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African growth picks up but debt a concern, says IMF
[LIBREVILLE, Gabon] Growth across sub-Saharan African will rise to 3.4 per cent this year from 2.8 per cent in 2017, but in the continent's poorest countries, debt is a major burden, the IMF said on Tuesday.
Top performers are Benin, Burkina Faso, Ethiopia, Ghana, Ivory Coast, Rwanda, Senegal and Tanzania, the International Monetary Fund said.
Their economies expanded by 6 per cent or more in 2017 and will maintain strong growth over the medium term, it said.
The star is Ethiopia, which notched up 10.9 per cent growth in gross domestic product (GDP) in 2017, and is expected to enjoy 8.5 per cent this year.
At the other end of the scale lie 12 countries, home to about a third of sub-Saharan Africa's population.
Last year, per-capita incomes declined in these economies - a trend that is likely to happen in most of them in 2018, it said.
Its Regional Economic Outlook for 2018 praised high-performing countries that have tackled entrenched macro-economic problems and encouraged investment.
These economies have also benefited from favourable global winds - stronger world growth and higher commodities prices.
As a result, capital inflows in these economies have risen, and some countries have been able to build up their reserves.
For the laggards, though, much of the pain lies from the failure to address spending, remove market-distorting policies and mobilise capital.
"Macroeconomic vulnerabilities are rising in many countries as the required fiscal adjustment keeps getting delayed," Abebe Aemro Selassie, director of the IMF's African Department, said in a press release.
"Fifteen of the region's 35 low-income countries are now rated to be in debt distress or at high risk of debt distress," he warned.
Uptick in oil prices
Debt-burdened countries have had to divert resources "from much-needed spending in areas such as health, education, and infrastructure," he said.
Based on current policies, average medium-term growth for Africa is expected to level off below four percent, said Mr Selassie.
"(This is) far short of the levels envisaged five years ago, and below what is needed for countries to achieve their Sustainable Development Goals," he said, referring to a group of UN objectives on a range of social and economic development areas.
The report also made these points:
- Terrorism is having a major cost for the Sahel countries, and internal conflicts are a drag for Burundi, the Democratic Republic of Congo and South Sudan. Violence there also leads to a costly "spillover" of displaced people and refugees to neighbouring countries.
- Growth is being hampered by Nigeria and South Africa, the continent's two biggest economies. "(They) have been stuck in low gear and are weighing on the region's overall growth," says the IMF.
- South African growth was 1.3 per cent in 2017, reflecting a rebound in farming and minerals, and the tally for 2018 is projected at 1.8 per cent. Nigeria experienced 0.8 per cent GDP growth in 2017, which should rise to 2.1 per cent this year.
- Oil-exporting countries in Africa have enjoyed an uptick in commodity prices after a prolonged slump. But they should not waste time - they need to strengthen their sector and boost the efficiency of public spending.
- Capital inflows in some countries have seen a boom in stock prices: between April 2017 and January 2018, indices rose by abut 10 per cent in South Africa, 40 per cent in Kenya, 60 per cent in Ghana and 70 per cent in Nigeria.