macroeconomic imbalances and boost investment.

“Growth has rebounded in Sub-Saharan Africa, but not fast enough. We are still far from pre-crisis growth levels. African Governments must speed up and deepen macroeconomic and structural reforms to achieve high and sustained levels of growth,” said Albert G. Zeufack, World Bank Chief Economist for Africa Region.

He added that by fully embracing technology and leveraging innovation, Africa can boost productivity across and within sectors, and accelerate growth in Sub-Sahara Africa.

According to a news release, the moderate pace of economic expansion reflects the gradual pick-up in growth in the region’s three largest economies – Nigeria, Angola and South Africa – and that elsewhere, economic activity will pick up in some metals exporters, as mining production and investment rise.

It furthered that among non-resource intensive countries, solid growth, supported by infrastructure investment, will continue in the West African Economic and Monetary Union (WAEMU), led by Côte d’Ivoire and Senegal.

The report stated that the growth prospects have strengthened in most of East Africa, owing to improving agriculture sector growth following droughts and a rebound in private sector credit growth, and that in Ethiopia, growth will remain high, as government-led infrastructure investment continues.

According to Punam Chuhan-Pole, World Bank Lead Economist and author of the report, in many African countries the economic recovery is vulnerable to fluctuations in commodity prices and production and that underscores the need for countries to build resilience by pushing diversification strategies to the top of the policy agenda.

The news release stated that the public debt relative to GDP is rising in the region, and that the composition of debt has changed, as countries have shifted away from traditional concessional sources of financing towards more market-based ones. Higher debt burdens and the increasing exposure to market risks raise concerns about debt sustainability. Thus, 18 countries were classified at high-risk of debt distress in March 2018, compared to eight in 2013.

Speaking from the World Bank Headquarters in Washington, Albert G. Zeufack, said governments of Sub-Sahara Africa need to speed up mass-economic reforming recovery and that projection shows that Africa has only grown by 3.1 percent in 2018 and 3.6 in 2019 and 2020.

He said the second finding of the result was that more attention needs to be paid to the issue of rising debt and that debt has now exposed Africa and threatens physical sustainability, hence  the need to pay more attention.

He revealed that the third finding was that Africa must leverage innovation was to provide quality, sustainable, reliable and affordable electricity to the people and that though 3.1 percent in 2018 was good news compared to the year 2016, it was still not enough at the rate in 2014 before the drop in commodities as the growth rate needs to be sped up in Africa.

He said it was important for African countries to do three things – speed up mass-economic reforms, continue with number of consolidation in a number countries and deepen structural reforms, adding that it was important for countries to encourage private investment and to fully embrace physical change as it would greatly help increase productivity and reformation of growth rate.

He said the number of countries that have now moved into the category of highly debt distressed have increased from 8% in 2013 to 18% in the beginning of 2018, and that such was due to the fact that this time around the structure of the rate has changed significantly as it is no longer conditional debt but countries were now issuing more perfect and private sector debt, which has the consequences of increasing and threatening debt sustainability.

He noted that Africa has the lowest electrification in the world as only 2% household in 2016 had access to electricity, and that the satiation was even worst in some countries where less than 10% households have access to electricity, adding that boosting access to electricity was a key development issue for the region.

He said access to electricity would lift productivity within and across sectors and African governments must fully embrace technology and leverage innovation to ensure quality, affordable and sustainable electricity.

He said the region’s household electrification rate averaged 42% in 2016, while there was wide variation in electricity access across countries, with some fragile countries having rates less than 10% while there are huge disparities in electricity access between rural and urban households.