The International Monetary Fund (IMF) has urged sub-Saharan African countries to reduce underlying vulnerabilities and strengthen their macroeconomic fundamentals for sustained high growth.
According to the Fund’s latest Regional Economic Outlook for sub-Saharan Africa: “Economic growth is picking up and macroeconomic outcomes have strengthened, but more needs to be done to decisively shield the recovery against risks arising from both domestic and external shocks.
“Growth in sub-Saharan Africa is expected to increase from 2.7 percent in 2017 to 3.1 percent in 2018 and 3.8 percent in 2019.”
Speaking to newsmen in Bali, Indonesia, during the IMF/World Bank meetings, Abebe Selassie, Director of the IMF’s African Department said: “Growth is set to improve, most notably for oil exporters, while non-resource intensive countries continue to grow strongly – with quite a few growing at 6 percent or more”.
He added that while there has been progress in narrowing fiscal deficits, more focus is needed to raise revenues in support of continued development spending and to service debt.
“The global economy is entering a period of unusually elevated policy uncertainty with significant downside risks. The external environment is expected to become less supportive, and challenges relating to rapid advances in technology and climate change are growing.
“Sub-Saharan African countries need to better-position themselves to deliver growth that is more resilient and capable of creating enough jobs to fully harness its demographic dividend.
“Policy reforms should focus on delivering growth that creates the 20 million jobs per year needed to absorb new entrants into the labour market.
“Policy actions include deepening trade and financial integration (including in the context of the African Continental Free Trade Area), removing market distortions, improving the efficiency of public spending, promoting digital connectivity and a flexible education system, and fostering an environment that is conducive to private investment and risk-taking,” he added.
Need for change
The report indicated that one-third of Africans live in countries where per capita GDP fell last year, and warned that trade tensions between the United States and other major economies including China could lead to a cumulative loss of GDP for Africa of up to 1.5 percent by 2021.
Another key revelation in the outlook is that Africa will face long-term challenges due to rapid advances in artificial intelligence and increased automation, which are expected to shape future job markets.
“If you are not equipping your labour force for the jobs which have to be created, you could end up with much lower growth rates – and that’s what we’re worried about,” Selassie said.
Africa will need to create an average of 20 million new jobs for its rapidly growing population each year through 2035; more than double the job-creation rate of the past five years.
Though the pan-African growth rate is dragged down by the sluggish performances of large economies like South Africa, Angola and Nigeria, many countries are seeing robust expansion.
Selassie said: “We have 22-odd countries that are growing at close to 6 percent or more, and quite a lot of others in the 3, 4 or 5 percent”.