According to the International Monetary Fund, growth in Sub-Saharan Africa is expected to remain strong at about 5¾ percent in 2015 but the fall of oil prices and the ongoing ebola epidemic could reduce the growth rate.
In its annual regional economic outlook for Sub-Saharan Africa released in October, the IMF predicts that growth in sub-Saharan Africa will remain strong, at about 5¾ percent
in 2015. Accordingly, solid growth will continue in countries, driven by sustained infrastructure investment, buoyant services sectors, and strong agricultural production.
Growth should be pronounced in the low-income countries, where activity is
forecasted to accelerate to 6½–6¾ percent, with growth averaging more than 8 percent in Chad, Côte d’Ivoire, DRC and Mozambique. Substantial infrastructure efforts in the energy sector of Mozambique and Tanzania) in electricity capacity (Ethiopia, Rwanda and Uganda), in transportation (Ethiopia, Niger), and the resumption of donor support (Mali) should sustain high growth rates.
Nigeria, the largest economy, is projected to continue its expansion at a rate of about 7–7¼ percent, largely because the country has managed to diversify its economy from oil more than previously thought, with a much larger role played by the services sector which represents 60 percent of the economy. Recovering oil output will also help to boost the growth. In neighbouring Cameroon, public infrastructure projects will continue to drive growth.
In South Africa, a small recovery is expected by the IMF to take place in 2015, with growth rebounding to 2.3 percent after 1.4 percent in 2014, on the assumptions of improving labour relations and increasing exports. However infrastructure bottlenecks are only expected to disappear gradually from 2016 as new power plants come on stream. In Ghana, high interest
rates, private investment flight, and reduced real disposable income as the currency depreciation feeds into inflation will put the brakes on activity. But growth should accelerate in Senegal, supported by public investment, including in the energy sector.
This overall positive outlook is, nevertheless, obscured by the tragic situation in Guinea,
Liberia, and Sierra Leone, where the Ebola epidemic is inflicting a heavy human and economic toll. The IMF also warns that the Ebola outbreak could spread to other countries if it is more protracted.
Restrictions on the movement of goods and people have threatened the food chains from production to market access and commerce. The neighbouring countries have closed their borders. In Sierra Leone, where agriculture accounts for 57.0 percent of GDP, cocoa and coffee production, which account for 90.0 percent of agricultural exports, has stalled due to people abandoning their farms. In Liberia, production of rubber, the most important agricultural export for the country, has been seriously affected because of the reduced mobility of the workforce and the difficulty in getting the products to the ports due to the quarantine zones.
The limited supply of goods and services has boosted inflation in Liberia where prices of oil, rice and potatoes have doubled in 2014. Substantial resources meant for development work are being diverted to addressing public health implications of the outbreak, reports the UN Development Program (UNDP). Several foreign airlines have halted flights to the affected countries, trigging a crisis in the tourism sector. Some mining companies, have closed down their operations. According to World Bank estimates, the fall in GDP in 2015 could range from 2.3 percent in Guinea, 8.9 percent in Sierra Leone and 11.7 percent in Liberia.
The security situation continues to be difficult in Central African Republic, Eastern DRC and South Sudan, and remains precarious in Northern Mali, Northern Nigeria, and the coast of Kenya.
Diversify the economy
External risks may also impact growth. A slowdown in emerging markets like China might weaken demand for African commodity exports. If it continues, the dramatic fall of crude oil triggered by the economic slowdown in China and by the rise of the tight oil production in United States, from over US $ 120 a barrel in 2011 to less than $ 60 in December 2014, is likely to affect the optimistic IMF growth forecast for Sub-Saharan Africa, at least for the oil producing countries of the Gulf of Guinea. Regardless of the price knock-down effect, the second producer of the region, Angola should also be affected by a decline of its output as production in some mature fields falls, causing GDP growth to decelerate to below 4 percent in 2014, despite a robust rebound in agriculture, analyses the IMF.
Alongside with Angola, Chad, Congo-Brazzaville, Equatorial Guinea, Gabon and Nigeria where oil exports account for between 20 and 90 percent of GDP will inevitably be affected. In Nigeria, falling crude oil prices are causing headaches to the economic planners which had calculated the 2015 national budget on the basis of a 73 per barrel. The positive aspect is that this trend may stimulate the use of oil revenues to diversify further the economy especially agriculture and solid minerals. In other countries a further slowdown in other commodity prices, especially for coal, copper, gold, iron ore, and platinum would affect a wide range of countries in the region.
In 2015, Economic Partnership Agreements (EPA) will also start to be implemented, between the European Union and three regional blocks: the Economic Community of West African States (ECOWAS), the Southern African Development Community (SADC) and the East African Community (EAC).
The impact of these EPAs is difficult to predict. Many of these countries are LDCs which rely heavily on customs duties for budgetary purposes and will be affected by significant negative fiscal impacts. An estimated positive impact, but difficult to calibrate, is to what extent these EPAs will strengthen regional integration in Africa. But West-African peasant organisations are sceptical and will continue to mobilize against the implementation of the ECOWAS EPA. Malian peasants organizations in particular claim that the EPA will destroy West Africa’s rural economy and prompt a massive migration from the countryside towards the cities and that EPAs are threatening food security, by allowing the export of subsidized EU farm products to Africa. (F.M.)