World Bank report has said growth recovery in Nigeria for the year is still fragile as oil production remains subdued.
The report, Africa’s Pulse, released yesterday in Washington DC said growth across Sub-Saharan Africa remains sluggish.
It blamed the development on uncertainty in the global economy, high inflation, a sharp deceleration of investment growth and the underperformance of the continent’s largest economies. Nigeria and South Africa are two of the continent’s largest economies. The report urged African governments to sharpen their focus on macroeconomic stability, domestic revenue mobilisation, debt reduction, and productive investments to reduce extreme poverty and boost shared prosperity in the medium to long term.
“Economic growth in Sub-Saharan Africa is set to slow from 3.6% in 2022 to 3.1% in 2023, according to the latest Africa’s Pulse, the World Bank’s April 2023 economic update for Sub-Saharan Africa. Economic activity in South Africa is set to weaken further in 2023 (0.5% annual growth) as the energy crisis deepens, while the growth recovery in Nigeria for 2023 (2.8%) is still fragile as oil production remains subdued.
“The real Gross Domestic Product (GDP) growth of the Western and Central Africa subregion is estimated to decline to 3.4% in 2023 from 3.7% in 2022, while that of Eastern and Southern Africa declines to 3% in 2023 from 3.5% in 2022,” said a World Bank statement on the report.
The bank’s Chief Economist for Africa, Andrew Dabalen, said: “Weak growth combined with debt vulnerabilities and dismal investment growth risks a lost decade in poverty reduction. 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 report also shows that high inflation and low investment growth continue to constrain African economies. It added that inflation is set to remain high at 7.5 per cent 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 per cent in 2021, with a sharper slowdown in Eastern and Southern Africa than in Western and Central Africa.
According to the report, countries could more than double their average revenues from natural resources. “Tapping these fiscal resources in the form of royalties and taxes while continuing to attract private sector investment requires the right kinds of policies, reforms, and good governance. Maximizing government revenues derived from natural resources would offer a double dividend for people and planet by increasing fiscal space and removing implicit production subsidies,” the report notes.
