Sub-Saharan Africa: One Planet, Two Worlds, Three Stories

IMF News, October 21, 2021

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Sub-Saharan Africa is projected to grow by 3.7 percent in 2021 and 3.8 percent in 2022.
The recovery at 3.7 percent in 2021 will be the slowest in the world, while advanced markets grow by more than 5 percent and other emerging markets and developing countries grow by more than 6 percent.
The rebound in 2021 primarily reflects a favorable external environment, including a sharp improvement in trade and commodity prices, and improved harvests lifting agricultural production.
The outlook remains highly uncertain and depends on progress in the fight against COVID-19 and is vulnerable to disruptions in global activity and financial markets.

Real per capita income is expected to remain close to 5½ percent below precrisis trends.
Permanent real output losses are projected to range between -21 percent and -2 percent.
Non-resource-intensive countries are growing much faster than resource-rich countries; this pattern predates the crisis and has been amplified by recent events.
The crisis has widened gaps within countries, with about 30 million people thrown into extreme poverty.
Rising food price inflation, combined with reduced incomes, threatens past gains in poverty reduction, health, and food security and may exacerbate social and political instability.

Public debt is predicted to decline slightly in 2021 to 56.6 percent of GDP but remains high compared to a pre-pandemic level of 50.4 percent of GDP.
Half of sub-Saharan Africa’s low-income countries are either in or at high risk of debt distress.
Debt-service payments are accounting for an increasing share of government resources, increasing pressure on countries’ fiscal positions.

Policymakers face three key fiscal challenges:
- to tackle the region’s pressing development spending needs;
- to contain public debt; and
- to mobilize tax revenues in circumstances where additional measures are generally unpopular.
For most countries, urgent policy priorities include:
- spending prioritization;
- revenue mobilization;
- enhanced credibility; and
- an improved business climate.
The recent SDR allocation has boosted the region’s reserves and easing some burdens; rechanneling SDRs from countries with strong external positions to countries with weaker fundamentals could help bolster the region’s resilience.
On COVID-19, international cooperation on vaccination is critical to prevent repeated waves and avoid hardening divergent recovery paths between sub-Saharan Africa and the rest of the world.

The region’s vast potential remains undiminished, but the threat of climate change and the global energy transition imply a need for a more innovative and greener growth model.
Achieving this transition will require bold transformative reforms and continued external funding; such measures are key prerequisites for realizing long-promised development goals.

Press Release No. 21/306 — October 21, 2021. International Monetary Fund