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Nigeria, South Africa slow down growth in SSA region

04 Oct 2018, 01:11 pm
Financial Nigeria
Nigeria, South Africa slow down growth in SSA region

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The World Bank's new Africa's Pulse projects 2.8 percent as the average economic growth rate in Sub-Saharan Africa in 2018, representing a slight increase from the 2.3 percent recorded in 2017.

South African President, Cyril Ramaphosa, and Nigerian President, Muhammadu Buhari

The World Bank has released its Africa's Pulse report, a bi-annual analysis of the state of African economies, showing that the sluggish expansion of the Nigerian, South African and Angolan economies have contributed to the slow pace of economic recovery in Sub-Saharan Africa (SSA). 

The report, released by the World Bank on Wednesday, states that the lower oil production, due to capacity constraints, in Angola and Nigeria offset the higher oil prices. In South Africa, a contraction in agriculture, mining, and construction held the economy back.

The Africa's Pulse shows that the average growth rate in the SSA region is estimated at 2.8 percent in 2018, representing a slight increase from the 2.3 percent recorded in 2017. The World Bank projects that the growth rate would increase to 3.3 percent in 2019, and rise to an average of 3.6 percent in 2020.

Earlier this year, the World Bank had projected the SSA growth rate to ease at 3.1 percent in 2018, and rise to 3.5 percent in 2019.

Excluding Angola, Nigeria and South Africa, growth in the region was steady. Several oil exporters in Central Africa benefited from higher oil prices and an increase in oil production. The international oil benchmark as of Wednesday stood at $86 per barrel.

According to a statement by the World Bank, economic activity remained solid in countries such as Cote d’Ivoire, Kenya, and Rwanda. This is supported by agricultural production and services on the production side and household consumption and public investment on the demand side.

“The region’s economic recovery is in progress but at a slower pace than expected,” said Albert Zeufack, World Bank’s Chief Economist for Africa. “Policy makers must continue to focus on investments that foster human capital, reduce resource misallocation and boost productivity to accelerate and sustain an inclusive growth momentum.”

He added that policy makers in the region must equip themselves to manage new risks arising from changes in the composition of capital flows and debt.

Nigeria’s GDP grew by 1.50 percent  in the second quarter of 2018, slower than the 1.95 percent recorded in the previous quarter. The country exited recession in Q2 of 2017, after suffering contraction for five consecutive quarters. Meanwhile, the South African economy slipped into recession in Q2 of 2018, shrinking by 0.7 percent. This followed a revised 2.6 percent contraction in the preceding quarter.

According to the report, public debt remained high and continues to rise in some countries. Vulnerability to weaker currencies and rising interest rates associated with the changing composition of debt may put the region’s public debt sustainability further at risk. Other domestic risks include fiscal slippage, conflicts, and weather shocks.

The Lead Author of the report, Cesar Calderon, who is also a Lead Economist at the World Bank, noted that there is lower labour productivity in the SSA region, albeit, with potentials for improvement. He said, “Reforms should include policies which encourage investments in non-resource sectors, generate jobs and improve the efficiency of firms and workers.”


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