The World Bank has lowered to 1.6percent its 2016 growth forecast for Africa, from the 2.4percent it projected in June, advising governments on the continent to steer their economies off the overreliance on commodity exports.
In its latest Africa’s Pulse report, which is a biannual analysis of economic trends on the continent, the bank said shocks from collapsed commodity prices and tighter financial conditions, and adverse weather conditions, among others, continue to weight down on activity on the continent.
Speaking to journalists across Africa via video conferencing, Albert Zeufack, the bank’s Africa Region Chief Economist, said the dim outlook must signal to African countries the need to start investing in infrastructure and in skills that would position the population to take advantage of opportunities.
“Investing in infrastructure, especially energy, will bring better conditions for the private sector to engage in its own activities more and grow profitably and make countries more competitive,” he said.
So long as African governments put their hopes in commodities, they will continue to be at the mercy of price volatilities, citing the recession Nigeria is currently experiencing as a result of the oil price slump as a case in point.
“It is important for our countries to continue to reform in making our economies more business friendly, reduce corruption, and provide incentives for the private sector to develop these activities and other non-resource related activities,” he told the B&FT.
“It is extremely important for us to start thinking of creating new economic entries and those will only happen if all countries deepen reforms that will lead to diversification across sectors and hence improve chances of our economies,” he added.
On Ghana, the report said growth could slow in 2016 due to oil production outages, saying, though, that the outlook for 2017 “is largely positive.”
The coming on stream of the TEN oilfield, it said, should help improve “fiscal and external positions,” whilst continuous improvement in macroeconomic conditions and energy supply should increase investment.
It added that: “Private consumption should benefit from falling inflation as policy becomes more accommodative.”
Slump in growth
The projected slip in growth is nearly half of the 3 percent growth Africa recorded in 2015 and the uninspiring economic fortunes of Nigeria and South Africa, the continent’s largest economies, is said to be largely responsible for the slowed growth.
In the midst of the gloomy outlook, a turnaround and appreciable progress is expected in the coming year, the report said.
By 2017, a 2.9 percent growth is estimated and a further upsurge is expected in 2018 as African economies will expand by 3.6 percent.
According to the growth performance ratio per country – the economies of Nigeria, Botswana, South Africa, Chad, Madagascar, Angola, Liberia Sierra Leone, Cape Verde and The Gambia – are performing badly, while the Ghana is classified as being in the middle neither performing poorly or exceptional.
Only four African economies — Tanzania, Ethiopia, Burundi, Mozambique — are deemed well-performing.
Source: B&FT Online