Sub-Saharan Africa poised for recovery
GROWTH in the Sub-Saharan Africa region is forecast to rise between 2,3 and 3,4 percent in 2021, depending on the policies adopted by countries and the international community, according to the latest World Bank’s Africa Pulse Report.
The 2021 baseline growth forecast is revised up 0,2 percentage point relative to the October 2020 Africa’s Pulse projection, as the positive impact of a carry-over from the rebound in the second half of the year and a more supportive external environment are offset by the impact on activity of the persistence of social distancing restrictions and the limited scope for additional fiscal support.
However, the 2021 baseline projection for the region is partly dragged down by the second wave of Covid-19 infections, driven by new and more transmissible variants, which appears to be worse than the first wave. Vaccine deployment along with credible policies to stimulate private investment could, however, accelerate growth and the number of countries with growth exceeding 4 percent in 2021 could more than double, from eight to 17.
Achieving growth above 4 percent will be possible if countries implement a policy package that encourages sustained investments and job creation, and that allows the exchange rate to reflect market forces and enhance the country’s competitiveness, reads part of the Africa Pulse.
Despite activity remaining well below the pre-Covid-19 projections, recovery for the region is expected to vary across countries.
Non- resource- intensive countries, such as Côte d’Ivoire, and Kenya, and mining-dependent economies, such as Botswana and Guinea, are expected to see robust growth in 2021, driven by a rebound in private consumption and investment as confidence strengthens and exports increase.
In the Southern Africa subregion, excluding South Africa, economic activity in the subregion is projected to expand by 2,6 percent in 2021, and 4,0 percent in 2022.
The Pulse also notes that African countries can speed up their recovery by ramping up their existing efforts to support the economy and people in the near term, especially women, youth and other vulnerable groups.
Africa’s Pulse says in their road to recovery, Sub-Saharan African countries will need ample financing for investments in human capital, energy, digital and physical infrastructure.
Amid mounting stress on the public sector balance sheets, the needs for concessional financing will continue to remain significant in 2021-22.
“Meeting the public investment needs without further jeopardising fiscal sustainability would require policy reforms that foster domestic resource mobilisation (from the revenue and the expenditure side) and greater access to concessional finance,” reads part of Africa Pulse.
The World Bank recommends that amid strict or partial lock-downs, governments should put emphasis on digital solutions to improve tax administration and collection rather than imposing taxes.
“They should also streamline fiscal incentives and improve the targeting of social and public investment programs.”
Meanwhile the World Bank says policies that foster investments in innovation and digital technologies can help reset Sub-Saharan Africa’s economic structures and facilitate catch-up with the rest of the world.
“Digital technologies present an opportunity to diversify African economies away from natural resources, by helping alleviate the financial constraints faced by entrepreneurs — including capital requirements for start-ups.
“Digital technologies are critical for addressing the region’s major development challenges, such as economic diversification, health, education, food security, and governance.” — www. ebusinessweekly.co.zw.