The Nigerian economy has made progress as the impact of COVID-19 wanes and the outlook of the oil market appears brighter. Thus, the World Bank Group has reviewed its 2021 Gross Domestic Product (GDP) projection for Nigeria, raising it to 2.4 per cent, adjusting the 1. 8 per cent it earlier projected.
In the report it captioned: “Africa’s Pulse: Climate Change Adaptation and Economic Transformation in Sub-Saharan Africa,” the multilateral institution commended the growth recorded by Sub-Saharan Africa. It said the region was set to emerge from the 2020 recession sparked by the COVID-19 pandemic with growth expected to expand by 3.3 per cent in 2021.
Though the World Bank acknowledged in the twice-yearly economic update, a brighter look for Sub-Saharan Africa, it also noted that current speeds of economic recovery in the region was varied, with the three largest economies–Angola, Nigeria, and South Africa, expected to grow by 0.4 per cent, 2.4 per cent and 4.6 percent respectively.
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Excluding South Africa and Nigeria, the rest of Sub-Saharan Africa was rebounding faster at a growth rate of 3.6 per cent in 2021, with non-resource-rich countries like Côte d’Ivoire and Kenya expected to recover strongly at 6.2 and 5.0 per cent, respectively, the report said.
The Washington-based financial institution also noted that due to prudent monetary and fiscal policies, the region’s fiscal deficit, at 5.4 percent of GDP in 2021, was expected to narrow to 4.5 per cent of GDP in 2022 and 3 percent of GDP in 2023
According to its report, the rebound in the region was being fueled by elevated commodity prices, a relaxation of stringent pandemic measures, and recovery in global trade, but remains vulnerable given the low rates of vaccination on the continent, protracted economic damage, and a slow pace of recovery.
It explained that the growth for 2022 and 2023, would also remain just below four per cent, continuing to lag the recovery in advanced economies and emerging markets, and reflecting subdued investment in Sub-Saharan Africa.
The Chief Economist for Africa at the World Bank, Albert Zeufack said the success of vaccine deployment will accelerate growth in the region.
“Fair and broad access to effective and safe COVID 19 vaccines is key to saving lives and strengthening Africa’s economic recovery,” he said. “Faster vaccine deployment would accelerate the region’s growth to 5.1 per cent in 2022 and 5.4 per cent in 2023—as more containment measures are lifted, boosting consumption and investment.”
The report pointed to developments that it dubbed “a positive trend,” which was that African countries have seized the opportunity of the crisis to foster structural and macroeconomic reforms, adding that several countries had embarked on difficult but necessary structural reforms, including the unification of exchange rates in Sudan, fuel subsidy reform in Nigeria, and the opening of the telecommunications sector to the private sector in Ethiopia.
“However fiscal discipline, combined with limited fiscal space, has prevented African countries from injecting the level of resources required to launch a vigorous policy response to COVID-19.
“Apart from mounting fiscal pressures and rising debt levels as they implement measures for a sustainable and inclusive economic recovery, Sub-Saharan African countries are also faced with worsening impacts of climate change,” the World Bank report said.
While the progress made so far was commended, the World Bank advised the countries to build on reform measures to tackle carbon emission. It said they should also harness this opportunity to make sustainable, resilient transitions toward low-carbon economies that can provide long-term benefits in the form of reduced environmental hazards as well as new economic development openings.
The report highlighted Africa’s unique context of low baseline development, pre-existing climate vulnerabilities, limited energy access, and high reliance on climate-sensitive sectors— as posing challenges but also providing opportunities to transform the economy and create jobs. It pointed out that private firms and governments in Africa were providing training for jobs in solar energy (Togo and South Africa).
Investments in climate-smart infrastructure could help cities create jobs, adding that de-carbonization was an opportunity to foster manufacturing activity in the region, including the production of components of the Internet of Things, value-addition to minerals that will power the green economy, and insertion into regional value chains, the report say.
With the increase in the number of solar-energy startups, supplying rural Africa with affordable electricity, clean energy economy is expected to increase in Sub-Saharan Africa by 2025.