World Bank lowers sub-Saharan Africa’s 2024 growth prediction due to Sudan

The World Bank announced on Monday that it had reduced its prediction for sub-Saharan Africa’s economic growth this year from 3.4% to 3%, primarily because of the civil war-related economic devastation in Sudan.

According to the bank’s most recent regional economic outlook report, Africa’s Pulse, growth is anticipated to stay comfortably above 2.4% from the previous year due to increased private investment and consumption.

“This is still a recovery that is basically in slow gear,” World Bank head economist for Africa Andrew Dabalen announced during a press conference.

The research increased its prior expectation of 3.8% growth to 3.9% for the next year.

According to the paper, officials will be able to begin reducing high lending rates after inflation has subsided in many nations.

It further stated that armed conflict and natural disasters including droughts, floods, and cyclones continue to pose significant threats to the development projections.

The lender added that regional growth in 2024 would have been half a percentage point higher and consistent with its original April projection if not for the turmoil in Sudan, which ravaged economic activity, led to extensive displacement, and caused hunger.

According to the analysis, growth in South Africa, the most developed economy in the area, is predicted to rise from 0.7% last year to 1.1% this year and 1.6% in 2025.

According to the survey, Kenya, the wealthiest country in East Africa, is anticipated to increase by 5% this year, while Nigeria is predicted to rise by 3.3% this year and 3.6% in 2025.

Goods and Services

During the 2000–2014 commodity super cycle, the sub-Saharan Africa area grew at a strong annual average of 5.3%; but, when commodity prices plummeted, output began to stutter. The COVID outbreak hastened the slowdown.

“Cumulatively, if that were to continue for a long time, it would be catastrophic,” Dabalen said.

He claimed that a recovery in foreign direct investments that began in 2021 was still modest and that many economies in the region were deprived of both public and private investments.

“The region needs much, much larger levels of investments in order to be able to recover faster… and be able to reduce poverty,” he stated.

High debt servicing expenses in nations like Kenya, which was shattered by fatal protests against tax hikes in June and July, are another factor impeding growth throughout the region.

Dabalen stated, “There are staggering levels of interest payments,” and he attributed this to governments moving away from the low-cost loans provided by organizations such as the World Bank and toward borrowing from financial markets over the past ten years.

According to him, the total amount of external debt owed by economies has increased from $150 billion ten and a half years ago to roughly $500 billion, with China and bond market investors bearing the majority of the burden.

Following four years of default, Chad, Zambia, Ghana, and Ethiopia have restructured their debt under the Common Framework initiative of the G20. While the other countries have finished restructuring their debt, Ethiopia is still in the process of doing so.

“As long as these debt issues are not resolved, there is going to be a lot of ‘wait and see’ games going on, and that is not good for the countries, and certainly not good for the creditors as well,” he stated.