Washington — Growth across Sub‑Saharan Africa remains sluggish, dragged down by uncertainty in the global economy, the underperformance of the continent’s largest economies, high inflation, and a sharp deceleration of investment growth, a World Bank report said Wednesday. In the face of dampened growth prospects and rising debt levels, African governments must sharpen their focus on macro‑economic stability, domestic revenue mobilization, debt reduction, and productive investments to reduce extreme poverty and boost shared prosperity in the medium to long term.
Economic growth in Sub‑Saharan Africa is set to slow from 3.6 % in 2022 to 3.1 % in 2023, according to the latest *Africa’s Pulse*, the World Bank’s April 2023 economic update for the region. Economic activity in South Africa is expected to weaken further in 2023, with only 0.5 % annual growth as the energy crisis deepens, while Nigeria’s growth recovery for 2023 (2.8 %) remains fragile because oil production stays subdued. The real gross domestic product (GDP) growth of the Western and Central Africa sub‑region is estimated to decline to 3.4 % in 2023 from 3.7 % in 2022, and that of Eastern and Southern Africa to fall to 3.0 % in 2023 from 3.5 % in 2022.
“Weak growth combined with debt vulnerabilities and dismal investment growth risks a lost decade in poverty reduction,” said Andrew Dabalen, World Bank Chief Economist for Africa. “Policymakers need to redouble efforts to curb inflation, boost domestic resource mobilization, and enact pro‑growth reforms—while continuing to help the poorest households cope with the rising costs of living.”
Debt‑distress risks remain high, with 22 countries in the region at high risk of external debt distress or already in distress as of December 2022. Unfavourable global financial conditions have increased borrowing costs and debt‑service burdens, diverting money from much‑needed development investments and threatening macro‑fiscal stability. Stubbornly high inflation and low investment growth continue to constrain African economies. Although headline inflation appears to have peaked in the past year, it is projected to stay high at 7.5 % for 2023, above central‑bank target bands in most countries. Investment growth fell from 6.8 % in 2010‑13 to 1.6 % in 2021, with a sharper slowdown in Eastern and Southern Africa than in Western and Central Africa.
Despite these challenges, several countries are showing resilience amid multiple crises. Kenya, Côte d’Ivoire, and the Democratic Republic of Congo (DRC) grew at 5.2 %, 6.7 % and 8.6 % respectively in 2022. In the DRC, the mining sector was the main driver of growth, thanks to expanded capacity and a recovery in global demand. Harnessing natural‑resource wealth offers an opportunity to improve fiscal and debt sustainability, but the report cautions that this can only happen if countries adopt the right policies and learn from past boom‑and‑bust cycles.
“Rapid global decarbonisation will bring significant economic opportunities to Africa,” noted James Cust, World Bank Senior Economist. “Metals and minerals will be needed in larger quantities for low‑carbon technologies like batteries—and with the right policies could boost fiscal revenues, increase opportunities for regional value chains that create jobs, and accelerate economic transformation.”
In a time of energy transition and rising demand for metals and minerals, resource‑rich governments have an opportunity to better leverage natural resources to finance public programmes, diversify their economies, and expand energy access. The report finds that countries could potentially more than double the average revenues they currently collect from natural resources. Tapping these fiscal resources through royalties and taxes while continuing to attract private‑sector investment requires appropriate policies, reforms, and good governance. Maximising government revenues from natural resources would offer a double dividend for people and the planet by increasing fiscal space and removing implicit production subsidies.
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