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Sub-Saharan Africa: one planet, two worlds, three stories

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Sub-Saharan Africa: one planet, two worlds, three stories

As sub-Saharan Africa goes through a persistent pandemic with repeated waves of infection, a return to normal will be far from easy

WASHINGTON DC, United States of America, October 21, 2021 / APO Group / –

Sub-Saharan Africa is expected to grow 3.7% in 2021 and 3.8% in 2022 – a welcome but relatively modest recovery, suggesting that divergences with the rest of the world will persist over the medium term; The crisis highlighted the main disparities in resilience between countries in sub-Saharan Africa and also exacerbated pre-existing vulnerabilities and inequalities within each country. In addition, food price inflation threatens to undermine previous food security gains and exacerbate social and political instability; As the pandemic continues, authorities face an increasingly difficult political environment, with growing needs, limited resources and difficult compromises. Saving lives remains the top priority, but there is also an urgent need to prioritize spending, mobilize revenues, build credibility and improve the business environment; International solidarity and cooperation remain vital, not only for immunization, but also to address other critical global issues, such as climate change.

The economy of sub-Saharan Africa is expected to recover in 2021, a marked improvement over the extraordinary contraction of 2020. This rebound is very welcome and is mainly the result of a favorable external environment, in particular a marked improvement in trade. and commodity prices. In addition, improved crops have increased agricultural production. Still, the outlook remains highly uncertain as the recovery depends on progress in the fight against COVID-19 and is vulnerable to disruptions in global activity and financial markets, the International Monetary Fund (IMF) said in its latest Economic Outlook. regional for the sub-region. Saharan Africa.

“As sub-Saharan Africa goes through a persistent pandemic with repeated waves of infection, a return to normal will be far from easy,” said Abebe Aemro Selassie, director of the IMF’s Africa Department. “In the absence of vaccines, lockdowns and other containment measures have been the only option to contain the virus.

“At 3.7% this year, the recovery in sub-Saharan Africa will be the slowest in the world, as advanced markets grow by more than 5%, while other emerging markets and developing countries grow by more than 6%. This mismatch reflects the slow deployment of vaccines in sub-Saharan Africa and the marked differences in policy space.

“Real per capita income is expected to remain almost 5½ percent below pre-crisis trends, with permanent real production losses ranging between -21 percent and -2 percent. Low-resource countries grow much faster than resource-rich countries — a pattern that predates the crisis and has been amplified by recent events, highlighting fundamental differences in resilience. Low-resource countries have a more diverse economic structure, which helps them adapt and recover more quickly. Rises in commodity prices have also helped some countries, but these windfall gains are often volatile and cannot substitute for more sustainable sources of growth. In addition, differences in fiscal space also help to explain the differences between countries in the current pace of recovery.

“The widening gaps between countries have been accompanied by growing divergence within countries, as the pandemic has had a particularly hard impact on the most vulnerable in the region. With an estimated 30 million people living in extreme poverty, the crisis has exacerbated inequalities not only between income groups, but also between subnational geographic regions, which can increase the risk of social tension and political instability. In this context, rising food price inflation, combined with falling incomes, threatens previous gains in poverty reduction, health and food security.

“In addition, growing debt vulnerability remains a source of concern and many governments will need to undertake fiscal consolidation. Overall, public debt is expected to decline slightly in 2021 to 56.6% of GDP, but remains high from a pre-pandemic level of 50.4% of GDP. Half of low-income countries in sub-Saharan Africa are either over-indebted or at high risk. And more countries could find themselves under pressure in the future, as debt service payments represent an increasing share of public resources.

In this context, Mr. Selassie underlined a number of political priorities. “The difficult political environment that the authorities faced before the crisis has been made more demanding by the crisis. Policymakers face three key fiscal challenges: 1) coping with the pressing development spending needs of the region; 2) contain public debt; and finally, 3) mobilizing tax revenues in circumstances where additional measures are generally unpopular. Achieving these goals has never been easy and involves a difficult balancing act. For most countries, pressing political priorities include prioritization of spending, mobilization of revenue, increased credibility and an improved business climate.

“The recent SDR allocation has increased the region’s reserves, easing some of the burden on the authorities as they guide their countries’ recovery. And the reorientation of SDRs from countries with strong external positions to countries with weaker fundamentals could help strengthen the region’s resilience.

“On COVID-19, international cooperation on immunization is essential to deal with the threat of repeated waves. This would help prevent the divergent recovery paths between sub-Saharan Africa and the rest of the world from hardening and becoming permanent fault lines, which would jeopardize decades of hard-won social and economic progress.

“In the longer term, the vast potential of the region remains intact. But the threat of climate change – and the global energy transition process – suggests that sub-Saharan Africa may need to embrace a more innovative and greener growth model. This presents both challenges and opportunities, and it underscores the need for bold transformative reforms and continued external funding. Such steps may not be easy, but they are essential preconditions of the much-promised African century.

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