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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.

Africa Is Taking Centre Stage In Food Security - And So Is Congolese Potash

Africa Is Taking Centre Stage In Food Security – And So Is Congolese Potash

The second highly successful US Africa summit which has just concluded in Washington D.C. marks the beginning of a new chapter in US-Africa relationships.

Geopolitical shifts have created major dislocations in the international energy and fertilized markets, massively impacting emerging and developed marketplaces alike, highlighting the critical need for sustainable global food security solutions.

Indeed a new African food security renaissance is about to take place – As a critical world leading nation, the United States of America has promised to rise to the challenge as a genuine, engaged and powerful partner in the building of Africa as a sustainable food security powerhouse -And the Kanga Potash project is an integral piece of this critical equation.

After 5 years and over USD40m, the Kanga Project team has completed its Definitive Feasibility Study (DFS) and is now preparing to move to the execution phase to develop what is one of the most promising potash production projects in the world, taking place in one of the most strategic locations on the African continent.

The country is blessed with enormous undeveloped reserves of potash, abundant natural gas, as well as phosphate. Straddling the equator on Africa’s west coast, it is uniquely positioned to supply the African continent to the north, south and center, all areas which are geared to emerge as agriculture powerhouses.

The Congo is also perfectly located across the Atlantic to supply Brazil and the rest of the South, and North American continent.

The Kouilou Region of the Republic of the Congo contains billions of tons of proven reserves of potash-rich carnallite, which can be recovered to produce potash in an ecologically friendly way, through tried and tested mining solutions.

The Project Team has also proven the existence of ultra thick super seams which are unique to its licenses and which have never been seen anywhere else in the world.

These ultra thick seams have a dramatic impact on the cost of production of potash as it drastically reduces the amount of solution mining caverns required to recover the carnallite.

Finally, the Kanga License sits directly on the Atlantic coast with planned export facilities a few hundred meters from the ocean. Independent potash export jetty facilities erase traditional logistics nightmares which other suppliers might face. Kanga will thus be the lowest cost supplier to both continental and international markets.

The combination of a strategic geographic location and these unique super thick seams position Kanga as a key player in African and global food security integrity.

The government of the Republic of Congo, under the Leadership of its President, Denis Sassou Nguesso, who participated in the US-Africa Summit, as well as his State Minister of Mines, Mr. Pierre Oba, are highly supportive of fertilizer mining projects in the Congo. Recognizing the significant work completed by Kanga Potash, the government granted a production license to Kanga Potash in late July of 2022. The Minister’s teams have since been working diligently with Kanga Potash to finalize as expediently as possible the signing of the Mining Convention, which is required to begin work.

The Government has also adopted a development-focused policy and has been extremely supportive in negotiating a long-term gas supply agreement at viable prices.

For years, natural gas has been flared at great expense to the environment, with the Republic of Congo residing on top of vast natural gas reserves. The newly appointed Minister of Hydrocarbons, Mr. Bruno Itoua, has demonstrated critical leadership in implementing the President’s carbon footprint reduction policies, having imposed a strict ban on flared gas, which will be redirected to the development of domestic industries.

The Kanga team is in discussions with industry players and financial institutions who are working on reaching financial closure for the USD500m CAPEX project. The Project has completed a NI43-101 Report. The first stage of implementation and next phase of work entails front end engineering and the drilling of the first production well, which will not only be used to further strengthen its resource report with measured and proven reserves sufficient for life of mine at all production scenarios, from 200 ktpa right through to 2m+ tpa, but it will also be used as the first well in the extraction of carnalite for processing.

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Concerns Over Debt Sustainability Rise in Sub-Saharan Africa Amid Covid-19

Like many regions, Sub-Saharan Africa (SSA) has been severely hit by the coronavirus, posing significant challenges to businesses there. As the pandemic continues to disrupt the economy and debt levels rise, Atradius analysts predict an economic contraction of 4.6% in 2020 due to the disruption in trade, a drop in commodity demand, and worldwide travel restrictions.

This development is especially troubling for vulnerable economies heavily dependent on oil exports, such as the Republic of Congo and Angola, and countries dependent on tourism like Cabo Verde, Mauritius, and Tanzania. However, diversified economies like, Ghana, Uganda and Senegal will see a stronger recovery because they had a better starting point before entering the recession.

The Pandemic Rages On

At the onset of the pandemic, African governments acted decisively and restrictive measures were taken across the region as borders closed and partial lockdowns began. In SSA, the number of infections and fatalities is relatively low compared to other regions. Of the five countries accounting for more than 75% of all confirmed cases, South Africa has the most confirmed cases, followed by Ethiopia and Nigeria.

The challenge with SSA is that the virus spreads faster in impoverished and densely populated areas because social-distancing measures cannot be adhered to easily.

Although government actions averted a massive health crisis in the region, the economy has paid a price. In countries where many people work in the informal sector, pandemic-related restrictions had the most severe economic impact.

Debt Levels Continue to Worsen

In 2020, the composition of the region’s debt has shifted toward more commercial and foreign currency-denominated debt, a dramatic change from previous years. Rising fiscal deficits throughout the region are making for a worrisome situation. Zambia, Angola, Ghana, and other countries had concerns about debt sustainability even prior to the Covid-19 pandemic. In addition, many countries, especially commodity (particularly oil) exporting countries, have seen currency depreciation.

Sub-Saharan African countries that have previously relied on foreign borrowing are struggling to finance their deficits. That said, there are some plans to bring these countries relief in the form of the Debt Service Suspension Initiative from the G20. This initiative allows the poorest countries to suspend debt service payments to official bilateral creditors and has been extended to mid-2021, giving some African countries breathing room in this economic crisis. Additionally, the region is calling on commercial creditors to participate in the initiative to help countries like Zambia and Angola that have high commercial foreign currency debt.

Opportunity Ahead in 2021?

The extent and duration of the economic impact of the global pandemic remain uncertain, but post-Covid-19, governments in SSA are prepared to step up their efforts to make countries more resilient in the face of external shocks.

Opportunities exist on the other side of 2020 in the form of renewable energy in solar and wind. This will not only help the region achieve climate goals, but it also creates economic opportunities for bigger countries like Kenya and South Africa.

Another opportunity for SSA lies in manufacturing, which is still low across SSA exempting Ethiopia and South Africa. The implementation of the African Continental Free Trade Area, introduced in early 2020, will provide significant opportunities for manufacturing companies across the region. Due to Covid-19, however, the expected implementation in July 2020 was delayed. Once it is implemented, which will likely be in January of 2021, SSA will be one of the largest free trade areas in the world.

For businesses operating in SSA, one of the risks presented during the global pandemic is the exchange rate risk, especially since the currencies of commodity exporters have depreciated. Businesses can mitigate these risks by minimizing currency mismatch. Paying attention to contracts with public buyers will also be important moving through SSA’s economic recovery because government finances have deteriorated for many countries throughout the region.

The SSA region is headed into a challenging year filled with uncertainty and economic vulnerabilities. The most affected countries – those reliant on tourism and oil exports – will see a particularly slow recovery over the course of 2021. Cote d’Ivoire and Uganda, which have been recording high growth rates before Covid-19 hit, will see a strong recovery after the pandemic.

Covid-19 has had a tremendous impact on short-term economic growth and as long as governments expenditures throughout the region can be prioritized and used towards much-needed infrastructure, there is a silver lining for the region. Still, vulnerabilities remain and the pace and strength of any recovery is dependent on the containment and end of Covid-19.


Afke Zeilstra is a Senior Economist at Atradius, a global trade credit insurer. She is responsible for country risk analysis and advice on countries in Africa. She holds an M.A. in Economics.