MIL OSI Translation. Government of the Republic of France statements from French to English –
Source: IMF in French
The challenges in sub-Saharan Africa in six graphics
Abebe Aemro Selassie and Shushanik Hakobyan
IMF Africa Department
April 15, 2021
Sub-Saharan Africa continues to grapple with the pandemic, the economic cost of which is unprecedented.
Although the region’s outlook has improved since October 2019, the 1.9% contraction in economic activity seen in 2020 remains the region’s worst result ever. In 2021, sub-Saharan Africa will be the slowest growing region of the world and is likely to fall further behind as the global economy rebounds. Our latest report on Regional Economic Outlook for Sub-Saharan Africa examines these issues in more detail.
Based on current forecasts, GDP per capita in many countries is only expected to return to its pre-crisis level at the end of 2025. Restricted access to vaccines and lack of fiscal space in developing countries. the region should weigh on the outlook. As a result, the gap between growth in sub-Saharan Africa and that of the rest of the world is expected to widen further over the next five years.
To support future growth and carry out transformative reforms, the poorest countries in sub-Saharan Africa will need international assistance to meet additional external financing needs to the tune of 245 billion dollars over the next five years; for the region as a whole, these additional needs amount to $ 425 billion. The extension of the G20 initiative to suspend debt service until December 2021 and the new common debt framework can help in this regard. The proposed $ 650 billion Special Drawing Rights allocation would provide an estimated $ 23 billion to countries in sub-Saharan Africa, helping them increase their cash flow and fight the pandemic. But to meet these needs, sub-Saharan Africa will need contributions from all potential sources, including international financial institutions and the private sector, as well as donor assistance that does not affect their indebtedness.
“The crisis is not conquered anywhere until it is conquered everywhere. It will take a global effort to give sub-Saharan Africa a fair chance for a sustainable recovery and a prosperous future, ”noted Abebe Aemro Selassie, director of the IMF’s Africa department.
The six graphs below illustrate the situation:
Sub-Saharan Africa will be the region of the world where growth will be the slowest in 2021. The region is expected to experience growth of 3.4%, driven by the recovery of the world economy, the increase in trade, the increase commodity prices and a return of capital inflows. However, the recovery in sub-Saharan Africa is expected to lag behind that of the rest of the world, with cumulative GDP per capita growth of 3.6% over the period 2020-2025, well below that of the rest of the world ( 14%). Within the region, the divide that existed between resource-rich and resource-poor countries will persist. Countries that are not dependent on natural resources are expected to experience an average increase in their per capita income of 21.6% by 2025. In the oil-exporting countries, which are among the most populous in the region, income per capita inhabitant will not increase over this period.
Restricted access to vaccines, their slower deployment and the potentially high cost of vaccinations are slowing the recovery in sub-Saharan Africa. Some advanced countries have obtained enough doses to immunize their own populations multiple times, while many countries in sub-Saharan Africa will struggle to simply immunize their essential front-line workers this year. Sub-Saharan Africa accounts for 15% of the world’s population, but as of April 5, only 0.5% of all doses administered globally have been to countries in sub-Saharan Africa. 38 of the 45 countries in the region rely on the mechanism COVAX, an international initiative aimed at ensuring equitable distribution of vaccines, and on the African Union to access vaccines. The COVAX mechanism has started delivering doses to the area, but the supply is limited.
The success of vaccine deployment also depends heavily on distribution infrastructure (eg, cold chain storage), which many countries in the region lack. In addition, the cost of immunizing 60% of the population could be excessive for some countries, reaching 50% of health expenditure in 2018 in the Democratic Republic of the Congo and the Gambia for example. The cost of vaccinations represents more than 2% of the GDP for a quarter of the countries in the region. It could double or triple if booster injections were required. The international community must play a crucial role in removing restrictions on the distribution of vaccines or medical equipment, fully funding multilateral mechanisms such as COVAX, and rapidly redistributing excess vaccine doses.
The COVID 19 crisis is expected to reverse years of economic and social progress and have lasting economic consequences in the region. According to our projections, the number of people living in extreme poverty in sub-Saharan Africa increased by 32 million in 2020; the number of missed school days is more than four times higher than in advanced countries, and employment fell by about 8.5% in 2020. In terms of livelihoods, per capita income has fallen back to its 2013 level. There is a need to put in place stronger social safety nets to quickly and efficiently help those who need it most in order to avoid permanent damage.
To create the necessary leeway to support the recovery, public and private balance sheets need to be cleaned up. Sub-Saharan African countries approached the crisis with high debt and less means to spend. The pandemic-related fiscal packages in the region reached only 2.6% of GDP on average in 2020, well below the 7.2% of GDP spent by advanced countries. However, public debt in sub-Saharan Africa increased to over 66% of GDP (weighted average 58%) in 2020, its highest level in nearly 15 years, largely due to a decline revenue and GDP. Seventeen countries, accounting for around a quarter of the region’s GDP, or 17% of the region’s debt, are therefore now at high risk of debt distress, or are already in debt distress.
The private sector’s balance sheets have been hit hard by the pandemic as well. Monthly business sales collapsed 40 to 80 percent in 2020 from their pre-crisis level. Between 50 and 80% of the households surveyed reported a loss of income at the peak of the first wave of the pandemic when containment measures were put in place. The NPL ratio has increased only modestly so far in the region, due to the temporary loosening of regulations decided by countries during the crisis.
Unlocking the enormous potential of sub-Saharan Africa requires bold and transformative reforms.
Every day, more than 90,000 people connect to the Internet for the first time in sub-Saharan Africa. Harnessing the digital revolution would strengthen the resilience and efficiency of sub-Saharan Africa, expand access to global markets, improve public service delivery, enhance transparency and accountability, and foster the creation of new jobs.
Each week, countries in sub-Saharan Africa export approximately $ 6.5 billion in goods. But only about a fifth of these exports go to other countries in the region. The implementation of the new continental free trade area would not only reduce Africa’s vulnerability to disruptions in the global economy, but also stimulate regional competition, improve productivity, attract foreign investment and promote and security. food.
Each year, 20 million new job seekers enter the labor market in sub-Saharan Africa: this is one of the region’s greatest assets in the long term. Over the next 10 to 15 years, nearly one in two of new entrants to the global workforce will come from sub-Saharan Africa, and with an increasingly urbanized population, transformative reforms that strengthen social protection systems, facilitate the digital switchover, improve transparency and governance, and mitigate climate change would help increase the region’s consumption, which could also drive global demand for goods and services. Policymakers will need to create more fiscal space to carry out these reforms by increasing domestic revenues, enhancing the effectiveness and efficiency of spending, and managing public debt vulnerability.
EDITOR’S NOTE: This article is a translation. Apologies should the grammar and / or sentence structure not be perfect.