Africa’s failure to live up to expectation even though it possesses one of the largest economies has given rise to a doubt that the continent’s economy would rise above the waters.
To know how things stand in the continent, the World Bank took into account the high inflation, sharp deceleration of investment growth, the underperformance of the continent’s largest economies and uncertainty in the global economy.
After that consideration, it came up with some conclusions on Wednesday.
The World Bank projected that the economies in African are on a downward slope, considering the highlighted factors.
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Economic growth in Sub-Saharan Africa has fallen from 3.6% in 2022 to 3.1% in 2023.
According to the global bank, economic activity in South Africa will further weaken in 2023 (0.5% annual growth) as the energy crisis deepens.
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As for Nigeria, growth recovery for 2023 (2.8%) is fragile because oil production has been subdued.
The real gross domestic product (GDP) growth of the Western and Central Africa sub region is estimated to decline to 3.4% in 2023 from 3.7% in 2022.
Also, that of Eastern and Southern Africa declines to 3.0% in 2023 from 3.5% in 2022.
“Weak growth combined with debt vulnerabilities and dismal investment growth risks a lost decade in poverty reduction,” said Andrew Dabalen, World Bank Chief Economist for Africa.
It advised that “policy makers need to redouble efforts to curb inflation, boost domestic resource mobilisation, and enact pro-growth reforms—while continuing to help the poorest households cope with the rising costs of living”.
The World Bank added that debt distress risks remain high with 22 countries in the region at high risk of external debt distress or in debt distress as of December 2022.
Unfavorable global financial conditions have increased borrowing costs and debt service costs in Africa, diverting money from badly needed development investments and threatening macro-fiscal stability.
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“Stubbornly high inflation and low investment growth continue to constrain African economies.
While headline inflation appears to have peaked in the past year, inflation is set to remain high at 7.5% for 2023, and above central bank target bands for most countries.
Investment growth in Sub-Saharan Africa fell from 6.8% in 2010-13 to 1.6% in 2021, with a sharper slowdown in Eastern and Southern Africa than in Western and Central Africa”, the bank stated.
