The International Monetary Fund (IMF) cut sub-Saharan Africa economic growth forecast to 3 percent in 2016 — down from last year’s 3.4 percent –, the lowest the region has posted in more than two decades.
In its latest African Economic Outlook, the IMF said three factors including the slump in global commodity prices, an Ebola outbreak in West Africa and a severe drought that has affect countries in the Southern and Eastern part of the continent, were responsible for the fall in economic fortunes.
Major oil exporters such as Nigeria and Angola have been hardest hit by the global price slump, while South Africa and Ethiopia have faced one of the worst droughts in decades.
The fund said African governments need to implement urgent and substantial reform as prolonged domestic downturns and other weak external factors subdue growth.
“With these large shocks [most governments] are facing, we’re saying to them a policy reset is urgent, and the longer you take the more difficult the alignment will be and the more painful it might be,” Antoinette Sayeh, the IMF’s Africa director, told the Financial Times.
“This is particularly urgent in commodity exporters and some market access countries, as the policy response to date has generally been insufficient,” he added.
The IMF said it is still optimistic about sub-Saharan Africa’s longer term prospects but stressed that urgent and substantial government reforms are needed to realize its potential.
The last time sub-Saharan Africa growth was lower than 3 percent was in 1999.
Growth is seen recovering to four percent next year, helped by a slight improvement in commodity prices.
The regions two largest economies, Nigeria and South Africa, are expected to growth by 2.3 percent and 0.6 percent respectively.
If the two are not included in calculating the region’s growth in 2016 rises to 4.4 percent, down from 4.7 percent last year, and rises to 5.4 percent next year.
Côte d’Ivoire, Kenya and Senegal would see growth of more than five percent, mostly “supported by ongoing infrastructure investment efforts and strong private consumption,” IMF said.
“Many countries in the region continue to register robust growth. In particular, most oil importers are generally faring better with growth in excess of 5 percent in countries such as Côte d’Ivoire, Kenya, and Senegal, as well as in many low-income countries,” Sayeh said.