Africa faces urgent need for stability, growth, and job creation to avert “Lost Decade”
By Zion Rufus
Sub-Saharan Africa is grappling with a bleak economic outlook, marked by fragile growth recovery and mounting instability.
The latest World Bank Africa’s Pulse report highlights the challenges facing the region, including sluggish growth in major economies, global economic uncertainty, and rising instability.
The report forecasts economic growth in Sub-Saharan Africa to slow down to 2.5% in 2023, down from 3.6% in 2022. South Africa’s GDP is expected to grow by a mere 0.5% in 2023, hindered by energy and transportation bottlenecks.
Nigeria and Angola are projected to grow at 2.9% and 1.3%, respectively, primarily due to lower international prices and currency pressures impacting oil and non-oil activities.
Moreover, increased conflict and violence in the region are taking a toll on economic activity, with the potential for further damage from climatic shocks. In Sudan, economic activity is set to contract by a staggering 12% due to internal conflict, causing production disruptions, human capital loss, and a weakened state.
In terms of per capita growth, Sub-Saharan Africa has seen no improvement since 2015 and may face a per capita contraction rate of 0.1% annually from 2015 to 2025, potentially marking a “lost decade” in the aftermath of the 2014-15 commodity price crash.
Andrew Dabalen, World Bank Chief Economist for Africa, emphasized the impact of this slowdown on vulnerable populations: “The region’s poorest and most vulnerable people continue to bear the economic brunt of this slowdown, as weak growth translates into slow poverty reduction and poor job growth.”
With millions of young Africans entering the labor market each year, policymakers face an urgent need to transform their economies, fostering better job opportunities.
Despite the challenging scenario, there are some positive aspects, such as an expected decline in inflation from 9.3% in 2022 to 7.3% in 2023, and improved fiscal balances in countries pursuing prudent economic policies.
In 2023, the Eastern African community (EAC) is projected to grow by 4.9%, while the West African Economic and Monetary Union (WAEMU) is set to grow by 5.1%.
However, the region still grapples with widespread debt distress, with 21 countries at high risk of external debt distress or already in debt distress as of June 2023.
Current growth rates are insufficient to create quality jobs for the growing working-age population. The current pattern generates only 3 million formal jobs annually, leaving many young people underemployed and engaged in unstable work.
To harness Africa’s demographic potential, creating job opportunities for the youth is imperative.
The report suggests a range of policies to address these challenges, including cost-effective private sector reforms, investment in education to bolster semi-skilled occupations, and promoting girls’ education and women’s access to jobs.
Additionally, encouraging labor-intensive manufacturing and addressing the region’s capital limitations are essential steps toward inclusive growth and job creation.
As Africa faces this pivotal juncture, implementing these policies can be instrumental in achieving stability, fostering growth, and creating much-needed employment opportunities.
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