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The World Bank has announced that economic growth in Sub-Saharan Africa is expected to decelerate this year by slumps in economic powerhouses South Africa, Nigeria and Angola.
According to the bank’s recent Africa’s Pulse, a semi-annual outlook for the region, rising instability, weak growth in the region’s largest economies, climate shocks, and lingering uncertainty in the global economy are causing deceleration of growth − from 3.6% in 2022 to 2.5% in 2023.
However, there is optimism for a rebound with a projected growth of 3.7% in the following year and an even more promising 4.1% in 2025.
In per capita terms, the region has not recorded positive growth since 2015, as African countries’ economic activity has failed to keep pace with their rapid increase in population.
Per the report, overall, growth in the region has been inadequate to reduce extreme poverty, boost shared prosperity, and create jobs.
For instance, some 12 million Africans enter the labour market each year, and current growth patterns generate only 3 million formal jobs annually, thus leaving many young people underemployed and engaged in casual, piecemeal, and unstable work that does not make full use of their skills.
According to Andrew Dabalen, the bank’s chief economist for Africa, the region’s poorest and most vulnerable people continue to bear the economic brunt of this slowdown, as weak growth translates into slow poverty reduction and poor job growth.
As a concerning trend, there have been increased incidences of attempts to destabilize governments by unconstitutional or violent means in recent years.
“This increased conflict and violence in the region weigh on economic activity, and this rising fragility may be exacerbated by climatic shocks. More than half of the countries in Sub-Saharan Africa (28 of 48) have been downgraded in their 2023 growth estimates,” the report stated.
Even in the continent’s most advanced economy, South Africa, which is grappling with its most severe energy crisis in history, the growth outlook is modest, with an expected growth rate of just 0.5% for this year.
Economic growth in top oil producers Nigeria and Angola is expected to slow to 2.9% and 1.3% respectively.
Sudan, which is currently in a severe internal armed conflict that has resulted in widespread infrastructure destruction and a crippled economy, is expected to face a staggering 12% economic contraction, as reported by the Bank.
Excluding Sudan, regional growth would be 3.1%.
“The region is projected to contract at an annual average rate per capita of 0.1% over 2015-2025, thus marking a lost decade of growth in the aftermath of the 2014-15 plunge in commodity prices,” the report stated.
Inflation has been receding, but it is still above central bank targets in most countries in the region. It is expected to decline from 9.3% in 2022 to 7.3% in 2023. Yet, 18 countries in the region have average annual inflation rates of two digits or more in 2023.
Inflationary forces are primarily driven by elevated food and fuel prices, coupled with the depreciation of domestic currencies leading to a reduction in household income and putting a burden on private consumption.
