SSA needs $70bn external support annually to boost economy— IMF

…urges investment in infrastructure, education, health

Sub-Saharan African (SSA) countries need an estimated external financing need of about $70 billion annually from 2024 to 2028, to bolster their economies and deepen reforms, according to the International Monetary Fund (IMF) forecasts.

The IMF Regional Economic Outlook noted that despite gradual economic recovery in Sub-Saharan African countries, risks still tilt towards a downside.

It projected that growth would rise from 3.4 percent in 2023 to 3.8 percent in 2024 and 4.0 percent in 2025 for two-thirds of SSA countries in 2024.

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Yet, “financing challenges are forcing countries to cut essential public spending and redirect development funds to debt service, thereby endangering growth prospects for future generations”, the report noted.

Nigeria, Africa’s fourth economy, as ranked by the IMF will only grow by 3.3 percent in 2024, a slight improvement from 2023, while Niger and Senegal are projected to expand by 10.4 percent and 8.3 percent in 2024.

Growth is, however, hinged on the effectiveness of domestic reforms.

“South Africa’s efforts to mitigate the energy crisis through improved electricity supply may be derailed by electoral uncertainties. Likewise, Nigeria is addressing long-standing distortions in the foreign exchange market, boosting oil production, and enhancing revenue mobilisation,” the report said.

SSA countries will need to broaden financing sources and diversify growth opportunities by attracting foreign direct investment, fostering domestic financial markets, improving the quality and efficiency of public spending, and accelerating economic diversification, the report noted.

“Given high borrowing costs, prioritising cost-effective and viable reforms becomes essential to mobilise more FDI. Likewise, fostering financial inclusion through the development of mobile banking, microfinance and financial literacy would improve these SMEs’ access to funding,” the report added.

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It urged public investments to prioritise sectors with high private and social returns, including infrastructure, education, and healthcare, aligning with sustainable development goals.

The IMF called for the expansion of regional trade relationships, which could boost good trade within Africa and globally.

“If full regional integration is implemented, the median goods trade within Africa could increase by 53 percent and with the rest of the world by 15 percent,” it said.