The World Bank’s semi-annual Africa Pulse report warns that Africa risks losing the needed progress it ought to make in the decade as economic growth in sub-Saharan Africa is projected to decelerate to 2.5% this year, down from 3.6% in 2022. In terms of per capita income, the outlook is even more unfavourable.
It states,
The report noted that rising instability, and slow growth in South Africa and Nigeria- the region’s largest economies together with unending uncertainty in the global economy are responsible for the slow growth in the region.
It stated thus,
The bank’s Chief Economist for Africa, Andrew Dabalen said the poor and the vulnerable will be at the receiving end of the slow growth as it will translate to slow poverty reduction.
Africa is also grappling with a debt overhang that is exerting pressure on public finances as global interest rates continue to rise.
The escalating debt situation is causing more countries in the region to be at risk of or already experiencing debt distress.
Additionally, it has elevated the debt-service ratio to a substantial “staggering” level of 31% of revenue in the region in 2022.
It stated,
The World Bank went further stating
The international lender bemoaned the few jobs and opportunities available to Africa’s bourgeoning youth population.
Around 12 million young people enter the job market in the continent with only 3 million formal jobs being created. This situation leaves many young Africans underemployed and engaged in casual or informal labour.
The percentage of urban working-age adults in employment has remained static at 22% to 23% in the past two decades and growth during this period has created many employment opportunities.
Much of the population in the region is rural and engages in agriculture for survival.
It attributed this to the difficulty in scaling for small firms as many of the firms in the region employ less than five employees.
Amidst the geopolitical and economic malaise, the region is facing, the bank expects the East Africa region to grow by 4.1% while the West Africa region to expand by 5.1% in 2023.
Although inflation has been dropping across the region, it still stands above most central banks’ expectations.
It stated,
