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