Time.news – A slower spread of the virus and lower covid-19-related mortality, alongside strong agricultural growth and a faster-than-expected recovery in commodity prices have helped many African economies weather the pandemic-induced economic storm. It is one of the perhaps unexpected conclusions that Africa’s Pulse reaches, the semi-annual report on the continent prepared by the World Bank and released today. According to the analysis, entitled “The Future of Work in Africa: Emerging Trends in Digital Technology Adoption”, the economic recovery is now linked to the type of response that various governments will implement. According to World Bank analysts, those countries that will be able to deepen reforms capable of creating jobs, encouraging investments and improving competitiveness will overcome the phase of international contingency.
The resurgence of the pandemic in late 2020 and limited additional fiscal support will represent “a tough battle” for policy makers as they continue to work for stronger growth and better livelihoods for their populations. “African countries have made huge investments over the past year to keep their economies afloat and protect the lives and livelihoods of communities,” said Albert G. Zeufack, the World Bank’s chief economist for Africa.
“Ambitious reforms that support job creation, strengthen fair growth, protect the vulnerable and contribute to environmental sustainability will be key to strengthening those efforts that move towards a stronger recovery across the African continent.”
Growth in the region is expected to increase between 2.3 and 3.4% in 2021, depending on the policies adopted by the countries and the international community. A second wave of covid-19 infections is partly dragging down growth projections for 2021, with daily infections about 40% higher than the first wave. While some countries have experienced a significant decline in covid-19 infections thanks to containment measures taken by the government, other countries are facing an upward trend.
The report estimates that real GDP growth for 2022 will be 3.1%. The recovery in sub-Saharan Africa is expected to vary from country to country. Non-resource-intensive countries, such as Ivory Coast and Kenya, and mining-dependent economies, such as Botswana and Guinea, are expected to see robust growth in 2021, driven by a rebound in private consumption And investment as confidence strengthens and exports grow.
In the regions of eastern and southern Africa, the contraction in growth for 2020 is estimated at -3%, mainly led by South Africa and Angola, the largest economies of these sub-regions. Excluding Angola and South Africa, the report expects economic activity in the region to increase by 2.6% in 2021 and 4% in 2022.
In West and Central Africa, 2020 closed with a 1.1% contraction, less than expected, partly due to a less severe contraction in Nigeria, Africa’s largest economy, in the second half of the year. Real gross domestic product in West and Central Africa is expected to grow by 2.1% in 2021 and 3% in 2022. The World Bank analysis also notes that African countries can accelerate their recovery by stepping up existing efforts to support the economy and people, especially women, young people and other vulnerable groups.
Africa’s Pulse recommends that such policies be complemented by reforms that promote inclusive productivity growth and the country’s competitiveness. Any reduction in countries’ debt burdens would free up resources for public investment, in sectors such as education, health and infrastructure. Investments in human capital will help reduce the risk of long-term damage deriving from the pandemic that could manifest itself in the coming years and can increase competitiveness and productivity, according to World Bank analysts who believe the next twelve months will be decisive.
A further boost, in recent months, could come from the gradual implementation of the African continental free trade area and from greater integration of African countries into regional and global value chains. The report also notes that reforms that address digital infrastructure gaps and make the digital economy more inclusive – ensuring affordability but also building skills for all segments of society – are essential to improve connectivity, stimulate adoption of digital technology and generate more and better jobs.