SLOW DOWN

World Bank cuts Sub Sahara Africa growth prospects

It has cited global inflation, supply disruptions and climate shocks.

In Summary
  • The region's GDP was projected to grow 4% last year
  • The analysis notes that recovery remains uneven, incomplete and is happening at varied rates of speed across the region.
World Bank offices in Upperhill, Nairobi
World Bank offices in Upperhill, Nairobi
Image: FILE

World Bank has revised Sub Sahara Africa's 2022 economic growth downwards, citing global inflation, supply disruptions and climate shocks. 

On Wednesday, the global lender slashed the region's growth prospects to 3.6 per cent from  last September's four per cent estimate. 

''The region continues to deal with new Covid-19 variants, global inflation, supply disruptions and climate shocks,'' World Bank said in the latest Africa Pulse Report. 

The lender said global commodity prices are increasing at a faster pace since the onset of the conflict between Russia and Ukraine, adding to the region’s growth challenges.

Russia is the world’s largest exporter of fertiliser and together with Ukraine account for a substantial share of wheat, corn and seed oil imports, all of which may be halted if the conflict persists.

The analysis notes that the high fuel and food prices will translate into higher inflation across African countries, hurting poor and vulnerable citizens, especially those living in urban areas.

The lender is concerned that there is an increased likelihood of civil strife as a result of food and energy-fueled inflation, particularly in the current environment of heightened political instability.

“As African countries face continued uncertainty, supply disruptions and soaring food and fertiliser prices, trade policy can potentially play a key role by ensuring the free flow of food across borders throughout the region,'' Albert Zeufack, World Bank Chief Economist for Africa said.

The analysis notes that recovery remains uneven, incomplete and happening at varied rates of speed across the region.

Of the region’s three largest economies—Angola, Nigeria, and South Africa—growth in South Africa is expected to decline by 2.8 percentage points in 2022, dragged by persistent structural constraints.

Angola and Nigeria are expected to continue their growth momentum in 2022, up by 2.7 and 0.2 percentage points respectively, in part due to elevated oil prices and good performance in the non-oil sector.

''Resource-rich countries, especially their extractive sectors, will see improved economic performance due to the war in Ukraine, while non-resource-rich countries will experience a deceleration in economic activity,'' the report reads in part.

Excluding Angola, Nigeria and South Africa, regional growth is projected at 4.1 in 2022, and 4.9 percent in 2023.

The Eastern and Southern Africa sub-region shows sustained recovery from the recession, at 4.1 per cent in 2021, down to 3.1 per cent in 2022 and settling around 3.8 percent in 2024.

The DRC and Zambia are expected to benefit from rising metal prices in the short and medium-term and gain from the transition away from fossil fuels in the long term.

Rwanda and Seychelles are expected to register the biggest decline in 2022, down by 4.1 percent, and 3.3 percent respectively.

The Western and Central Africa subregion is projected to grow 4.2 per cent in 2022 and 4.6 per cent in 2023.

Excluding Nigeria, the subregion is projected to grow at 4.8 per cent in 2022, and 5.6 percent in 2023.

The growth trajectory for Cameroon, which has a somewhat diversified economy, shows sustained robust performance, reaching 4.4 percent in 2024.

Ghana's economy is projected to pick up pace in 2022, growing by 5.5 percent, then slowing gradually to five per cent in 2024, lower than the seven per cent pre-pandemic growth.

The report also highlights the importance of expanding social protection programs beyond safety nets to strengthen economic resilience and responsiveness to shocks, particularly for poor and vulnerable households.

It has recommended the development of social insurance, savings and labor market programmes that contribute to economic resilience by protecting urban informal workers and helping the population invest in their health and education.