Effects of worls bank donation in sub-saharan African countries

Sub-Saharan Africa, home to more than 1 billion people, half of whom will be
under 25 years old by 2050, is a diverse continent offering human and natural
resources that have the potential to yield inclusive growth and eradicate
poverty in the region. With the world’s largest free trade area and a 1.2 billion-
person market, the continent is creating an entirely new development path,
harnessing the potential of its resources and people.

The region is composed of low, lower-middle, upper-middle, and high-income

countries, 22 of which are fragile or conflict-affected. Africa also has 13 small
states, characterized by a small population, limited human capital, and a
confined land area.

Economic growth in Sub-Saharan Africa (SSA) is set to decelerate from 4.1%

in 2021 to 3.3% in 2022, as a result of a slowdown in global growth, rising
inflation exacerbated by the war in Ukraine, adverse weather conditions, a
tightening in global financial conditions, and the rising risk of debt distress.
These trends compromise poverty reduction, already set back by the impact
of the COVID-19 pandemic. Rising inflation is weighing on economic activity in
SSA by depressing both business investments and household consumption.
As of July 2022, 29 of 33 countries in SSA with available information had
inflation rates over 5% while 17 countries had double-digit inflation.

In SSA, the high pass-through of food and fuel prices to consumer prices has
caused inflation to soar to record highs in many countries, breaching the
ceiling of central bank targets in most countries which have them. The vast
majority of the population in Sub-Saharan Africa is affected by these high food
prices as they allocate over 40% of total spending on food.

These economic challenges come at a time when countries’ ability to support

growth and protect poor households is severely constrained. The fiscal deficit
of the region expanded during the pandemic to 5.6% of GDP in 2020 (from
3.0% of GDP in 2019). In 2022, the deficit amounts to 4.8% of GDP due to
consolidation efforts.

Debt is projected to stay elevated at 59.5% of GDP in 2022 in SSA. Eight out
of 38 IDA-eligible countries in the region are in debt distress, and 14 are in
high risk of joining them. African governments spent 16.5% of their revenues
servicing external debt in 2021, up from less than 5% in 2010. Looking ahead,
growth in SSA is projected to bounce back to 3.5% in 2023 and 3.9% in 2024.
Excluding South Africa and Angola, the Eastern and Southern African
subregion is expected to grow to 4.5% next year and 5.0% in 2024. In South
Africa, the economy slowed to 0.2 % year-on-year in 2022Q2, from 2.7% in
the previous quarter The economy is projected to grow by 1.9% this year, a
downward revision of 0.2 percentage point relative to early projections in April.
The Angolan economy is one of the major beneficiaries of favorable terms of
trade which translate into real growth of 3.1% in 2022, from 0.8% the previous
year. Kenya is set to grow 5.0% in 2023 (down from 5.5%) and back up to
5.3% in 2024.

Excluding Nigeria, the Western and Central Africa subregion is projected to

grow at 5.0% in 2023 (up from 4.2%), and growth will firm in 2024 (5.6%).
Real GDP growth in Nigeria is expected to slow from 3.6% in 2021 to 3.3% in
2022 as economic growth in the country continues to suffer from an
underperforming oil sector. WAEMU countries are set to recover in 2023 from
the slowdown in 2022 (4.9%), up to 6.4%, and firming further in 2024 to 7.0%.
Growth in Côte d’Ivoire is projected to bounce back from 5.7% in 2022 to
6.8%. After slowing to 4.8% in 2022, growth in Senegal is projected to jump to
8.0% in 2023 and firm to 10.5% in 2024. In Cameroon, the economy will
maintain its steady post-pandemic growth in 2023 (4.3%) and 2024 (4.6%),
buoyed by investment and private consumption.

The looming threat of stagnation worldwide amid a landscape of multiple new

and covariate shocks emphasizes the need for African policymakers to
implement policies that accelerate structural transformation through
productivity-enhancing growth and creating more and better jobs. Boosting
agricultural productivity is essential to drive a growth-enhancing structural
transformation process. Amid soaring food prices and supply constraints,
policy makers need avoid making previous policy mistakes (bans or
tariffs/taxes on exports and imports), and ensure international trade flows.

Last Updated: Dec 14, 2022

Ref. https://www.worldbank.org/en/region/afr/overview