African economies to rebound in 2015, despite uncertain global conditions
African economies are expected to register robust growth in 2015 expanding by 4.5 per cent in 2015, and may reach 5 per cent in 2016, compared to 3.9 per cent registered in 2014 and 3.3 per cent globally, according to the 14th edition of African Economic Outlook 2015, released on Monday, May 25 in Abidjan, Côte d’Ivoire, at the African Development Bank Group’s 50th Annual Meetings.
This signals robust growth despite ongoing global and regional headwinds, including depressed commodity prices and the lagged impact of the Ebola epidemic.
Falling global oil prices are also expected to support growth among net oil importers by boosting consumer demand and competitiveness and mitigating inflationary pressures.
Moreover, the report themed “Regional Development and Spatial Inclusion” shows that most African economies now boasts of much greater economic diversification – with a shift in the African economy, with agriculture, construction and services playing a bigger role than before.
This overall positive outlook is, however, overshadowed by the spillover effects of the deadly Ebola outbreak in West Africa, which have dampened the region’s prospects in the tourism, service and aviation sectors due to the perceived risk to exposure.
This is in addition to depressed commodity prices and uncertain global conditions, the consequences of the Ebola outbreak in West Africa as well as domestic political uncertainties that could delay an expected return to pre-2008 levels of growth.
“African countries have shown considerable resilience in the face of global economic diversity. For future growth to be sustainable and transformative will require that its benefits are shared more equitably among the population and that governments continue to pursue policies that promote economic stability,” said Steve Kayizzi Mugerwa, Acting Chief Economist and Vice-President of the African Development Bank.
The report is a joint publication by African Development Bank, Organisation for Economic Co-operation and Development (OECD) and United Nations Development Programme (UNDP).
According to the report, total foreign investment in the continent is expected to reach $73.5 billion in 2015, targeting consumer markets in large urban centres.
Remittances from Africa’s diaspora have increased six-fold since 2000 and will reach $64.6 billion by the end of 2015.
African sovereign borrowing, on the other hand, is rising rapidly, indicating increasing investor confidence, the report shows.
However, it cautions that this new source of financing must be accompanied by macroeconomic prudence to ensure that sustainable debt levels are maintained.
Human development in Africa is improving, although indicators show that poverty remains widespread in both low- and middle-income countries.
“Inclusive and sustainable growth is a fundamental aspect of Africa’s post-2015 development agenda for economic and social transformation,” said Ayodele Odusola, Chief Economist and Head of the Strategy and Analysis Team at the UNDP Regional Bureau for Africa.
“We need to invest in building economic opportunities, including at the local level. And especially those of young women and men who are the architects of tomorrow’s Africa,” he added.
The report shows that economic gains have been uneven across regions and within countries and, despite high growth rates, are vulnerable to setbacks from health, environmental and social risks.
Specifically, the report shows that the outbreak of the Ebola virus disease had a severe impact on the populations and economies of Guinea, Liberia, Sierra Leone and their neighbours in West Africa, with the fight of these countries exacerbated by the uneven international response.
It underscores that the Ebola epidemic highlighted the inadequacy of social service delivery in many African countries, especially health services, and the fragility of institutional structures.
“An important lesson is that the enhancement of equity, social protection and timely responses to domestic disasters cannot be accomplished without strong and accountable domestic institutions,” the report reads in part.
Although the level of social tensions and violence receded in 2014 in many parts of Africa, the consequences of war are still evident, with lingering conflicts in the Central African Republic, Libya, Nigeria and South Sudan. The impact on populations and livelihoods has been severe.
“There is an obvious and urgent need to foster more inclusive growth and broader political participation to reduce the deprivation that tends to stoke rebellions and conflicts,” the report says.
For the first time, the African Economic Outlook has put the continent’s demographic changes and spatial dynamics into the broader debate of generating quality employment opportunities for the youth.
In 2050, Africa will be home to over 2 billion people, about 25 per cent of humanity, against 15 per cent today. Most of them will live in Sub-Saharan Africa, whose population is projected to triple. This could present an unprecedented opportunity: dependency ratios, which had risen since the 1980s, could drop to 0.6 in 35 years.
“African economies could benefit from mobilizing the wide and extraordinary untapped potential of their diverse regions. Putting people and places at the center of policy-making may improve Africa’s competitiveness and the well-being of Africans,” said Mario Pezzini, the Director of the OECD Development Centre.
Cities will grow fast, but, unlike recent demographic transitions elsewhere, so will rural communities.
“Making the most of this demographic bonus for inclusive and sustainable growth will require tapping into the potential of local economies, which too often have been neglected. Policies must also be put in place to address the gaps that will develop between fast-changing urban centers and their hinterlands,” the report says.
The African Economic Outlook is produced annually by the African Development Bank (AfDB), the OECD Development Centre and the United Nations Development Programme (UNDP).
For the full report, including statistics and 54 individual country notes, please visitwww.africaneconomicoutlook.org.