Accra, Oct. 05, GNA- The World Bank
says the further decline in growth rates in sub-Saharan Africa due to both
internal and external factors, was an opportunity for African countries to
focus on reinvigorating reforms and diversifying sources of growth.
Punam Chunan-Pole, Acting Chief
Economist-World Bank Africa said there was the need for African governments to
speed up or institute structural reforms in order to boost their
competitiveness.
Projections from the fall edition of
the World Bank’s Africa’s Pulse indicate that growth in Sub- Saharan Africa
will further slow in 2015 to 3.7 percent, contrary to earlier predictions of a
fall to four percent, from 4.6 in 2014.
Growth is however expected to rebound
to 4.4 percent in 2016 and strengthen to 4.8 percent in 2017 owing to
improvements in commodity prices, and the results of fiscal consolidation and
continued investments in infrastructure.
The fall, according to the Bank, is
the lowest growth rate since 2009, and is due to a more challenging economic
environment spurred by both external and domestic factors.
Speaking at a briefing with Journalists
from African countries via video conferencing, Ms. Chuhan-Pole, who is also
Team Lead for Africa’s Pulse, the Bank’s bi-annual analysis of economic trends
and latest data on the African continent, said the forecast remained below the
robust GDP growth levels of 6.5 percent which the region sustained between 2003
and 2008.
She noted that although the factors
accounting for the overall decline in growth in the region varied among
countries, Ghana, like South Africa and Zambia was affected by constraints with
electricity supply.
“In the region’s commodity exporters,
especially oil producers such as Angola, Republic of Congo, Equatorial Guinea
and Nigeria, as well as producers of minerals and metals such as Botswana and
Mauritania, the drop in prices is negatively affecting growth,” the Pulse
reported.
In other countries like Burundi and
South Sudan, threats from political instability and social tensions also took
an economic toll.
Ms. Chunam-Pole said external factors
including the economic slow-down in China and tightening global financial
conditions also weighed on Africa’s economic performance. The report also
showed that weaker terms of trade, large current account deficits and generally
larger fiscal deficits across the continent had led to rising government debt
in many countries.
“Although government debt-to-gross
domestic product ratios look manageable in most countries, they have increased
in several frontier market economies (Ghana and Zambia), driven by
non-concessional borrowing. External debt has increased notably in Ghana and
south Africa.”
This growing external and fiscal
vulnerability had raised concerns among investors, evidenced by rising
sovereign bond spreads and higher yields on recent bond issuances. Moreover,
weak fundamentals, coupled with the strong appreciation of the US dollar, have
kept currencies across the region under pressure throughout the year.
“By end September, the Ghanaian cedi
and south African rand had depreciated by more than 25 percent against the US
dollar, compared with 2014 levels, while the Angolan kwanza fell 38 percent,”
she said, adding that the Ugandan shilling and Zambian kwacha weakened the most
by depreciating 45 and 80 percent respectively.
However, some countries, including
Cote d’Ivoire, Ethiopia, Mozambique, Rwanda and Tanzania continued to post
robust growth in spite of the projections, sustaining growth at around seven
percent or more in 2015 to 2017. This feat, she noted, was spurred by
investments in energy and transport, consumer spending and investment in the
natural resources sector of their economies.
She noted that policy buffers in
several countries were low thus constraining response to the current situation,
saying there was the need to focus on reducing macroeconomic imbalances.
She also called for improved domestic
resource mobilization such as through taxes or tax compliance as well as enhancing
the efficiency of public expenditures to create fiscal space.
Ms. Chuhan-Pole said investments in
infrastructure, for instance, should focus on areas where there was the
potential for good returns to finance the debt incurred for the investment,
adding that borrowing should prudent, focusing on medium term frameworks that
ensure debt sustainability.
GNA
