IMF Paints Bleak Picture Of Economies In Sub-Saharan Africa


HAVING persistently frittered away opportunities to attain growth and sustainable development, the new forecast by the International Monetary Fund that a third of the global economy will slip back into recession in 2023 is a disquieting portent for Sierra Leone’s economy.

Similarly, the World Bank has trimmed its forecast for many regions. In its latest Global Economic Prospects report, it pegs sub-Saharan Africa’s per capital income growth over 2023-24 at 1.2 per cent.

For an economy that requires a consistent double-digit growth to stave off disaster, this would worsen poverty for more than 7 million of the population.

IMF Managing Director, Kristalina Georgieva said even countries that are not in recession, it would feel like recession for hundreds of millions of people, said the IMF chief.

She bases her prognosis of a fresh global recession on Russia’s war in Ukraine, higher interest rates, a new surge in the spread of COVID-19 in China, and deceleration of the United States, European Union, and Chinese economies.

The World Bank report warned that another fresh wave of recession in 2023 would mean that for the first time in 80 years, two global recessions occurred within the same decade. “Small states are especially vulnerable to such shocks because of their reliance on external trade and financing, limited economic diversification, elevated debt, and susceptibility to natural disasters,” the report said. This applies to Sierra Leone.

In June 2022, the development lender had forecast the global economy at 3.0 per cent in 2023. It has reviewed this downward with a new estimate of 1.7 per cent. It is reckoned that this is the slowest projection outside the 2009 and 2020 recessions since 1993.

Sub-Saharan Afica`s economy is on the razor’s edge. Inflation rose for 10 straight months to 21.47 per cent in November, falling slightly to 21.34 per cent in December. The naira which is the currency of one of the biggest economy, Nigeria, exchanges at the parallel market at close to N800 for $1. The debt profile is projected to hit N77 trillion. Plainly, Nigeria like many countries in Africa is ill-prepared for a global recession, and lacks the economic buffers to alleviate its impact.

This is unlike the 2008-09 global economic meltdowns, which plunged many Western economies into recession. Then, Nigeria had a buoyant $64 billion foreign reserves, GDP of 6.29 per cent, a performing non-oil sector, and low external debt that helped it to escape a downturn. Sadly, these indicators have disappeared. Now, the macroeconomic indices have worsened in all countries in Africa in the beginning of 2023.

Electricity and the difficulty in accessing forex to pay for imported machinery and raw materials have stifled its growth. Member companies of the Manufacturing and producing sector spent huge resources on alternative energy sources between 2014 and 2021 due to poor supply.

Since 2015, many countries in the region have squandered the opportunity to tackle corruption, revitalize, and diversify the economy, and end insecurity. The thrust of the region`s economic policy is to borrow at pace. Consequently, debt servicing is gulping a high percentage of revenue in sub-Saharan Africa.

To reverse the dire projections, African governments should do things differently. Swiftly, they should work on economic and human security. Terrorism, banditry, kidnapping, and oil theft on a grand scale should be addressed holistically. This will allow farmers and commercial activities to thrive; and FDI to flow in again.


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