BY: Nghiinomenwa Erastus
Angola will record negative growth of 0,7%, Zambia will only grow by 1%, and Namibia will increase by 1,3% this year.
Next year (2022), Namibia is expected to do better than others with 3,6% in economic growth, followed by Angola 2,4%.
Despite a new economic and leadership vibe in Zambia brought by the new president, they are only projected to grow by 1% even next year.
This is according to the October 2021 Sub-Saharan Africa Economic outlook for this year and next year, as prepared by the International Monetary Fund (IMF).
Angola, Congo, and the Central African Republic are the only countries projected not to record a positive expansion in the region’s production level.
Notable is that if it were not for the negative growth of the three countries, Zambia and Namibia would be the only country out of more than 40 economies expected to register growth below 1,5%.
Moreover, this year, the two countries’ projected economic growth is way below the region’s expected growth of 3,7%- not even halfway.
Namibia is only projected to come closer to regional projection next year in terms of economic activities expansion.
Namibia is projected to grow by 3,8% by the IMF. In comparison, the Bank of Namibia kept it less ambitious at 3,4- while the Sub-Saharan region is projected to expand its activities by 3,8% in 2022.
Sub-Saharan Africa is the world’s least vaccinated population, most promising renewable energy potential, and critical ecosystems wrote the IMF.
According to the IMF metrics, in October this year projected Sub-Saharan Africa’s economy (more than 45 economies) is set to expand by 3,7%t in 2021 and 3,8% per cent in 2022.
This follows the sharp contraction in 2020 but still represents the slowest recovery relative to other regions.
The growth will primarily result from a sharp improvement in global trade and commodity prices.
Moreover, good harvests have also helped lift agricultural production in the region.
South Africa is expected to grow by 5% in 2021, reflecting a better-than-expected growth in the year’s first half from the recent update to its national accounts, complementing the strong base effects from 2020.
Angola has been in recession and is only expected to end the six years of low growth and high unemployment next year.
Since April, its 2021 growth has been revised downward because of falling investments and recurring technical problems in the oil sector.
Botswana, which takes up most of Namibia’s rough diamond, is projected to grow by 9,2% this year, making it the only economy in the Sub-Saharan African region with expected growth of more than 7%.
Botswana positive expansion is projected to go till next year.
The economic outlook for the region points to divergences at three levels: between sub-Saharan Africa and other areas, within sub-Saharan Africa, and within countries.
These divergences reflect the region’s slower vaccine rollout, limited fiscal space, and regional disparities in resilience.
Moreover, the outlook remains highly uncertain, and risks are tilted to the downside.
In particular, the recovery depends on the path of the global pandemic and the regional vaccination effort, food price inflation. It is also vulnerable to disruptions in worldwide activity and financial markets.
Looking ahead, “sub-Saharan Africa’s potential remains undiminished,” wrote the Fund.
However, the IMF cautioned that the region’s recovery is expected to be slower than in advanced economies, leading to a widening rift in incomes.
The economic divergence is expected to persist through the medium term- partly reflecting different access to vaccines and stark differences in the availability of policy support.
The IMF analysis added that rising food price inflation, combined with reduced incomes, threatens past gains in poverty reduction, health, and food security.
Secondly, as the pandemic has continued, authorities in sub-Saharan Africa have faced an increasingly complex and challenging policy environment.
The IMF report highlighted that policymakers face three key fiscal challenges: tackle the region’s pressing development-spending needs, contain public debt, and mobilize tax revenues.
In the circumstances in which additional measures are generally unpopular.
The IMF analysis explained that without vaccines, lockdowns had been the only option for containing the virus.
Even though lockdowns the impact of lockdowns on activity has faded in some economies (but not vanished), the high economic and social costs associated with long periods of inactivity remains.
The IMF has proposed a plan to vaccinate at least 40% of the total population of all countries by the end of 2021 and 70% by the first half of 2022.
For sub-Saharan Africa, the Fund explained that “these goals are ambitious and will require a marked change in strategy by both advanced economies and sub‑Saharan African countries”.
Moreover, the ability of governments to support private savings during the crisis in sub-Saharan Africa was and still is relatively limited.
The Fund said this is because of a lack of fiscal space, notably the inability to issue more debt.
This, in turn, likely added to the collapse in aggregate demand.
The IMF analysis indicated that with ongoing spending needs related to the pandemic, development, and recovery, most governments would have difficulty reducing their borrowing requirements.
“Bringing them face-to-face with a fiscal trilemma,” the report highlighted.
Most countries face limited ability to run more significant current account deficits with private-sector demand unable to support the recovery.
“Without external financing, the public sector’s borrowing from domestic markets will tend to crowd out private investment and hinder growth,” warned the IMF.
Overall public debt levels are expected to improve slightly in 2021 to 56,6% of GDP- however, this ratio remains elevated compared with a pre-pandemic level of 50,4%.