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Sub-Saharan Africa progresses, but not enough, despite potential, IMF analysis

“The 2019 growth is estimated at 3.2% for sub-Saharan Africa and is expected to increase to 3.6% in 2020,” says the International Monetary Fund. But there remains “a lot of things to do, especially to achieve the goals of sustainable development.”

Sub-Saharan Africa has come a long way in 30 years but remains “a lot of things to do” for it to emerge, says Papa N'Diaye, of the International Monetary Fund. Which presented on 30 October 2019 in Abidjan its regional economic prospects for the continent.

“There has been a lot of progress: the poverty rate has dropped dramatically in sub-Saharan Africa, starting from 60% in the 1990s. (to arrive) at 40% today. It is (again) very high but it's a progress “says Papa N'Diaye, Africa Division Chief at the IMF, who oversaw the report entitled Dealing with uncertainty. “The infant mortality rate has dropped, the living conditions are better than 20 years ago”, he believes. He also cites the modernization of the continent and the transformation of cities like Dakar or Abidjan.

However, it remains “a lot of things to do, especially to achieve the goals of sustainable development”.

The 2019 growth is estimated at 3.2% for sub-Saharan Africa and is expected to increase to 3.6% in 2020 “, according to the IMF. But there is a “high heterogeneity between oil-exporting or mineral-rich countries”, skating, and countries with more diversified exports. Which reach growth rates of about 6% or even 7% or 8%.

The economist nuances, however, the observation: “In GDP per capita, it is much less”because of the high population growth (2 to 2.5% per year).

12 Sub-Saharan African countries are expected to have negative per capita growth in 2019. And the continent's two economic giants, Nigeria and South Africa, are expected to stagnate.

We must be able to generate growth higher than the increase in the population, says the IMF. “This is one of the main challenges”, notes Papa N'Diaye. By 2030, 20 million jobs need to be created each year for new entrants into the labor market, double what was done in 2017-2019.

“I will not say it's impossible, but” it needs “the collaboration of several actors, not only the public but also the private sector, the international as well as the donors and the donors”he says. It is necessary “In the end, governments are working to make growth more inclusive”that is to say, better shared, says the manager.

Another concern for the continent is jihadism in the Sahel zone, which, in addition to the loss of life, has “increase military spending” countries that already have few resources. This represents “4% of GDP, 20% of tax revenue, money is diverted” towards security expenditures rather than for social, educational or health purposes.

There too, “it's a problem that will require the collaboration of several actors (…). We need international collaboration “, considers Mr N'Diaye.

For the economist, the large single African market, the Continental Free Trade Area (Zlec), officially launched in July 2019 in Niamey, will “create opportunities” and improve competition. Even though the task at hand is immense to reduce customs barriers and non-tariff barriers (such as poor road conditions) that hinder trade.

The report highlights that competition is less important in sub-Saharan Africa than in the rest of the world. This situation would lead to both lower business competitiveness and higher prices. “The price of staples or individual consumer basket is 20% higher in Africa than in other developing countries”, according to the document.

Corruption also remains a concern. “The (Bad) governance is expensive. To growth, to the state, to the credibility of the state. It reduces the confidence of citizens. It gangrene the business climate “adds the IMF representative, according to which growth points could be earned by reducing corruption.

Dad N'Diaye however, is optimistic: “Africa is facing huge challenges, it is a continent with tremendous potential, it is there, palpable, achievable!”. However, the condition for success, according to the Fund, is that the right reforms are carried out.

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