ABIDJAN (Ivory Coast) – Africa’s economy should return to growth in aggregate across the continent this year after a coronavirus recession, said the African Development Bank (AfDB), while warning that poverty and public debt will continue to rise.
The 2.1% contraction of the pan-African economy last year was the first recession in half a century, but should give way to an expansion of 3.4% this year, said AfDB on Friday in the 2021 edition of its African Economic Outlook report.
At 3.1%, the International Monetary Fund’s forecast is less optimistic than that of AfDB, whose mission is to fund investment in African countries and offer advice and technical assistance for development.
The bank predicted the strongest rebound for economies like Morocco, Tunisia and Mauritius that depend on tourism, at 6.2% – although their gross domestic product fell the furthest last year.
Meanwhile, oil and raw material exporters, like Algeria, Nigeria, Angola and South Africa, should enjoy growth around 3%, and the continent’s most diversified economies, such as Ethiopia and Ivory Coast, are expected to rise by 4.1%, having already suffered a softer 2020 blow.
The AfDB report also highlighted that 39 million more people could slip below the extreme poverty threshold of US$1.90 (RM7.80) per day this year, up from an estimated 30 million in 2020.
A total 465 million people in Africa could be affected by extreme poverty, or a third of the continent’s population, in a setback after two decades of steady reductions.
Meanwhile, “the pandemic shock and ensuing economic crisis have had direct implications for budgetary balances and debt burdens”, warned AfDB.
Deficits roughly doubled last year to around 8.4% of GDP, while the average debt-to-GDP ratio on the continent is expected to surge by between 10 and 15 percentage points, to around 70%.
By last December, 14 of 38 countries analysed for debt sustainability were judged at “high risk of debt distress”, with 16 seen as “moderate risk” and just two as “low risk”.
“Serious debt challenges might be looming, and disorderly defaults and lengthy resolutions could become a major obstacle to Africa’s progress towards prosperity,” said AfDB president Akinwumi Adesina in the report.
“We need to address Africa’s debt and development finance challenges, in partnership with the international community” and private creditors, he said.
He also urged leaders to enact “bold governance reforms to eliminate all forms of leakages in public resources, improve domestic resource mobilisation, and enhance transparency”. – AFP, March 14, 2021
