WB revises down Africa’s growth to 2.8pc, cites uncertainties

Economy

WB revises down Africa’s growth to 2.8pc, cites uncertainties
Monday, April 8, 2019 21:06

By EDWIN OKOTH

Mombasa Port. FILE PHOTO | NMG 

The World Bank has revised down Africa’s growth rate, citing the continent’s fragility due to political and regulatory uncertainties.

Africa will grow at 2.8 per cent in 2019, according the global lender, down from the earlier projected three per cent.

The World Bank also downgraded to 2.3 per cent the growth for 2018, down from 2.5 per cent in 2017, in their latest bi-annual analysis of the state of African economies released Monday.

The continent’s economic growth is said to have been outpaced by population increase for the fourth consecutive year, pushing down 2019 growth projections below three per cent since 2015.

World Bank Chief Economist for Africa Albert Zeufack said the continent’s future growth would now largely rely on its investment and improvement in the digital economy.

“The digital transformation can increase growth by nearly two percentage points per year and reduce poverty by nearly one percentage point per year in sub-Saharan Africa alone. This is a game-changer for Africa. There is need for investment in the education system to embrace digital skills, improve regulations and encourage digital entrepreneurship to create jobs,” Mr Zeufack said.

Kenya was ranked favourably on the path to digital framework, with the potential to boost consumer participation in the economy.

Together with Ghana, Nigeria, Rwanda, South Africa, Tanzania, Uganda, and Zambia, the country was found to have homegrown digital, multi-side platforms (that is, matching providers and consumers of goods and/or services) in transportation, online shopping, asset sharing, and professional services

There was, however, more usage for foreign platforms compared to the local ones.

“Uber is the most widely used application in Africa with services in the Arab Republic of Egypt, Ghana, Kenya, Morocco, Nigeria, and South Africa, among others. Foreign platforms are more likely to operate regionally than at the country level,” the World Bank wrote in its latest Africa’s Pulse report.

The digital platforms, according to the report, allow SMEs to supply goods and services by alleviating location constraints and cutting once-prohibitive marketing costs. The increased market efficiency arising from the digital revolution is expected to result in jobs for the rising youth population in Africa.

Countries like Nigeria and Angola remain fragile for being reliant on oil while South Africa’s policy uncertainty pushed it into recession which it emerged from in the third quarter of 2018. This fragility, according the World Bank, is costing sub-Saharan Africa over half a percentage point of growth per year. This adds up to 2.6 percentage points over five years.

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