Higher commodity prices partly to contribute to modest rebound for Nigeria (1.4%), South Africa (3.0%), and Angola (0.9%) but the recovery remains sluggish.
The World Bank has projected economic recovery to remain subdued among countries that are highly dependent on oil. These include Angola and Nigeria and those facing persistent economic difficulties such as South Africa.
The Bretton Wood institution attributes the slower growth to structural weaknesses among oil exporters as well as the slow vaccine rollouts in these economies. Nonetheless, countries that are non-resource intensive such as Cote D’Ivoire as well as Guinea and Niger are likely to see robust growth in 2021.
According to the World Bank, the spate of growth for the West African coastal countries is due to a rebound in economic activity; private consumption and investment as consumer confidence improves as well as exports begin to surge. This notwithstanding, the region’s largest economies will grow by 1.78% in 2021 relative to an average of 6.78% for the three West Africa countries.
Continent-wide growth projection will increase from a contraction of 2.0% in 2020; the worst in 25 years to 3.4% in 2021. This is on the back of a speed-up and wider coverage of the vaccination programme in the region. This is to reduce the region’s already burdened health facilities and health systems.
Uneven recovery persists
The virus has been less scathing for the sub-Sahara African region compared to other jurisdictions- US, Europe, Asia because the virus has spread less quickly. Entering into 2021, the region has had its own share of renewed waves, but at a slower pace.
However, these occurrences of renewed waves of COVID-19 infections is partly delaying the 2021 growth projections. While some countries have adopted measures to curb the spread of infections, others are experiencing an upward trend.
The World Bank assures that the worst is behind us, and expects a new era of increased growth to begin. However, it believes this will be uneven, as daily infections are about 40% higher than during the first wave.
The region is therefore highly reliant on the speed with which its populations receive vaccines. However, as it stands now, vaccine deployment to the region has been very slow. Currently, developed countries such as the US and Europe have reserved 70% of the world’s vaccines manufactured to date.
Moreover, public debt vulnerabilities have become a rising concern in many countries in the region. Rising debts have restrained countries’ abilities to stimulate their economies towards a path of recovery. Expectations are that the median debt level of the region will peak this year; with several countries in the region on an upward debt trajectory. Also, debt service to tax revenues forecast to rise above 20% in some others, the World Bank warns.
“Additional assistance will be needed to address liquidity and solvency issues; the extension of the Debt Service Suspension Initiative (DSSI) along with grants and concessional financing, to help create fiscal space for economic investments.
“The debt situation in Africa requires an all hands on deck approach. No options should be taken off the table.”
READ ALSO: Policies must address sectorial inequality in Ghana
