Overview

After slowing to 3 percent in 2015, economic growth in Sub-Saharan Africa is projected to decelerate in 2016, to the lowest level in years, and below population growth. The sharp decline in aggregate growth reflects the challenging economic conditions in the region’s largest economies and commodity exporters—Angola, Nigeria, and South Africa—as they continue to face headwinds from lower commodity prices, tighter financing conditions, and droughts. At the same time, in over a quarter of countries, economic growth is showing signs of resilience. There is variation across countries, particularly between resource and non-resource rich countries, but overall, the region’s growth trend remains below pre-financial crisis levels. Slower growth deepens the challenge of reducing poverty. The incidence of extreme poverty has fallen --from 57% in 1990 to 43% in 2012-- but remains high. Overall, growth is less poverty reducing in Africa than elsewhere.

Commodity prices are expected to remain largely below their 2011–14 peak, despite a recent pickup, reflecting the weak global recovery. Faced with growing financing needs, commodity exporters have begun to adjust, but the adjustment efforts remain insufficient. Against this backdrop, a modest rebound is foreseen in Sub-Saharan Africa in 2017-18.

Rising violence and conflicts are fueling increased forced displacement. Emerging threats in the form of trafficking, piracy, and religious extremism are causing persistent fragility in large parts of the continent. The lessons of the Ebola crisis highlight the importance of developing strong health systems and supporting regional disease surveillance and coordination. The impact of climate change is another risk facing the region. Africa is the lowest carbon-emitter, and yet suffers the most from the effects of climate change, through droughts, costal erosion and flooding.

This vulnerability to shocks increases uncertainty, which in turn raises the cost of doing business in Africa and hampers productivity and growth. Addressing these sources of vulnerability and building resilience is critical to maintain solid growth rates and sustain the progress made so far in reducing poverty and achieving the development goals. To continue to make progress on its development goals and achieve structural transformation Africa must capitalize on the significant growth opportunities.

Last Updated: Sep 21, 2016

The WBG strategy for Africa builds on opportunities for growth and poverty reduction to support structural transformation, economic diversification and inclusion within the new development finance framework. The region is made up of a combination of low-income, lower-middle income, upper-middle income, and high income countries. 18 countries are Fragile and Conflict-affected States. Africa also has 13 small states.

The Bank is responding to this diversity by providing a wide range of instruments – both traditional and innovative - tailored to the needs of the countries.

The strategy focuses on the following priority areas:

Agricultural productivity. There is a continuing need to accelerate progress in boosting agricultural productivity and output in Africa. Supporting smallholders through investment in improved technologies, rural financial services, and better access to markets is vital.  Equally important is the push to boost agribusiness investments and improve land and water management by adopting modern irrigation practices, preventing conflicts over water resources and implementing climate-smart agriculture solutions.

Affordable and reliable energy. Increasing access to affordable, reliable, and sustainable energy is a primary objective of the Bank’s work in Africa as inadequate electricity supply remains the greatest infrastructure obstacle in Africa.

Africa’s poor are likely to be hit hardest by climate change, particularly changes in temperature and rainfall patterns.  Investing in climate change adaptation techniques and disaster risk management will remain top priority. To build climate resilience, countries will need help to both mitigate and adapt to the impacts of climate change and ensure food security. The Africa Climate Business Plan, presented at COP21, lays out a work program to help on both fronts.

Regional integration in Africa remains a critical piece of our strategy to improve connectivity, leverage economies of scale, and enhance productivity.

Urbanization. Integrated urban planning, addressing water, sanitation, transport, housing, power and governance, will be vital to making urbanization a true driver of productivity and income growth, and are at the core of our work in Africa.

High quality human capital. Each year in Africa and for the next decade, 11 million youth will enter the job market.  Young Africans must be equipped with the right skills and training. There is still a mismatch between what African students are learning and the skills employers are actually seeking.  To help bridge this gap, the Bank has launched initiatives to boost STEM (science, technology, engineering and mathematics) across the region.

Knowledge is essential to our effort to improve development outcomes and make aid more effective. Country Economic Updates, produced in consultation with clients and other stakeholders, help promote substantive discussions around key policy issues.  Analytical work on structural transformation, on macroeconomic vulnerabilities, on fragility and poverty, on improving governance, but also on more specific areas such as the management of drylands, addressing the challenges of the Sahel, improving development outcomes in the Horn of Africa, and tapping the opportunities in land reform, urbanization, and demography are also underway.

Last Updated: Sep 21, 2016

As of June 2016, the Bank approved $9.3 billion for the region for 110 projects this fiscal year, including $669 million in IBRD loans and $8.7 billion in IDA commitments, of which $200 million was from the IDA Scale-up Facility. Key focus areas included raising agricultural productivity, increasing access to affordable and reliable energy, building resilience to climate change, strengthening fragile and conflict-afflicted states, and promoting good quality education. The Bank also made important contributions to knowledge this fiscal year.

A few highlights of our development results:

  • Boosting agricultural productivity
    Agriculture accounts for 65 percent of employment in Africa. At a time when some countries are facing challenges from the decline in commodity prices, developing this sector can help to diversify economies. To improve the lives of 2 million of the estimated 50 million pastoralists in the region, the $248 million Regional Sahel Pastoralism Support Project aims specifically to improve access to essential productive assets, services, and markets in six countries—Burkina Faso, Chad, Mali, Mauritania, Niger, and Senegal—and to improve the local response to pastoral crises and emergencies. Most of the beneficiaries of the six-year project will be women and youth.
  • Increasing affordable and reliable energy
    Africa continues to lag behind other regions in access to electricity—yet the continent has huge potential for renewable energy, including hydropower, solar, and geothermal. This fiscal year the Bank provided $700 million for the Sankofa Gas Project in Ghana, which will develop offshore natural gas resources located 60 kilometers from the western shore. Gas from the project will fuel up to 1,000 megawatts of domestic power generation, about 40 percent of Ghana’s currently installed generation capacity. The project will leverage $7.9 billion in private sector investments, yielding huge potential fiscal returns and benefits to Ghana.
  • Adapting to climate change and building climate resilience
    In April 2016, the World Bank, in collaboration with partners, agreed to establish the West Africa coastal observatory to enhance the knowledge base on coastal erosion, flooding, and other climate change hazards that West Africa’s coastal and island nations face. The observatory will build national and regional capacity and support countries’ efforts to strengthen the resilience of their coastal areas to climate change.
  • Supporting fragile and conflict-affected countries
    This fiscal year IDA approved turnaround resources for Guinea-Bissau and Madagascar. These funds help fragile and conflict-affected states to address the roots of fragility and support their transition to functioning states. In Guinea-Bissau and Madagascar, they will support key government reform initiatives, including the strengthening of a transparent and accountable public financial management system.
  • Regional initiatives by the World Bank and the United Nations in the Great Lakes, the Sahel, and the Horn of Africa are supporting cross-border efforts to address the underlying causes of fragility. The Bank is addressing the pressing issue of displacement in the Great Lakes and the Horn of Africa with two operations to help countries manage ongoing crises through support for forcibly displaced people and their host communities.
  • Fostering the development of human capital
    A $140 million Africa Higher Education Centers of Excellence project is funding 24 competitively selected centers in institutions of higher education in Eastern and Southern Africa. It will strengthen their capacity and focus on producing excellent training, applied research, and knowledge transfer in priority sectors such as agriculture, health, education, and applied statist

Last Updated: Sep 21, 2016

The WBG leverages partnerships, knowledge and the financing instruments. The Bank works closely with the UN, and various multilateral and bilateral partners.  The Bank collaborates with African regional and sub-regional organizations, such as the African Union, EAC, ECOWAS, CEMAC and SADC, which play a critical role in a host of sub-regional and regional programs and in promoting economic integration. We have also developed strong partnerships with the private sector, think thanks, parliamentarians and African civil society.

Mobilizing partners to deepen and accelerate support for Africa is a top priority and requires closer collaboration with non-conventional development actors, including Brazil, China and India, as well as global funds, Arab funds, and private foundations.

The Africa Region also leverages the combined strength of the entire WBG by working closely with IFC and MIGA in energy, agribusiness, water, transport and other priority areas.

The Bank will develop and deepen its partnership with the US/MCC and with the broader group of Arab Development Agencies who invest the bulk of their support in Africa.

Last Updated: Sep 21, 2016





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