Sub Saharan Africa lags in policy changes, affecting private sector growth, Economic Freedom Index
Heritage Foundation released its 2017 Economic Freedom report in February revealing that Sub-Saharan African (SSA) countries are distributed primarily within the lower ranks of economic freedom.
The report said that the SSA region as a whole continues to underperform in following through on policy changes that would encourage the rise of a more dynamic private sector. In some cases, the signs of repeated government failure continue to be overwhelming and the population-weighted average GDP per capita for the region is only $5,334, the lowest level of any region.
Mauritius and Botswana are the only "moderately free" economies and the majority are ranked either "mostly unfree" or "repressed."
In the Middle East and North Africa (MENA) region, Economic Freedom indicated that structural and institutional problems abound throughout the region, and private- sector growth continues to lag far behind levels needed to provide adequate economic opportunities for growing populations.
The report said that taken as a whole, the MENA region's lack of job opportunities remains a serious problem, particularly for younger members of the labour force whose average unemployment rate is close to 25%.
Both Sub-Saharan African and North Africa do not have any economically "free" countries. The IMF resumed its relationship with Somalia in 2013 and has since been heavily involved in the provision of policy advice and technical assistance. Two and a half decades of a civil war caused significant damage to the Somalia's social and economic infrastructure. Although the country has achieved important milestones in rebuilding its economy, economic conditions remain difficult, poverty is widespread, and more than half of the working-age population is unemployed.
According to the latest IMF 2016 Article IV Consultation report, the Somalian economy is expected to continue to be sustained by donors' grants, remittances, and foreign direct investment mostly by the Somali diaspora. The report said that economic activity is expected to slow down in 2016-17 as a result of the looming drought.
Although economic growth recovered in 2014 and 2015 at 3.6% for both years, slower growth of 3.4% and 2.7% is projected for 2016 and 2017, respectively, reflecting the impact of the drought on the agricultural sector. The report said that due in part to higher food prices, inflation is projected to pick up to about 2.7% in 2017 from 1.5% in 2016.
The security situation in Somalia remains fragile. The Al-Shabaab group has continued to launch sporadic attacks, despite recent gains by the Somali national army and African Union (AU) troops.
