Economic growth drops to 3.1% in Nigeria, others – World Bank
April 2023 edition of the World Bank Africa’s Pulse data report has indicated a sluggish growth rate in the economies of countries in the sub-Saharan Africa, including Nigeria.
According to the report, economic growth is expected to slow from 3.6 per cent in 2022 to 3.1 per cent in 2023, which according to the bank is as a result of ‘uncertainty in the global economy, the under-performance of the continent’s largest economies, high inflation, and a sharp deceleration of investment growth’ which is insufficient to reduce extreme poverty.
“The performance of the Sub-Sahara African economy is not uniform across sub-regions. The real gross domestic product (GDP) growth of the Western and Central Africa (AFW) sub-region is estimated to decline to 3.4% in 2023, from 3.7 percent in 2022, while that of Eastern and Southern Africa (AFE) declines to 3.0% in 2023, from 3.5% in 2022.
“Investment growth has declined sharply across the board. This decline has been broad-based across the sub-regions, resource abundant and resource scarce countries, and types of investors (public, private, and foreign). Slower investment growth in Sub-Saharan Africa is holding back long-term growth of output and per capita income,” the report read.
The World Bank Pulse report added that while headline inflation appears to have peaked in the past year, it is set to remain high at 7.5% for 2023.
The bank, therefore, recommended that African governments must sharpen their focus on macroeconomic stability, domestic revenue mobilisation, debt reduction, and productive investments in the face of dampened growth prospects and rising debt levels.
“In a time of energy transition and rising demand for metals and minerals, resource-rich governments have an opportunity to better leverage natural resources to finance their public programs, diversify their economy, and expand energy access,” the report indicated.
The April Africa Pulse Report recommends that: Governments face rising debt payments and liquidity issues, linked with expensive borrowing and appreciation of the US dollar; 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; and 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.
The report went further to note that resource-rich countries can take advantage of the rising demand for minerals and metals linked to the global transition to a low carbon economy; Minerals such as cobalt, copper and lithium) have the potential to increase fiscal resources, create new regional value chains that produce jobs, and accelerate energy access on the continent.
However, this, it said, will require good sectoral governance, appropriate taxation to capture a greater share of resource rents, and regional cooperation and investments.
According to the report, curbing inflation remains central to achieving macroeconomic stability, adding that fiscal policy anchored in debt sustainability can help.
“African governments have the power to undertake internal reforms to restore macroeconomic stability and better prioritise spending to lay the groundwork for future growth and jobs,” the report read.
