IN a new report released on Monday, the World Bank anticipates a modest uptick in economic growth for sub-Saharan Africa over the next couple of years. However, the projected growth rates are unlikely to significantly alleviate poverty across the continent, reflecting ongoing challenges faced by the region.
According to the Bank’s biannual Africa’s Pulse report, the economy of sub-Saharan Africa is poised to expand by 3.4 percent in the current year and further by 3.8 percent in 2024. This growth trajectory is attributed to a decline in inflation, which is expected to bolster private consumption. Notably, this marks an improvement from the 2.4 percent growth recorded in 2023.
‘The pace of economic expansion in the region remains slow and insufficient to have a significant effect on poverty reduction,’ the report stated, highlighting the fragile nature of the recovery.
The report acknowledges the severe impact of various shocks, including the Covid-19 pandemic and the Russia-Ukraine conflict, on many countries in the region. These events led to heightened inflation, compounded by global interest rate hikes, rendering borrowing increasingly expensive. Additionally, the region has grappled with challenges such as droughts and conflicts, further impeding economic progress.
‘While growth is set to bounce back in sub-Saharan Africa, the recovery is still fragile,’ the report noted. ‘Per capita GDP growth of 1 percent is associated with poverty reduction of only 1 percent in the region, compared to 2.5 percent in the rest of the world.’
Comparatively, South Africa is forecasted to witness a doubling of its growth rate to 1.2 percent in 2024, while Angola’s growth is anticipated to rise to 2.8 percent, primarily driven by the non-oil sector amid declining oil production.
In contrast, the East African Community region is expected to experience robust growth of 5.3 percent this year, propelled by strong performances in Kenya, Rwanda, Uganda, and the Democratic Republic of Congo. However, Nigeria, West Africa’s largest economy, is projected to grow at a rate of 3.3 percent this year, below its long-term average.
Concerns over debt distress persist in the region, with Zambia, Ghana, and Ethiopia having defaulted on their external debt in recent years. While the public debt-to-GDP ratio is forecasted to decrease from 61 percent in 2023 to 57 percent this year, more than half of the countries remain at high risk of debt distress, as highlighted in the report.
‘Typically when countries are in these situations, another big shock could send a lot of these countries into these types of financial crises and therefore default,’ Andrew Dabalen, the World Bank’s chief Africa economist, cautioned during a press briefing. ‘We can’t tell if there’s going to be another default or not.’
As sub-Saharan Africa navigates the complexities of economic recovery and debt sustainability, policymakers face the challenge of implementing strategies that promote inclusive growth and poverty reduction across the region. The World Bank’s report underscores the need for concerted efforts to address these persistent challenges and foster sustainable development in sub-Saharan Africa.