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Growth in sub-Saharan Africa remains Slow through 2019 – World Bank

The growth trajectory in Sub-Saharan Africa remained fragile. This continues to exist due to the persistent uncertainty, global economy and the slow pace of domestic reforms this year.

Hafez Ghanem, World Bank Vice President for Africa.

The report noted that poverty agenda in Africa should put the poor in control, helping to accelerate the fertility transition, leverage the food system on and off the farm, address risk and conflict, and provide more and better public finance to improve the lives of the most vulnerable. A critical piece will be addressing gender gaps in health, education, empowerment, and jobs. Absent significant efforts to create economic opportunities and reduce risk for poor people, extreme poverty will become almost exclusively an African phenomenon by 2030.

According to Africa’s Pulse, the poverty agenda in Africa should put the poor in control, helping to accelerate the fertility transition, leverage the food system on and off the farm, address risk and conflict, and provide more and better public finance to improve the lives of the most vulnerable.

With regards to accelerating poverty reduction and empowering women, the report said, four in 10 Africans, or over 416 million people, live below $1.90 per day in 2015.

“Africa’s economies are not immune to what is happening in the rest of the world, and this is reflected in the subdued growth rates across the region,” said Albert Zeufack, Chief Economist for Africa at the World Bank.

“At the same time, evidence clearly links poor governance to poor growth performance, so efficient and transparent institutions should be on the priority list for African policy makers and citizens.”

Sub-Saharan Africa is the only region in the world that can boast that women are more likely to be entrepreneurs than men, and African women contribute to a large share of agricultural labor across the continent. This success is stifled by large and persistent earnings gaps between men and women. Women farmers in Sub-Saharan Africa produce 33 percent less per hectare of land than men do, and female entrepreneurs or business owners earn 34 percent less profits than male business owners.

Zeufack said Africa is the only region in the world where women are more likely to be entrepreneurs than men, with African women contributing approximately 40 percent of agricultural labor across the continent. However, He noted that there are huge gaps in productivity and earnings that need to be addressed.

The Chief Economist for Africa said several solutions to reduce poverty are also solutions to empower women. He added,

“African countries need to educate girls, especially young girls, keep them in school longer, and provide them with the skills they need for work. This will likely result in lower fertility, higher income and higher age at marriage.”

Zeufack said African countries also needed to invest in climate-resilient infrastructure and implement policies to mitigate risks from natural disasters, adding that “natural disasters tend to disproportionately impact the poor and women.”

These earnings gaps are very costly to African people and economies. Africa’s Pulse identifies six policy pathways for women’s economic empowerment:

1. Building women’s skills beyond traditional training;

2. Alleviating women’s financial constraints through innovative solutions that relieve the collateral problem and improve their access to the financial sector;

3. Helping women secure their land rights;

4. Connecting women to labor;

5. Addressing social norms that constrain women’s opportunities; and

6.Building a strong new generation by helping girls to navigate their adolescence.

Beyond Sub-Saharan Africa’s regional averages, the World Bank said the picture is mixed.

The recovery in Nigeria, South Africa, and Angola the region’s three largest economies has remained weak and is weighing on the region’s prospects. In Nigeria, growth in the non-oil sector has been sluggish, while in Angola the oil sector remained weak. In South Africa, low investment sentiment is weighing on economic activity.

Excluding Nigeria, South Africa, and Angola, the World Bank said growth in the rest of the subcontinent is expected to remain robust although slower in some countries.

On the supply side, the manufacturing and mining industries saw a modest expansion, while the services sector lost some momentum and agricultural sector growth remained subdued due to drought.

The World Bank noted that growth in the region’s three largest economies Nigeria, South Africa and Angola is expected to remain low in the absence of structural reforms. The Bretton Woods Institution said that the regional growth performance continues to mask substantial heterogeneity across countries given that recovery in the region’s three largest economies has remained fragile.

“In Nigeria, growth in the non-oil sector has been sluggish, while in Angola the oil sector has underperformed. In South Africa, low investment sentiment is weighing on economic activity,” said the World Bank.

The report indicates that growth in sub-Saharan Africa excluding Nigeria, South Africa, and Angola is expected to remain robust although it has softened somewhat in some countries. The average growth among non-resource intensive countries is projected to edge down, reflecting the lingering effects of tropical cyclones in Mozambique and Zimbabwe, political uncertainty in Sudan, weaker agricultural exports in Kenya, and fiscal consolidation in Senegal,” said the findings.

Albert Zeufack, Chief Economist for Africa at the World Bank said this “anemic growth” reflects three factors:

“First, the deepening global trade tensions affecting the whole world, not just Africa. Second, the slow pace of domestic reforms, especially on debt management and efficiency of public sector institutions. Third, climate shocks such as the cyclone that affected Mozambique, Zimbabwe and Malawi earlier this year and alternating droughts and floods that are reducing farm production across Africa. All of this translates into a decline in exports and investments in African countries. In a way, governments, firms and individuals are not in a position to continue creating the jobs that are so desperately needed,” said Zeufack.

This edition of Africa’s Pulse includes special sections on accelerating poverty reduction and promoting women’s empowerment. The World Bank said global uncertainty is taking a toll on growth well beyond Africa, and real GDP growth is also expected to slow significantly in other emerging and developing regions. The Middle East and North Africa, Latin America and Caribbean, and South Asia regions are expected to see even larger downward revisions in their growth forecasts than in sub-Saharan Africa for 2019.

 

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