The World Bank in its latest economic analysis report said on Monday that sub-Saharan Africa growth projections are expected to slow in 2015 to 4 per cent from 4.5 per cent in 2014.
The bank said in the latest edition of Africa’s Pulse, its biennial analysis of the issues shaping Africa’s economic development, that the downturn largely reflected the fall in crude oil and other commodities’ prices.
The forecast is coming as the world’s finance and development ministers prepare for the group’s 2015 Spring Meetings in Washington DC for talks on the state of the global economy and international development.
The latest forecast is not only below the 4.4 per cent average annual growth rate of the past two decades, but also far short of Africa’s peak growth rates of 6.4 per cent between 2002 and 2008.
In spite of Federal Government’s claim of Nigeria as Africa’s largest economy with total gross domestic product of $510billion, the report said except for South Africa, the average growth for the rest of Sub-Saharan Africa is forecast at around 4.7 per cent.
In 2015, the World Bank is expected to deliver $15.7 billion in new lending for over 160 projects across Africa.
The projects include a new record of $10.2 billion in zero-interest credits and grants from the International Development Association, the World Bank’s fund for the poorest countries, representing the highest level of IDA delivery by any region in the Bank’s history.
World Bank Vice President for Africa, Makhtar Diop, said despite strong headwinds and new challenges, Sub-Saharan Africa was still experiencing growth.
Mr. Diop said with challenges come opportunities, adding that the end of the commodity super-cycle provided a window of opportunity to push ahead with the continent’s next set of structural reforms aimed at poverty reduction and growth more effective.
Sub-Saharan Africa as a net exporter of primary commodities, the report said, would still have crude oil as the most important commodity traded in the region, followed by gold and natural gas.
Over 90 per cent of the total exports of eight major oil-exporting countries, the World Bank report said, would come from the three biggest exports of each country, representing about 30 per cent of their GDP.
The impact of the recent decline in global commodities prices, the report said, was not limited to crude oil, as the prices of other commodities are now more closely correlated with oil.
As a result, Africa Pulse said terms of trade are declining widely among most countries in the region, with the 36 African countries expecting terms-of-trade deterioration home to 80 per cent of the population and 70 per cent of the economic activity in the region.
The continent’s huge economic diversity, the report said, was also mirrored in the impact of commodity price declines, particularly among oil producers.
Citing the situation in Nigeria, the report said although the country’s economy would experience some difficulties this year, growth is expected to rebound in 2016 and beyond.
The rebound, the report said, would be driven by a relatively diversified economy, and a buoyant services sector.
“Low oil prices will continue to weigh down on prospects of less diversified oil exporters, such as Angola and Equatorial Guinea,” it noted.
Besides, it said in several oil-importing countries, such as Cote d’Ivoire, Kenya and Senegal, growth is expected to remain strong, while Ghana, still high inflation and fiscal consolidation, would weigh on growth.
In South Africa, the report said, growth would continue to be curtailed by problems in the electricity sector.
Although debt burdens remained generally manageable, the report said debt-to-GDP ratios for countries with increased bond market access have picked up in recent years.
The report identified persistent conflict in a number of areas, and recent violence by extremist groups like Boko Haram and Al Shabaab as fresh security risks with the potential to undermine development gains.
The report said fiscal policy stance was expected to remain tight throughout 2015 in most net oil-exporting countries across the region, as countries take measures to curtail spending amid expected lower revenues.
While capital expenditures are expected to bear the brunt of expenditure cuts, recurrent expenditures, including fuel subsidies, would also be reduced.