By Chinwendu Obienyi
The World Bank on Wednesday, revealed that Sub-saharan Africa’s economic growth will drop to 2.5 per cent in 2023 from 3.6 per cent owing to the crippling debt costs and recent spate of coups.
The bank noted that the region’s economic growth is being held back by South Africa and Nigeria.
According to its Africa Pulse Report – a semi-annual outlook for the region, the bank said that the region is projected to contract at an annual average rate per capita of 0.1 per cent over 2015-2025, thus marking a lost decade of growth.
It noted that a key problem was the underperformance of the region’s two largest economies stressing that South Africa’s growth was expected to slip to 0.5 per cent, owing to rolling power cuts and infrastructure bottlenecks denting the country’s exports while the region’s poorest and most vulnerable people continue to bear the economic brunt of this slowdown, as weak growth translates into slow poverty reduction and poor job growth.
The bank said efforts to overthrow governments have become more commonplace, following a series of coups in West Africa, and that violent extremism in the Sahel, carries the seeds of contagion and added that Africa also faces a debt overhang that is weighing on public finances amid rising global interest rates.
This, the bank said, is boosting the number of countries in the region at risk of or already in debt distress, while lifting the debt-service ratio to a “staggering” 31 per cent of revenue in the region in 2022.
“Tightening global financial conditions are increasing sovereign spreads and weakening currencies, thus increasing debt burdens and curtailing access to global capital markets,” the bank said.
Disappointing growth has also meant poor job creation in a region which has the world’s fastest growing population.
To address these challenges, the bank said, “African policymakers need to design an inclusive growth strategy to provide steady and productive jobs for the more than 10 million youth that join the workforce each year. Current growth is only enough to generate 3 million new formal jobs a year, leaving many unemployed in a region where only one in six workers has a wage job”.
The report added that the lack of quantity also contributes to poor job quality, which is being further hindered by a shortage of capital, it said.
The bank estimates that Sub-saharan Africa owns only 2 per cent of the global capital stock, while being home to 12 per cent of the world’s working-age population.
It said, “The expected growth of the working-age population underscores the urgency of creating good jobs,” the bank said. “Between 2030 and 2050, sub-Saharan Africa is expected to account for 90 per cent of the growth in the working age population.”