Sub-Saharan Africa expected to scale over recession caused by COVID-19 into slow growth
It appears the effects of the COVID-19 pandemic on the economy of Africa would be felt for a long time, in spite of indicators of growth that have been identified. The World Bank Africa’s Pulse released October 6, 2021 says sub-Sahara Africa will emerge from the 2020 recession caused by the COVID-19 pandemic with growth expected at 3.3 per cent in 2021.
According to the latest edition of the Africa’s Pulse report, this expected growth is one per cent higher than the April 2021 forecast. The report notes that this rebound is currently fueled by elevated commodity prices, a relaxation of stringent pandemic measures, and recovery in global trade, but remains vulnerable considering the low rates of vaccination on the continent, protracted economic damage and a slow pace of recovery.
The World Bank’s twice-yearly economic update for the region Africa’s Pulse, indicates that growth for 2022 and 2023 will also remain just below four percent, continuing to lag the recovery in advanced economies and emerging markets, and reflecting subdued investment in sub-Sahara Africa.
Commenting on the report, Albert Zeufack, Chief Economist for Africa at the World Bank said; “Fair and broad access to effective and safe COVID 19 vaccines is key to saving lives and strengthening Africa’s economic recovery. Faster vaccine deployment would accelerate the region’s growth to 5.1 per cent in 2022 and 5.4 per cent in 2023—as more containment measures are lifted, boosting consumption and investment.”
The analysis shows that current speeds of economic recovery in the region are varied, with the three largest economies, Angola, Nigeria, and South Africa, expected to grow by 0.4 per cent, 2.4 per cent, 4.6 per cent respectively. Excluding South Africa and Nigeria, the rest of sub-Saharan Africa is rebounding faster at a growth rate of 3.6 per cent in 2021, with non-resource-rich countries like Côte d’Ivoire and Kenya expected to recover strongly at 6.2 and 5.0 per cent, respectively.
The report’s authors note that a positive trend, is that African countries have seized the opportunity of the crisis to foster structural and macroeconomic reforms. Several countries have embarked on difficult but necessary structural reforms, such as the unification of exchange rates in Sudan, fuel subsidy reform in Nigeria, and the opening of the telecommunications sector to the private sector in Ethiopia.
Noting the prudent monetary and fiscal policies in the region, it says fiscal deficit, at 5.4 per cent of GDP in 2021, is expected to narrow to 4.5 per cent of GDP in 2022 and 3 per cent of GDP in 2023.
‘However fiscal discipline, combined with limited fiscal space, has prevented African countries from injecting the level of resources required to launch a vigorous policy response to COVID-19,” it added.
It states that apart from mounting fiscal pressures and rising debt levels as they implement measures for a sustainable and inclusive economic recovery, Sub-Saharan African countries are also faced with worsening impacts of climate change.
The authors therefore advise that just as the countries have used the crisis to introduce reform measures, they should also harness this opportunity to make sustainable, resilient transitions toward low-carbon economies that can provide long-term benefits in the form of reduced environmental hazards as well as new economic development openings.
It further highlights Africa’s unique context of low baseline development, preexisting climate vulnerabilities, limited energy access, and high reliance on climate-sensitive sectors— as posing challenges but also providing opportunities to transform the economy and create jobs.