The World Bank has cut its growth forecast for Sub-Saharan Africa for the year to 2.8 per cent from an initial 3.3 per cent, it said on Monday.
In its latest report on the regional economy, the bank also cut its 2018 growth estimate to 2.3 per cent from October’s prediction of 2.7 per cent growth.
According to the bank, the slower-than-expected overall growth reflects ongoing global uncertainty, which increasingly comes from domestic macroeconomic instability, including poorly managed debt, inflation and deficits.
The bank said Nigeria, South Africa and Angola, which make up about 60 per cent of sub-Saharan Africa’s annual economic output, were all facing various challenges, curbing their contribution to the growth momentum.
“This downward revision reflects slower growth in Nigeria and Angola, due to challenges in the oil sector, and subdued investment growth in South Africa, due to low business confidence,” it said.
“Nigeria’s economy grew by an estimated 1.9 per cent last year, up from 0.8 per cent the previous year, reflecting a modest pick-up in the non-oil sector.
“South Africa came out of recession in the third quarter of last year but investors were still cautious due to policy uncertainty.
“In the meantime, Angola, the region’s third-biggest economy, remained stuck in recession, as oil production remained weak,” the World Bank said
The commodity price slump of 2015 cut short a decade of rapid growth for the region.
The bank said growth would take longer to recover as a decline in industrial production and a trade dispute between China and the United States take their toll.
The bank’s forecast for the year means economic growth will lag population growth for the fourth year in a row and it will remain stuck below 3 per cent, which it slipped to in 2015.
High inflation and heavy debt loads discouraged investors in economies such as Zambia and Liberia, hitting their growth prospects, the World Bank said.
It said rates of debt in the region were growing and the type of borrowing that countries were undertaking had exposed them to vulnerabilities.
“External debt is shifting from traditional, concessional, publicly guaranteed sources to more private, market-based, and expensive sources of finance, putting countries at risk,” the bank said.
“By the end of 2018, nearly half of the countries in sub-Saharan Africa covered under the Low-Income Country Debt Sustainability Framework were at high risk of debt distress or in debt distress, more than double the number in 2013.
“Economies that do not depend on commodities such as Rwanda, Uganda, Kenya, Benin and Ivory Coast, continued to grow strongly,” the bank said in the report.
Albert Zeufack, the Chief Economist for Africa at the bank, said the region could boost annual growth by about nearly two percentage points if it harnessed information technology more effectively.
“This is a game-changer for Africa,” he said.