IMF seeks strong policy measures for Sub Saharan Africa's fragile outlook
The IMF latest Sub-Saharan Africa regional outlook report stated that growth in the region remains fragile. Real GDP growth for about two-thirds of SSA countries, accounting for 83.0% of regional GDP, slowed in 2016 - clearly SSAs worst performance in more than two decades.
According to the report, a modest 2.5% growth expectation of 2017 will be to a large extent driven by one-off factors in the three largest countries (combined with modest improvements in their terms of trade).
A recovery in oil production in Nigeria, higher public spending ahead of elections in Angola, and the fading of drought effects in South Africa
However, the 2017 expectation falls short of past trends and is too low to put sub-Saharan Africa back on a path of rising living standards.
The IMF stated that the weak outlook is partly a result of delayed and still limited policy adjustments, with an ensuing increase in public debt, declining international reserves, and pressures on financial systems placing stress on private sector activity. Countries hardest hit by the oil price shock (Angola, Nigeria, and Central African Economic and Monetary Community, CEMAC) are still struggling to deal with the unusually large terms-of-trade shock and implied budgetary revenue losses.
Others commodity exporters such as Ghana, South Africa, Zambia, and Zimbabwe, are also dealing with larger fiscal deficits and debt mainly due to the acute droughts and/or political instability. The report stated that some countries on the other hand continued to grow more robustly, supported by domestic factors such as investment spending and accommodative monetary policy.
The IMF warned that while the effect of the 2016 drought that hit most southern African countries is fading, a new bout of drought is now affecting parts of eastern Africa (Ethiopia, Kenya, South Sudan, and Tanzania) as the erratic weather patterns of La Niña hit these countries.
In addition, pest and armyworm infestations in some southern African countries (Democratic Republic of Congo, Malawi, Namibia, South Africa, Zambia, and Zimbabwe) As a result of these developments, about half of sub-Saharan African countries have reported food insecurity situations that could potentially impact 60 million more people in the region this year. Worse still, famine has been declared in South Sudan and is looming in northeastern Nigeria as a result of past and ongoing conflicts.
The impetus to revive and sustain growth in this region must come from a focus on macroeconomic and structural policies that support self-sustaining sources of growth. The IMF emphasised that for all countries in the region, complementing macroeconomic policies with efforts to unlock the countries’ growth potential, is critical to the growth agenda.
Efforts include fostering educational development, advancing economic diversification to increase resilience to shocks, promoting regional and international trade integration, prioritizing growth-enhancing investment, invigorating macro-structural policies to reduce market distortions, and strengthening governance frameworks as well as the business climate to attract investment towards new sectors of growth.
