NAIROBI, Kenya, Oct 30 – Growth in sub-Saharan Africa is expected to pick up to 2.6 percent in 2017 from 1.4 percent last year.
In a new report, IMF says that while growth is expected to accelerate further to 3.4 percent next year, momentum remains weak.
IMF attributes the improved performance in part to the rebound in Nigeria’s oil and agricultural production and the easing of drought conditions that impacted much of eastern and southern Africa in 2016 and early 2017.
At the same time, one-third of the economies, mostly in eastern and western Africa will grow at a fast pace of 5 percent or more.
“While 15 out of 45 countries continue to grow at 5 percent or faster, growth in the region as a whole will barely surpass the rate of population growth, and in 12 countries, comprising over 40 percent of sub-Saharan Africa’s population, income per capita is expected to decline in 2017,” reads the report.
Director of the IMF’s African Department Abebe Aemro Selassie says that the quest for recovery rests on strong and urgent policy action to address vulnerabilities and tackle constraints to growth.
“Many countries face a period of fiscal consolidation. While this is already reflected in most sub-Saharan African countries’ medium-term strategies, experience shows that planned fiscal adjustments tend to be postponed; implementation needs to begin without delay if debt levels are not to increase sharply,” he added.
The regional Economic Outlook for Sub-Saharan Africa report adds that foreign exchange market pressures appear to have declined, but international reserves remain low in many countries.
The report recommends that fiscal reforms can be designed to limit the adverse effect on growth and the most vulnerable. “Experience with past fiscal consolidations in the region shows that this is best achieved through revenue mobilization as well as better prioritization of public spending,” it reads.
Additionally, policies to promote diversification can help support growth. While there is no single path for reforms, countries such as Botswana, Rwanda, and Uganda, that have successfully diversified their economies have built on their existing strengths and tackled specific constraints.
“Diversification strategies were supported by policies to enhance macroeconomic stability, improve education outcomes, bolster governance and transparency in regulation, and deepen financial markets.”