Sub-Saharan Africa faces slowest growth since 2009 …Nigeria, Angola hardest hit
The International Monetary Fund (IMF) has marked down its growth forecasts for sub-Saharan Africa for 2015 to 3¾ per cent - the lowest in six years.
Speaking to reporters during the IMFWorld Bank Annual meetings in Lima Peru, Antoinette Sayeh, Head of the IMF African department, said the vastly improved business and macroeconomic environment that has allowed for strong growth in recent years now risks being eclipsed by falling commodity prices and less accommodating financial conditions.
But the Fund noted that despite the slowdown, the growth in the region is still stronger than that in many regions, because economic activities in several countries have weakened markedly in recent months.
There is considerable variation across the region, however, said Sayeh. Hardest hit are the eight oil-exporting countries, including Nigeria and Angola, which together account for half of the region’s gross domestic product. “Falling export incomes and sharp fiscal adjustments are taking their toll on growth, which is expected to decelerate sharply to 3½ per cent this year, from 6 per cent in 2014,” remarked Sayeh, adding these numbers are weighing down on the regional average.
She noted that while low-income countries continue to experience growth rates of around 6 per cent, thanks to sustained private consumption and investment in infrastructure, growth in several middle-income countries is being hampered by electricity shortages, increasingly difficult financing conditions and weaker commodity prices.
The prospects for many countries are further compounded by modest savings and growing deficits, As Sayeh posited, “In many cases, savings from the recent period of rapid growth have been limited, and countries are now entering this period with larger fiscal and external deficits than at the onset of the 2008 global financial crisis.”
The IMF chief also described the security situation in a number of countries as a further risk: “The civil war in South Sudan and the acts of violence perpetrated by Boko Haram and other insurgency groups in a region spanning Cameroon, Chad, Niger, Nigeria and Mali, are causing widespread suffering. They are also weighing on economic activity, straining fiscal budgets and diminishing the prospects for investment.” She added that the recent political unrest in Burundi and Burkina Faso was also a cause for concern.
With crash in oil prices, fiscal adjustments are said to be unavoidable for oil exporters like Nigeria. Unfortunately, opportunities to smoothen the adjustment are regarded as “becoming increasingly limited.” For most other countries, it is advised that fiscal policies be guided by mediumterm spending frameworks that balance debt sustainability considerations while addressing development needs.
L-R: President/CE, Dangote Industries Limited, Aliko Dangote; President, United Republic of Tanzania, Dr. Jakaya Mrisho Kikwete, cutting of ribbon with Kaduna State Governor (Representative of Nigeria President), Mallam Nasir Ahmad El-Rufai and Regional Commissioner for Mtwara, Halima Dendego at the commissioning of a new 3.0 Million MTPA, Dangote Cement Tanzania Plant at Mgao Village, Mtwara, Saturday.