Africa is among the fastest growing regions, but it now faces significant headwinds as a result of global trends and region specific risks. Growth has slowed, coming in at 3.0 percent in 2015, down from 4.5 percent in 2014, the weakest pace since 2009. Per capita income growth is low, weighed down by population growth. 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.
The global commodity super-cycle has come to an end, sharply lowering the price of oil, gas, metals and minerals. As a net commodities exporter, Africa is deeply affected by falling commodity prices, putting pressure on the current account and fiscal balances.
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. Although Ebola has been largely contained, the risk of pandemics remains high. 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: May 10, 2016