HomeRegional NewsAfricaSub-Saharan Africa’s economic recovery hinges on reform for jobs

Sub-Saharan Africa’s economic recovery hinges on reform for jobs

Sub-Saharan economic growth is estimated to have contracted by 2% and prospects for recovery are strengthening amid action to contain new pandemic waves and speed up vaccine rollouts, according to the World Bank’s biannual economic analysis for the region.

Africa’s Pulse, is an analysis of the issues shaping Africa’s economic future.  Subtitled Future of Work in Africa: Emerging Trends in Digital Technology Adoption this year, the report notes the 2% growth is closer to the lower bound of the forecast in April 2020.

A slower spread of the virus and lower COVID-19-related mortality, strong agricultural growth and a faster-than-expected recovery in commodity prices has helped many African economies weather the economic storm induced by the COVID-19 pandemic.

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The report notes that economic recovery hinges on countries deepening reforms which create jobs, encourage investment and enhance competitiveness. The resurgence of the pandemic late in 2020 plus limited additional fiscal support will pose an uphill battle for policy makers as they try to work towards strong growth.

“Albert G Zeufack, World Bank chief economist: “African countries have made tremendous investments over the last year to keep their economies afloat and protect the lives and livelihoods of their people. Ambitious reforms that support job creation, strengthen equitable growth, protect the vulnerable and contribute to environmental sustainability will be key to bolstering those efforts going forward towards a stronger recovery across the African continent.”

While economic growth is projected, suppressed activity increases risk of long-lasting damage

Economic growth in the region is forecast to rise between 2.3% and 3.4% during 2021, depending on the policies adopted by countries, and indeed the international community. A second wave of COVID-19 infections is dragging down 2021 growth projections though, with daily infections about 40% higher than during the first wave.

While some countries show a significant drop in infection rates due to containment measures adopted by government, other countries are facing an upward trend in infections. Real Gross Domestic Profit (GDP) growth for 2022 is estimated at 3.1%. For most countries in the region, activity will remain well below the pre-COVID-19 projects at the end of 2021, increasing the risk of long-lasting damage from the pandemic on people’s lives.

Sub-Saharan Africa’s recovery is expected to vary from country to country. Non-resource-intensive countries such as Côte d’Ivoire and Kenya, and mini-dependent economies such as Botswana and Guinea, are expected to see robust growth in 2021. This will be driven by a rebound in private consumption and investment as confidence strengthens and exports increase.

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In Eastern and Southern Africa though the growth contraction for 2020 is estimate at -3%, mostly driven by the sub-region’s largest economies, Angola and South Africa. Discounting Angola and Africa though, economic activity in the sub-region is projected to expand by 2.6% in 2021 and 4% in 2022.

Growth in the Western and Central Africa sub-region contracted by 1.1% in 2020 which is less than the projected figure of October 2020. This is partly due to a less severe contraction in the sub-region’s largest economy, Nigeria, during the second half of the year. Real GDP in Western and Central Africa is projected to grow by 2.1% in 2021 and 3% in 2022.

Economic recovery will speed up by fostering reform

The Pulse notes that African countries could speed up their recovery by ramping up existing efforts to support and economy and people in the near term, especially women, youth and other vulnerable groups. The report recommends these policies be complemented by reforms that foster a country’s inclusive productivity growth and competitiveness. Reducing countries’ debt burden would release resources for public investment in areas such as education, health and infrastructure.

Investment in human capital would help lower the risk of long-lasting damage from the pandemic, which may become more apparent in the long term. I would also enhance competitiveness and productivity.

The next 12 months will be a critical period for leveraging the African Continental Free Trade area in order to deep African countries’ integration into regional and global value chains. The World Bank’s Africa’s Pulse report also notes that reforms which address digital infrastructure gaps and make the digital economy more inclusive (ensuring affordability but also building skills for all segments of society) are essential to improve connectivity, boost digital technology adoption and generate more and better jobs for all.

 Read more about the World Bank’s The African Pulse.

Theresa Smith
Theresa Smith is a conference producer for Clarion Events Africa.