By Alfred Nyakinda
Economic growth in Sub-Saharan Africa has been downgraded from 2.5 percent in 2017 to 2.3 percent in 2018, remaining below population growth for the fourth consecutive year, says a World Bank report.
The bank’s bi-annual analysis of the state of African economies further states that although regional growth is expected to rebound to 2.8 percent in 2019, it will have remained below three percent since 2015.
However, it notes that the digital economy has the capacity to enhance access to basic needs and services. It can also expand access to global markets, change business models, and render significant productivity gains.
“The digital transformation can increase growth by nearly two percentage points per year and reduce poverty by nearly one percentage point per year in sub-Saharan Africa alone. This is a game-changer for Africa,” said Albert Zeufack, World Bank Chief Economist for Africa.
The transition to a digital economy is hindered by the difficulty many face in accessing the internet. The report found that most mobile subscribers in Africa do not have access to the internet: more than half are covered by at least a 2G mobile network in 36 countries, one country does not have 3G services and 11 countries are not yet covered by a 4G mobile network.
The slower than expected overall growth reflects ongoing global uncertainty, but increasingly comes from domestic economic instability, including poorly managed debt, inflation and deficits; political and regulatory uncertainty that are having visible negative impacts on some African economies. It also fails to reveal stronger performance in several smaller economies that continue to grow steadily.
Growth was lower than expected in the region’s three largest economies. In Nigeria, growth reached 1.9 percent in 2018, up from 0.8 percent in 2017, reflecting a modest pick-up in the non-oil economy. South Africa came out of recession in the third quarter of 2018, but growth was subdued at 0.8 percent over the year, as policy uncertainty held back investment. Angola, the region’s third largest economy, remained in recession, with growth falling sharply as oil production stayed weak.
Non-resource-intensive economies such as Kenya, Rwanda, Uganda and several in the West African Economic and Monetary Union, including Benin and Côte d’Ivoire recorded solid economic growth in 2018.
Economic activity is projected to pick up among non-resource-intensive countries in which it slowed in 2018, supported by infrastructure investment, pro-business reforms and stronger consumer spending.
The report also found that fragility in a handful of countries is costing sub-Saharan Africa over half a percentage point of growth per year. This adds up to 2.6 percentage points over 5 years.
One of the problems it identifies is that the continents borders are typically porous and difficult for governments with limited resources to effectively control. However, these borders still present obstacles to trade in the form of tariffs, non-tariff barriers and inefficient custom arrangements. This has created opportunities for smuggling, tax evasion and illicit activities.
“The drivers of fragility have evolved over time, and so too must the solutions,” said Cesar Calderon, Lead Economist and Lead author of the report. “Countries have a real opportunity to move from fragility to opportunity by cooperating across borders to tackle instability, violence, and climate change.” Contact: akonate@worldbank.org, mleary@worldbank.org
