Sub-Saharan Africa faces a delicate economic situation, as highlighted in the recent World Bank report published as part of the “Fatshimetrie” initiative. According to this report, there is an increase in private consumption and a decline in inflation which supports an economic recovery in the region.
However, this recovery remains fragile due to uncertain global economic conditions, increasing debt service obligations, frequent natural disasters and escalating conflict and violence.
Although inflation is falling in most economies, from a median of 7.1% to 5.1% in 2024, it remains high compared to pre-COVID-19 pandemic levels. Likewise, although public debt growth is slowing, more than half of African governments are struggling with external liquidity problems and face unsustainable debts.
Overall, the report highlights that despite the projected increase in growth, the pace of economic expansion in the region remains lower than the growth rate of the previous decade (2000-2014). This is insufficient to have a significant impact on poverty reduction.
Moreover, due to multiple factors, including structural inequalities, economic growth reduces poverty in sub-Saharan Africa less than in other regions.
The report highlights that transformative policies are needed to tackle deep-rooted inequalities to support long-term growth and effectively reduce poverty. Andrew Dabalen, chief economist for Africa at the World Bank, highlighted that per capita GDP growth of one percent is associated with a reduction in the extreme poverty rate of around one percent in the region, compared to 2 .5% on average in the rest of the world.
It is clear that additional policy actions are needed to foster stronger and more equitable growth in sub-Saharan Africa. External resources to meet the gross financing needs of African governments are declining and those available are more expensive than before the pandemic. Inequalities persist in access to basic services such as education or health care, despite recent improvements, as do disparities in access to markets and income-generating activities, regardless of individuals’ skills. .
Ultimately, the report calls for a range of policy actions to promote stronger and more equitable growth in sub-Saharan Africa. Emphasis must be placed on implementing policies that expand the productive capacity of the private sector to create more and better jobs for society as a whole. Addressing deep and persistent inequalities is essential to progress towards a more inclusive and prosperous future for all people in the region.
Ultimately, it is clear that significant transformations are needed to secure a viable economic future in sub-Saharan Africa. Policies aimed at boosting growth and reducing inequality must be at the heart of efforts to promote sustainable and equitable development in the region.