Warns of social tension, political instability
Urges global solidarity
Emma Ujah – Abuja
The International Monetary Fund (IMF) has projected a 3.7 per cent growth rate for Sub-Saharan Africa in 2021.
The Director, African Department of the Fund, Mr. Abebe Selassie, disclosed this during a press briefing on October Regional Economic Outlook for sub‑Saharan Africa, in Washington, on Thursday.
He said, “We estimate that sub-Saharan Africa’s economy will grow by 3.7 percent in 2021 and 3.8 in 2022.
“The recovery is supported by favorable external conditions on trade and commodity prices.
“It has also benefited from improved harvests and increased agricultural production in a number of countries.”
The recovery follows the sharp contraction in 2020, which the director described as a welcome development, but noted, “it still represents the slowest relative to other regions.”
He regretted that while advanced economies were projected to return to their pre-crisis path by 2023, the pandemic lowered the path of real GDP in sub-Saharan Africa, suggesting a loss of real per capita output of close to 5½ percent, relative to the pre-crisis path.
Social tension, political instability
The director identified two factors affecting growth in the region: slow vaccine rollout and stark differences in policy space.
The combination, he pointed out, has pushed over 30 million more people into poverty, leaving the region with the risk of social tension and political instability.
His words, “Widening gaps between countries have been accompanied by growing divergence within countries, as the pandemic has had a particularly harsh impact on the region’s most vulnerable.
“With about 30 million people thrown into extreme poverty, the crisis has worsened inequality, not only across income groups, but also across sub-national geographic regions, which may add to the risk of social tension and political instability. In this context, rising food price inflation, combined with reduced incomes, is threatening past gains in poverty reduction, health, and food security.
“Furthermore, increasing debt vulnerabilities remain a source of concern, and many governments will have to undertake fiscal consolidation. Overall, public debt is predicted to decline slightly in 2021 to 56.6 percent of GDP but remains high compared to a pre-pandemic level of 50.4 percent of GDP.
“Half of sub-Saharan Africa’s low-income countries are either in or at high risk of debt distress. And more countries may find themselves under future pressure as debt-service payments account for an increasing share of government resources.”
Policy priorities actions
Against the challenges facing the continent, Mr. Selassie said that policymakers should tackle the region’s pressing development spending needs; contain public debt; and mobilize tax revenues.
According to him, “Meeting these goals has never been easy and entails a difficult balancing act. For most countries, urgent policy priorities include spending prioritization, revenue mobilization, enhanced credibility, and an improved business climate.
“The recent SDR (Special Drawing Rights) allocation has boosted the region’s reserves, easing some of the burden of authorities as they guide their countries’ recovery. And rechanneling SDRs from countries with strong external positions to countries with weaker fundamentals could help to bolster the region’s resilience.
“On COVID-19, international cooperation on vaccination is critical to address the threat of repeated waves. This would help prevent the divergent recovery paths of sub-Saharan Africa and the rest of the world from hardening and becoming permanent fault lines, which would jeopardize decades of hard-won social and economic progress.