The World Bank has in its analysis of issues shaping Africa’s economic future predicted that though Africa is on a path of recovery, the rate of recovery is much lower than expected and projects difficult path to recovery for Africa.
The October 2018 issue of Africa’s Pulse, the bi-annual analysis of the state of African economies by the World Bank notes that sub-Saharan African economies are still recovering from the slowdown in 2015-16, but growth is slower than expected. The average growth rate in the region is estimated at 2.7 per cent in 2018, which represents a slight increase from 2.3 per cent in 2017.
Mr Albert Zeufack, the World Bank Chief Economist for Africa, in his presentation on the report, said the Bank has found out in its analysis that, growth has picked up in the sub-Saharan region in 2018 but at a rate much lower than what a similar analysis in April this year had projected .
“Growth in sub-Saharan Africa has picked up in 2018 but at a very slow pace. At a pace lower than expected. We now estimate that sub-Saharan Africa will grow at 2.7 per cent in 2018, a slight increase from 2.3 per cent in 2017. So we are estimating a GDP growth of 2.7 per cent for sub-Saharan Africa.
This is slower than we had actually projected back in April when we launched the April edition of the Pulse,” Mr. Zeufack said. “The ride on the road to recovery will be bumpy so we should buckle up,” he said.
He continued by saying, slow growth in the three largest economies in the region; Nigeria, South Africa and Angola, and declining commodity prices are some of the reasons for the slow average growth rate in the region.
“And the reason why growth is really slower than expected is because of sluggish growth in the three largest economies. Despite higher oil prices, a decline in oil production has actually cancelled out the positive economic growth prospect we had earlier this year,” he added.
However, when growth was measured independent of these three economies, the region recorded an average growth of about 4.3 per cent which the Bank says is roughly the level of average growth between 2000 to 2017.
“So if you exclude these three economies, Nigeria, Angola and South Africa, the rest of sub-Saharan Africa is actually growing at around 4.3 per cent,” said Mr. Zeufack.
“So if the reforms could be deepened in these three countries, definitely there will be a boost in growth,” he added.
Cesar Calderon, the Lead Economist and Lead Author of the report, said in the last two decades, Africa’s slow growth story has become a story of inefficiency.
“As we all know, if you take a look at Africa’s growth in the last 50 years, most of the growth has come from factor of accumulation. Also, as a result, most of the growth disparities we have seen between sub-Saharan Africa and other regions has remained large – consistently large.
In the past this was attributed to low capital stock in Africa. It was the story of a region undercapitalized. But in the last two decades, it has become a story of inefficiency. This leads us to believe that, at the microeconomic levels, the lower productivity of African economies has to do with misallocation of resources by producers. And these inefficiencies are clearly linked to misallocation of talents,” Calderon said.
GDP growth for the region is however projected to rise higher in the coming years. It is predicted to grow at an average rate of 3.1 and 3.6 per cent for 2019 and 2020 respectively.
By Bismark Elorm Addo
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