Nigeria, other SSA economies grow by 4.5%, poverty remains high
THE irony of growth amid poverty may have repeated itself, as the Sub-Saharan African economy recorded a 4.5 per cent growth, with Nigeria leading the pack, amid high level poverty.
The development, according to World Bank report, indicated moderately resurged economies of the region, compared with 4.2 per cent in 2013.
However, in South Africa, growth slowed markedly, constrained by strikes in the mining sector, electricity shortages, and low investor confidence, according to the report tagged “Global Economic Prospects.”
Angola was also set back by a decline in oil production, while Ebola outbreak severely disrupted economic activities in Guinea, Liberia, and Sierra Leone.
For Nigeria, the continent’s largest economy, activity expanded at a robust pace, supported by a buoyant non-oil sector, though suffered macroeconomic challenges towards the end of 2014 as a result of crude oil price volatility.
Growth was also strong in many of the region’s low-income countries, with the average growth for the rest of the region put at 5.6 per cent, excluding South Africa, while extreme poverty remained high across the region.
Investment in public infrastructure, increased agriculture production, and buoyant services were assessed as thkey drivers of growth in the region.
Foreign Direct Investments flows- an important source of financing of fixed capital formation in the region, declined in 2014, reflecting slower growth in emerging markets and soft commodity prices.
However, several frontier market countries including Cote d’Ivoire, Kenya and Senegal, were able to tap international bond markets to finance infrastructure projects.
The fiscal deficit for the region narrowed as several countries took measures in 2014 to control expenditures, while at the same time, however, the fiscal position deteriorated in many countries, with some, due to increases in the wage bill, like Kenya and Mozambique.
In other countries like Mali, Niger, and Uganda, it was due to higher spending associated with front-loading and scaling up of public investment.
In Nigeria, Angola and elsewhere, the higher deficits reflected declining revenues, notably among oil-exporting countries because of declining production and lower oil prices.
“The region’s debt ratio remained moderate, thanks to robust growth and concessional interest rates. However, in a few countries, debt increased significantly in 2014, especially in Ghana, Niger, Mozambique and Senegal,” the report noted.
Falling prices for oil, metals, and agricultural commodities weighed on the region’s exports, but in contrast, due to infrastructure projects, import demand remained strong, causing several frontier market countries, as well as South Africa, to have substantial twin fiscal and current account deficits.
Inflation edged up in the first half of 2014, due in part to higher food prices, but remained low in most countries.
As a reflection of concerns about low oil prices, the sovereign spreads for oil exporters rose strongly, with Nigeria’s naira weakened sharply against the United States dollar, prompting the central bank to raise interest rates and subsequent devaluation of the currency.
Meanwhile, regional Gross Domestic Product (GDP) growth is projected to remain broadly unchanged at 4.6 per cent in 2015, rising gradually to 5.1 per cent in 2017, supported by sustained infrastructure investment, increased agricultural production, and expanding service sectors.