The World Bank on Wednesday said in its latest “Africa’s Pulse” report that economic growth in Sub-Saharan African could grow by 2.6% this year, double last year’s estimated 1.3% of last year, the lowest for two decades, before rising further to 3.2% in 2018 and 3.5% a year later.
The growth is expected to come from better commodity prices, after years of being hit by lower prices which has slowed growth, slashing government revenues and weakened several of the currencies on the continent.
World Bank’s chief economist for Africa Albert Zeufack, according to a report by Reuters, said the economies of Angola, Nigeria and South Africa, which make up 60 percent of GDP – was recovering but at a weak pace and per capita income was growing in negative terms.
He however said Nigeria needed to reform its finance to ensure it can hedge against any future currency crisis, adding that making fiscal adjustments would be “extremely challenging”.
Nigeria contracted in 2016, Angola slowed due to a fall in oil production while South Africa’s expansion slowed due to contractions in the mining and manufacturing industries and the effects of drought on agriculture, the bank said.
“Excluding these three countries, growth in the region was estimated to be 4.1% in 2016,” the report said.
Continuing, Zeufack told reporters in Africa via webcast: “We are pleased that Africa is back to growth but we are not out of the woods yet. That’s why we need to strengthen reforms to make sure stability is maintained.”
The continent, he said, needs to boost its per capita income and create jobs.
He said the upturn in economic activity is expected to continue in 2018-19, reflecting improvements in commodity prices, a pickup in global growth, and more supportive domestic conditions.
Zeufack said tackling infrastructure was key to stability, as only 35% of Africans have access to electricity which is the lowest among developing countries and that road density on the continent was also the lowest in the world.
Risks to growth could occur if there is a slippage on reforms, heightened security concerns and policy uncertainty, leading to a sudden stop in investments, Zeufack added, stressing that the growing protectionism in the West could pose a risk for sub-Saharan African economies but it could also present opportunities for the continent to be self-sufficient and create jobs.
“(Africa) needs political will, technology and the right kind of regulatory reforms. The pay-offs would be amazing,” Zeufack said.