Finding highlights in Sub-Saharan Africa’s growth slump
The World Bank published its latest ‘Africa Pulse’ report on September 29. In it the multilateral organisation warns that “Shocks from collapsed commodity prices and tighter financial conditions, exacerbated by domestic pressures arising from policy uncertainties, adverse weather conditions, and political and security concerns, have continued to weigh on [economic] activity” in Sub-Saharan Africa (SSA).
The multilateral organisation expects economic growth in the region to slow from 3% in 2015 to just 1.6% this year – the lowest in more than two decades. The World Bank was during April this year still expecting a growth rate of 3.2% but has now downwardly adjusted its predictions for the region following disappointing economic data in the first half of the year and continued headwinds during the third quarter.
“But the economic performance of countries in the region is far from homogeneous,” warns the World Bank. Indeed, while the region as a whole is forecast to expand by an average of 3.1% p.a. during 2014-16, individual country estimates range from recessions in Sierra Leone and Equatorial Guinea to growth of more than 8% p.a. in Ethiopia and the Ivory Coast.
Five growth clusters
Based on divergent growth experiences during 2014-16, the World Bank has grouped the 45 countries comprising the SSA region into five clusters after considering their growth performances during 1993-2008:
- Established: Ethiopia, Mali, Mozambique, Rwanda, and Tanzania
- Improved: Benin, Cameroon, Côte d’Ivoire, the Democratic Republic of Congo, Kenya, Senegal, and Togo
- Stuck in the middle: Burkina Faso, Central African Republic, Gabon, Ghana, Guinea-Bissau, Malawi, Mauritania, Mauritius, Namibia, Niger, Republic of the Congo, São Tomé and Príncipe, Seychelles, Sudan, Uganda, Zambia
- Slipping: Angola, Botswana, Cabo Verde, Chad, Equatorial Guinea, The Gambia, Liberia, Madagascar, Nigeria, Sierra Leone, and South Africa
- Falling Behind: Burundi, the Comoros, Guinea, Lesotho, Swaziland, and Zimbabwe
The International Monetary Fund (IMF) World Economic Outlook (WEO) released on October 4 commented that the largest economies in SSA – Nigeria, South Africa and Angola – are experiencing sharp slowdowns or recessions as lower commodity prices interact with difficult domestic political and economic conditions. While economic problems in these ‘slipping’ countries are weighing down overall growth in SSA this year, bright spots are numerous.
In East Africa, Ethiopia, Kenya, Rwanda and Tanzania are benefitting from a rapid pace of regional integration. Rwanda and Kenya’s innovation-led growth is also benefitting their neighbours through greater intra-regional trade and investment. The East Africa Community (EAC) is seen as the leading regional body on the continent in terms of momentum of and benefits derived from regional integration.
In West Africa, Benin, Mali, Ivory Coast, Senegal and Togo – often dwarfed by headlines from economic giant Nigeria – are showing strong growth performances off a low base. All five states form part of the 15-country Economic Community of West African States (ECOWAS) and the eight-country West African Economic and Monetary Union (WAEMU), with the latter seeing all member states share a common currency – the euro pegged CFA franc.
In Central Africa, Cameroon and the Democratic Republic of Congo are both seeing rapid economic growth on the back of robust public investment and revenues earned from extractive industries. In Southern Africa, Mozambique is benefitting from significant investment in its dormant gas industry, with hydrocarbon experts expected to begin early in the next decade.
On another positive note, the World Economic Forum (WEF) Global Competitiveness Report 2016–2017 was released on September 28, and pointed to an improvement in the competiveness of several SSA economies. Out of the 10 established and improved economies included in the WEF, six (Ethiopia, Kenya, Mali, Mozambique, Rwanda, Senegal and Tanzania) recorded higher competitiveness scores in the latest publication compared to the 2015-16 edition.