FIFI PETERS: The World Bank has raised its growth targets for sub-Saharan Africa this year. It now expects the region to grow by 3.3%, which is 1% higher than its April forecast.
We have the World Bank chief economist, Albert Zeufack on the show with us, joining us from Washington [DC]. Albert, thanks so much for your time. It is always a pleasure to speak with you. There is quite a big revision in forecasts that you have come out with today, sir. Why is the region expected to grow a lot faster than was previously expected?
ALBERT ZEUFACK: Fifi, we are projecting economic growth to be around 3.3% in 2021 in sub-Saharan Africa, which means that the continent will [then] be exiting the recession induced by Covid-19 in 2020. This growth is supported by a sharp increase in commodity prices, a recovery in global trade but, most importantly, the relaxation of confinement measures, especially in West and Central Africa, where the third wave of Covid has so far not been extremely painful. So we’re certainly seeing a boost in growth. It’s an optimistic view, and we are also projecting growth for 2022 and 2023 at just below 4%.
FIFI PETERS: When you take Nigeria, Angola and South Africa out of that equation, the growth rates for the region come up a lot higher. So just talk to us about why these three economies are weighing down on what could be faster growth.
ALBERT ZEUFACK: Yes, indeed. Nigeria, South Africa and Angola, our three largest economies that account for more than 60% of our GDP, interestingly are all exiting recession in 2021. This is good news because these three economies were not performing that well, even before we entered the Covid crisis. But the rate at which these economies are growing is still variable. Angola is barely growing at 0.4%, Nigeria at 2.4%, and South Africa at 4.6% in 2021.
We should note, Fifi, that both Angola and Nigeria remain in negative territory when it comes to growth per capita. So, if you exclude these three economies, the rest of Africa on average is growing at around 3.6%. This is powered by our island economies, such as the Seychelles and Mauritius which have implemented aggressive vaccination programmes, reaching more than 60% of the population early on, and which are now reaping the fruit in terms of growth. Seychelles will be growing at above 6% in 2021. The same goes for more diversified economies, like Côte d’Ivoire and Kenya. Kenya will be growing at above 5% and Côte d’Ivoire above 6% in 2021. So a number of African countries are actually doing very well.
FIFI PETERS: I think the point that you make just emphasises the importance of vaccinating. It’s an economic case that can boost growth, as the examples you have shared showed.
But Albert, what is this recovery in sub-Saharan Africa? What will it mean for jobs and for investments?
ALBERT ZEUFACK: One thing we should highlight, Fifi, is that growth in South Africa, for example, would have been higher in 2021 if it weren’t for the third wave [of] Covid that hit and forced the country to raise confinement measures again.
The momentum we saw in the first two quarters of the year is likely to taper down in the second half of the year because of the confinement measures. What has happened is consumption and investment have not recovered at the level that certainly would be able to sustain a very high growth rate moving forward, and hence the need for countries in the region to really continue reforms that would improve the investment climate – both for domestic investment and foreign direct investment [FDI].
FDI precisely has actually gone down Fifi, and in 2020 FDI contracted by 12% across the continent. So it is important to rely more on regional value chains and domestic investment to make sure we increase the pace of recovery.
FIFI PETERS: All right Albert, thanks so much for joining us, sir. Always fascinating speaking with you. Albert Zeufack is the chief economist for Africa at the World Bank.