African countries asked to invest while keeping an eye on debt levels.
The economic growth in Sub-Saharan Africa is rebounding in 2017 after registering the worst decline in more than two decades last year.
According to the latest Africa’s Pulse, the World Bank’s bi-annual analysis of the state of African economies, the region is showing signs of recovery and is projected to grow at 2.6%.
However, the recovery is weak, with growth expected to rise only slightly above population growth, a pace that hampers efforts to boost employment and reduce poverty.
The report notes that the continent’s largest economies ; Nigeria, South Africa, and Angola are seeing a rebound from the sharp slowdown in 2016 but the recovery has been slow due to insufficient adjustment to low commodity prices and policy uncertainty.
The latest report also reveals that seven countries including Kenya, Rwanda and Tanzania continue to exhibit economic resilience, supported by domestic demand, posting annual growth rates above 5.4% in 2015-2017.
These countries house nearly 27% of the region’s population and account for 13% of the region’s total Gross Domestic Product. The continent’s aggregate growth is expected to rise to 3.2% in 2018 and 3.5% in 2019, reflecting a recovery in the largest economies.
However, a number of factors including weak commodity prices on the international market, drought, insecurity in South Sudan and Somalia and political volatility ahead of elections especially in Kenya and the Democratic Republic of Congo poses a great risk to the region’s projected growth.
Kenya is set to hold general elections August 08 while the Democratic Republic of Congo plans to hold its election next year amidst protests in the central African nation.
This new development comes at a time when the continent is in dire need of necessary reforms to boost investment and tackle poverty.
WB emphasizes micro-economic reforms
In a teleconference held from the bank’s headquarters in Washington, Albert Zeufack, said there’s need to implement reforms that increase the productivity of African workers and create a stable macroeconomic environment.
He said better and more productive jobs are instrumental to tackling poverty on the African continent.
“As countries move towards fiscal adjustment, we need to protect the right conditions for investment so that Sub-Saharan African countries achieve a more robust recovery,” he said, adding that African countries should invest while keeping an eye on debt levels.
Zeufack said they have been emphasising fiscal discipline and reforms on managing public investment and things have been changing over the past years.
“If you look at the Africa of the 2000s and that of the 1980s, you will see that there is a big difference. You will also realise that for example fiscal discipline has actually improved in the telecoms sector,” he said.
“The changes may not have been across the board. In the 1980s when we adjusted, some economies were slower than others and there were a number of challenges. We can never declare victory on macroeconomic reforms.”
He cited Greece to stress the importance of the reforms. “Countries like Greece, if you take your foot off the pedal, the economies will crumble.”
He said their push for reforms is aimed at limiting wastefulness in countries and sometimes increasing their revenues through various initiatives including advising economies to tax real estate and land speculation.
Punam Chuhan-Pole, the World Bank lead economist and author of the Pulse report noted that for investment to pick up again, proper procurement methods and efficient project coordination on Public Private Partnerships needs to be improved for investment to improve.