• Saturday, June 15, 2024
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Nigeria, others face sluggish growth on debt burden, joblessness – World Bank

What to know about the World Bank’s report as Nigerians?

Economies in the Sub-Saharan Africa (SSA) region face many challenges, including a “lost decade” of sluggish growth, persistently low per capita income, mounting fiscal pressures exacerbated by high debt burdens, and an urgent need to create jobs, the World Bank has said.

According to the bank, tackling these multifaceted issues requires comprehensive reforms to promote economic prosperity, reduce poverty, and create sustainable employment opportunities for the teeming youths.

According to the latest World Bank Africa’s Pulse report, it blames rising instability, weak growth in the region’s largest economies, and lingering uncertainty in the global economy for dragging down growth prospects.

The World bank projects that economic growth in SSA will decelerate to 2.5% in 2023 from 3.6% in 2022 as the region’s three largest economies and commodity exporters continue to struggle.

It equally slashed its earlier growth projection for Nigeria to 2.9% from earlier 3.3%, as
Angola will also remain weak at 1.3% all due to lower international prices and currency pressures affecting oil and non-oil activity.

South Africa’s GDP is only expected to grow by 0.5% in 2023 as energy and transportation bottlenecks continue to bite.

There are even more concerns about how conflict and violence in the region continue to weigh on economic activity. Climatic shocks may exacerbate this rising fragility.

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In Sudan for instance, economic activity is expected to contract by 12% due to internal conflict, which is halting production, destroying human capital, and crippling state capacity, the World Bank noted in the report.

Regarding per capita, growth in Sub-Saharan Africa (SSA) has not increased since 2015. The region is projected to contract at an annual average rate per capita of 0.1% over 2015-2025, thus potentially marking a lost decade of growth in the aftermath of the 2014-15 plunge in commodity prices.

“The region’s poorest and most vulnerable people continue to bear the economic brunt of this slowdown, as weak growth translates into slow poverty reduction and poor job growth,” Andrew Dabalen, World Bank Chief Economist for Africa, stated.

“With up to 12 million young Africans entering the labour market across the region each year, it has never been more urgent for policymakers to transform their economies and deliver growth to people through better jobs.”

However, there are a few bright spots despite the gloomy outlook. The region’s Inflation is expected to decline from 9.3% in 2022 to 7.3% in 2023.

Also, fiscal balances are improving in African countries pursuing prudent and coordinated macroeconomic policies. In 2023, the Eastern African Community (EAC) is expected to grow by 4.9%, while the West African Economic and Monetary Union (WAEMU) is set to expand by 5.1%.

However, debt distress remains widespread, with 21 countries at high risk of external debt distress or in debt distress as of June 2023.

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Overall, current growth rates in the region are inadequate to create enough high-quality jobs to meet increases in the working-age population. Current growth patterns generate only 3 million formal jobs annually, thus leaving many young people underemployed and engaged in casual, piecemeal, and unstable work that does not fully use their skills.

The Bretton Woods institution believes that job opportunities for the youth will drive inclusive growth and turn the continent’s demographic wealth into an economic dividend.

According to Nicholas Woolley, a World Bank Economist who also co-authored the report, “The urgency of the jobs challenge in Sub-Saharan Africa is underscored by the huge opportunity from demographic transitions that we have seen in other regions.

“This will require an ecosystem that facilitates private-sector development and firm growth, as well as skill development that matches business demand.”

Another concern is that labour-intensive manufacturing seems to be missing in Africa, limiting further effects for indirect job creation in support services and international trade.

The report attributes this partly to a lack of capital, which continues to hamper the structural transformation required for good-quality jobs.

“While the region contributes 12% of the global working-age population, Sub-Saharan Africa owns only 2% of the global capital stock. This means people have fewer assets with which to be productive in Sub-Saharan Africa, compared to other regions,”

The report identifies a set of policy measures to overcome hurdles and unleash job creation in the region including cost-effective private sector reforms focused on increasing competition, uniform policy enforcement across firm sizes, and regulatory alignment with regional trading partners.

Governments can also help identify and support the early-stage growth of businesses through more inclusive procurement practices and the promotion of local businesses abroad.

The report further recommends investment in education as critical in boosting semi-skilled occupations for the region.

“Interventions that improve learning in school are more effective than those increasing school attendance alone, while vocational education can be useful for addressing the underemployed and those who have missed out on education as children.

“Education of girls and access to jobs for women can reduce potential productivity loss from the misallocation of female labor. Cash transfers have proven effective in increasing girls’ school enrollment and attendance and curbing pregnancies among school-age girls,” it stressed.