That sounds like good news. Not least because the regional economy expanded by just 2.6 per cent in 2023. The problem, point out World Bank (WB) analysts, is that there is no growth in real terms (i.e. discounting inflation). On the other hand, this progress is not sustained over time and, as such, is not enough to reduce poverty.
The long-awaited Africa Pulse report, published every six months by the WB, which presents the main challenges and trends for Sub-Saharan Africa, concludes that despite the expected increase in growth in the region (3.4 per cent this year and 3.8 per cent in 2025), the pace of economic expansion will continue to be lower than the growth rate of the previous decade (6.5 per cent from 2000-2014), and is insufficient to have a significant effect on poverty reduction. Find out more about the main conclusions of this report, divided into major themes:
Economy: the Sub-Saharan African region is expected to grow by 3.4 per cent this year and 3.8 per cent in 2025 (up from 2.6 per cent in 2023), due to falling inflation in most countries, an increase in private consumption and global economic recovery (particularly in the United States of America). The big economies of South Africa (0.6 per cent in 2023 and 1.2 per cent in 2024) and Angola (0.8 per cent in 2023 and 2.8 per cent in 2024) are the ones to watch out for. In terms of Gross Domestic Product (GDP) per capita, performance is even more modest: 0.9 per cent in 2024 and 1.3 per cent in 2025, although better than the 0.1 per cent of 2023. The conclusion is that, despite progress, the recovery remains ‘weak’ since real growth (i.e. after inflation) is non-existent.
Inflation: the average regional rate is expected to fall from 7.1 per cent in 2023 to 5.1 per cent in 2024 and 5 per cent in 2025. The fall in commodity prices and the effects of restrictive monetary policies and fiscal consolidation explain the reduction in inflationary tensions, which nevertheless remain above pre-pandemic levels. This year there are 14 countries forecasting double-digit inflation in 2024, such as Malawi, Nigeria, Ethiopia, Ghana and Angola.
Monetary policy: in terms of currency devaluation, the most serious cases are Nigeria (the naira devalued by 50 per cent against the dollar in 2023), South Sudan, Angola and Malawi. On the positive side, the currencies of Kenya and Zambia have seen the greatest appreciation. There is great regional disparity in the central banks’ reference interest rates. According to data as of 15 March, the highest rates are in Ghana, Malawi and Nigeria (above 20%). Mozambique (16.5%) comes next, below Angola (19%) and Gambia (17%), but above neighbours Kenya (13%), Zambia (12.5%) and South Africa (8.25%).
Public accounts: the average rate of public debt as a percentage of GDP should fall from 61 per cent in 2023 to 57 per cent in 2024, but the risks of over-indebtedness remain high. More than half of the countries have liquidity problems and are looking to restructure their debts, but the cost of financing remains high (in 2023, governments will spend more than 45% of their revenues on debt and interest payments, compared to 31% in 2022). At the beginning of the year, Benin, Côte d’Ivoire and Kenya returned to the markets to issue Eurobonds (something they hadn’t done since 2022), but paid interest rates of around 10 per cent. Other countries restructuring their debt are Ghana, Ethiopia, Zambia and Chad.
Political conflicts: instability in West Africa persists and has been exacerbated by the decision of Burkina Faso, Mali and Niger to leave the Economic Community of West African States (ECOWAS) and the postponement of elections in Senegal. The most violent conflicts persist in the trio of countries mentioned above, joined by Somalia, Sudan and Ethiopia. An additional risk is that 17 sub-Saharan African countries will hold elections this year.
Natural disasters: food insecurity is being amplified by extreme phenomena such as the droughts and floods that have recently affected Mozambique, Ethiopia, Kenya, Zambia and Somalia. The lack of rainfall and the occurrence of diseases have caused cocoa production to fall in Ghana and Côte d’Ivoire, leading to a surge in prices. This year should be marked by below-average harvests (including in major producers such as South Africa and Zambia), which will reduce food availability in countries such as Zimbabwe, Malawi (South), Mozambique (South and Centre) and Madagascar (South).
Food insecurity: according to the Famine Early Warning Systems Network, in March there were around 105 million people in the region suffering from severe food insecurity. The countries most at risk are Burkina Faso, the Democratic Republic of Congo, Malawi, Mali, Mozambique, Nigeria, Sudan, South Sudan and Somalia. Analysts say that almost a third of extremely poor people live in just two countries – DR Congo and Nigeria – and another third live in six nations: Ethiopia, Kenya, Madagascar, Mozambique, Tanzania and Uganda.
Poverty reduction: the region has been unable to generate sustained economic progress (the last ten years have been, according to analysts, a ‘lost decade’). In addition, existing income inequality means that a 1% increase in GDP per capita is equivalent to a reduction of only 1% in poverty, unlike in other regions of the world where the effect is 2.5%. According to analysts, sub-Saharan Africa has a Gini index score (which measures disparities in consumption) of 41.5, which means that social inequality is only more serious in the Latin American and Caribbean region.
By Jaime Fidalgo
