While sub-Saharan Africa is, overall, poised for a year of solid economic growth, policymakers need to be cognisant of risks that could still cloud the outlook amid mixed growth expectations for the continent’s countries.
The region was expected to grow by 4.5% in 2015, but the impact of the sharp decline of oil and commodity prices over the last six months would restrain growth for some African countries, pushing them towards the lower end of the expansion experienced in recent years, the International Monetary Fund (IMF) said on Tuesday.
Releasing its April 2015 IMF Regional Economic Outlook: sub-Saharan Africa report, IMF Africa director Antoinette Sayeh said: “Sub-Saharan Africa’s oil exporters have been hard hit by the price decline and their average growth in 2015 is expected to be about 1.25 percentage points lower than in 2014.”
While some countries basked in the benefits of lower oil import bills, others battled low prices for their non-oil commodity exports.
“For the region’s eight oil exporting countries, fiscal adjustment is a priority. Policymakers should support an adjustment by allowing exchange rates to depreciate, where flexible exchange rate mechanisms are in place,” she explained.
Non-oil exporting countries should leverage lower oil prices to eliminate fuel subsidies, while establishing “flexible energy pricing mechanisms”, which Sayeh believed would unlock education and infrastructure spending.
“The current circumstances also highlight the urgent need for policies that favour structural transformation to diversify sub-Saharan Africa’s production base and promote greater integration into global trading networks.”
This was particularly critical as, by 2030, the number of working-age citizens in Africa would surpass that of the rest of the world combined, offering the region a “tremendous opportunity” to create a powerful engine for long-term growth.
“This will help the region create jobs for the rapidly growing young population as the region is set to experience a significant demographic transition in the next decades,” Sayeh concluded.