BusinessDay

Nigeria, SSA to have slowest economic growth in 2021 IMF says

Nigeria and much of sub-Saharan Africa will witness the world’s slowest economic growth this year as a result of long standing structural challenges that could be worsened by new waves of Covid-19 infections amidst limited access to vaccines, the International Monetary Fund has warned.

Africa’s largest economy has seen two economic contractions since 2016 and delays in mounting much needed economic reforms means Nigeria will experience only tepid growth that will see many of its citizens shut out from economic prosperity.

According to the fund, although sub-Saharan Africa’s economy contracted less than initially expected in 2020, projected expansion of 3.4% would make it the slowest-growing region this year as vaccination picks up in the rest of the world.

The downturn pushed more than 32 million Africans into extreme poverty last year and per-capita output may not return to pre-pandemic levels until after 2022 or even 2025 for some countries. In the case of Nigeria which is now referred to as the poverty capital of the world, the country now has the highest number rate of unemployment in the world.

On Thursday, the national statistics agency announced that food inflation has accelerated to 22.95% in March, its highest pace in 15 years in Nigeria, compounding the misery of the people.

In its regional economic outlook released on Thursday, the IMF said growth projections are subject to “greater-than-usual uncertainty” given the risks of further Covid-19 shocks in Africa, which relies on a World Health Organization-led initiative to provide vaccines known as Covax.

“If supply and distribution issues continue, most countries will struggle to reach herd immunity before the end of 2023, leaving them exposed to new, more virulent strains of the disease,” the fund said.

“For the international community, ensuring vaccine coverage for sub-Saharan Africa is not simply an issue of local livelihoods and local growth. Broad regional coverage is also a global public good.”

“Strong reforms to engender growth, and significant external financing are important, because there’s a lot at stake in terms of reversing the increase in poverty that we’ve seen, and making sure going forward, you actually see growth keeping pace with the rapid population growth,” the IMF Africa Department Director, Abebe Aemro Selassie said in an interview with Bloomberg.

Most African countries, with their finances already strained by measures to contain the pandemic, will have to bolster health-care spending by 50% to vaccinate more than half of their populations.

A proposal to increase the fund’s reserve assets this year would provide the continent with $23 billion, which is only a fraction of the $425 billion it needs to finance its recovery through 2025, according to the report. The region will have to mobilize private funds to meet investment needs in coming years.

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