The economy of sub-Saharan Africa has barely shaken off the negative impacts of the ongoing COVID-19 pandemic and now has to respond to an additional challenge, the Russian invasion of Ukraine.
The World Bank’s Africa’s Pulse, a biannual analysis of the near-term regional macroeconomic outlook, released Wednesday April 13, 2022, estimates growth at 3.6 per cent in 2022, down from 4 per cent in 2021 as the region continues to deal with new COVID-19 variants, global inflation, supply disruptions and climate shocks.
The region is facing additional growth challenges including rising global commodity prices, which are increasing at a faster pace since the onset of the conflict between Russia and the Ukraine.
According to the analysis, as top world exporters of food staples, Russia—the world’s largest exporter of fertilizers—and Ukraine account for a substantial share of wheat, corn and seed oil imports, all of which may be halted if the conflict persists.
It indicates that while sub-Saharan economies are also likely to be impacted by tightening of global conditions and reduced foreign financial flows into the region, the analysis notes that the high fuel and food prices will translate into higher inflation across African countries, hurting poor and vulnerable citizens, especially those living in urban areas. One point of concern is the increased likelihood of civil strife as a result of food and energy-fueled inflation, particularly in this current environment of heightened political instability, it added.
The analysis notes further that recovery remains uneven, incomplete and is happening at varied rates of speed across the region.
Of the region’s three largest economies—Angola, Nigeria, and South Africa—growth in South Africa is expected to decline by 2.8 percentage points in 2022, dragged by persistent structural constraints. Angola and Nigeria are expected to continue their growth momentum in 2022, up by 2.7 and 0.2 percentage points respectively, in part due to elevated oil prices and good performance in non-oil sector. Resource-rich countries, especially their extractive sectors, will see improved economic performance due to the war in Ukraine, while non-resource rich countries will experience a deceleration in economic activity.
Commenting, Albert Zeufack, World Bank Chief Economist for the Africa said: “As African countries face continued uncertainty, supply disruptions and soaring food and fertilizer prices, trade policy can potentially play a key role by ensuring the free flow of food across borders throughout the region. Amid limited fiscal space, policymakers must look to innovative solutions such as reducing or waving import duties on staple foods temporarily to provide relief to their citizens.”
The report states that excluding Angola, Nigeria and South Africa, regional growth is projected at 4.1 in 2022, and 4.9 per cent in 2023.
The Eastern and Southern Africa subregion shows sustained recovery from the recession, at 4.1 per cent in 2021, down to 3.1 per cent in 2022 and settle around 3.8 per cent in 2024. The DRC and Zambia are expected to benefit from rising metal prices in the short-and medium term and gain from the transition away from fossil fuels in the long term. Rwanda and Seychelles are expected to register the biggest decline in 2022, down by 4.1 per cent, and 3.3 per cent respectively, it said.
By Emmanuel K. Dogbevi