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Navigating Growth Challenges: Prioritizing Equity in Sub-Saharan Africa’s Economic Recovery

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Navigating Growth Challenges: Prioritizing Equity in Sub-Saharan Africa’s Economic Recovery

Sub-Saharan Africa’s economies are poised for a modest rebound in 2024, with growth projected to reach 3.4%, according to the latest Africa’s Pulse report from the World Bank. Despite this uptick, the region faces persistent challenges that threaten the sustainability of its recovery and the reduction of poverty.

While increased private consumption and decreasing inflation provide some support to the economic resurgence, vulnerabilities persist. Global economic uncertainties, mounting debt obligations, recurrent natural calamities, and escalating conflicts hinder the region’s growth prospects.

The report forecasts a gradual improvement in growth rates over the next few years, yet this progress remains fragile. Although inflation is moderating and public debt growth is slowing, many African governments grapple with external liquidity issues and unsustainable debt burdens.

Crucially, the pace of economic expansion in Sub-Saharan Africa lags behind that of previous decades and falls short of significantly alleviating poverty. Structural inequalities exacerbate this challenge, resulting in less effective poverty reduction compared to other regions.

Andrew Dabalen, the World Bank’s Chief Economist for Africa, emphasizes the need for transformative policies to foster faster and more inclusive growth. He notes that relying solely on fiscal measures is insufficient and calls for policies that enhance the private sector’s capacity to generate employment opportunities for all segments of society.

The report also highlights shrinking external resources for African governments and warns of heightened risks from political instability and geopolitical tensions. These factors, coupled with persisting inequalities, underscore the urgency of policy interventions to fortify the region’s resilience against future shocks.

Sub-Saharan Africa grapples with some of the highest levels of inequality globally, manifesting in unequal access to basic services and income-generating activities. Addressing these structural constraints is vital for fostering a more prosperous and equitable future, notes Gabriela Inchauste, co-author of an upcoming World Bank report on inequality in the region.

Africa’s Pulse outlines several policy recommendations to promote robust and equitable growth, including restoring macroeconomic stability, facilitating intergenerational mobility, improving market access, and ensuring fiscal policies do not disproportionately burden the poor.

In navigating the complexities of economic recovery, prioritizing equity and inclusivity is paramount for Sub-Saharan Africa to achieve sustainable and resilient growth.


Reimagining Africa’s Economic Growth: Insights from Okonjo-Iweala

Ngozi Okonjo-Iweala, Director-General of the World Trade Organization, emphasized the imperative for Africa to bolster trade and investment in value-added goods and services to stimulate economic expansion. Speaking at BusinessDay’s Africa Trade and Investment Summit, themed ‘Reimagining Economic Growth in Africa,’ she underscored the need for an enabling external environment and a predictable internal economy to drive this transformation.

Okonjo-Iweala highlighted that African businesses face significant trade costs, equivalent to a 354 percent tariff among the world’s cheapest, hindering their competitiveness. Additionally, intra-African trade faces trade costs equivalent to a 435 percent tariff, underlining the challenges within the continent. To overcome these barriers and accelerate growth, she stressed the importance of increasing trade and investment in value-added goods and services.

Despite Africa’s underperformance, accounting for only three percent of global trade, Okonjo-Iweala sees potential for growth by shifting focus from raw materials and commodities to value-added products. She emphasized the necessity of reimagining global trade and investment, capitalizing on Africa’s growing young population and regional integration through initiatives like the African Continental Free Trade Area.

Highlighting the opportunities presented by the rapid growth in services, particularly in tech-savvy sectors like fintech, Okonjo-Iweala emphasized the need for more supply and value chains in Africa to integrate into global production networks. Successful re-globalization, she argued, would enhance growth, job creation, and supply resilience.

Okonjo-Iweala stressed the importance of a supportive external environment and an open and predictable internal economy for African countries to achieve these goals. She called for agreements that would facilitate this process and encouraged investors to diversify their portfolios to include African markets.

In his welcome address, Frank Aigbogun, Publisher of BusinessDay Media, echoed the sentiment of Nigeria and Africa being at a crossroads, emphasizing the need to focus on actionable steps to realize their potential. He underscored the importance of giving hope to the people by fostering economic growth and development across the continent.

Overall, Okonjo-Iweala’s insights shed light on the challenges and opportunities for Africa’s economic growth, emphasizing the need for strategic initiatives and partnerships to unlock its full potential on the global stage.