- The World Bank says Countries in Sub-Saharan Africa are showing strength in social policies on inclusion and structural reforms, but economic woes and wars are slowing progress.
- In terms of regional disparities, 2022 witnessed a widening gap between Western and Central Africa and Eastern and Southern Africa.
- These findings are contained in the World Bank’s Country Policy and Institutional Assessment (CPIA) latest report.
Economies in Africa are making significant steps in structural economic reforms as well as social policies on inclusion, but wars and persistent economic woes threaten to wipe out the gains.
Last year, a survey by the World Bank on poor countries shows that countries in Sub-Saharan Africa made considerable progress in institution both economic and social protection measures.
The World Bank’s Country Policy and Institutional Assessment (CPIA) is as an annual tool designed for countries eligible for financial support from the International Development Association (IDA), an arm of the World Bank dedicated to assisting the world’s most economically disadvantaged nations.
World Bank’s CPIA 2023 report assesses the quality of policies and institutions across all 39 IDA-eligible countries in SSA, focusing on developments for the 12-month period ended December 2022.
Countries receive ratings on a scale ranging from one, indicating low performance to six, indicating high performance, across 16 dimensions. These dimensions are grouped into four key areas: economic management, structural policies, social policies on inclusion and equity, and public sector management and institutions.
African countries show resilience
The key highlight of this year’s CPIA report is the resilience shown by SSA countries in the face of numerous obstacles. Africa has been grappling with supply chain difficulties caused by the Russia-Ukraine war, drought caused by adverse weather as well as conflicts due to political instability.
The average overall CPIA score for the region remained steady at 3.1. Notably, many countries demonstrated noteworthy enhancements in “policies for social inclusion” and “structural policies.”
However, these gains were tempered by a lack of progress in “economic management” and “public sector management and institutions.”
“At a time of high global interest rates and weak economic growth, it is encouraging to see progress in policy reform, especially around private-sector reforms and protecting vulnerable people from economic fluctuations,” Nicholas Woolley, economist with the World Bank’s Office of the Chief Economist for Africa said, expressing optimism for the continent in the midst of global challenges.
In terms of regional disparities, 2022 witnessed a widening gap between Western and Central Africa (AFW) and Eastern and Southern Africa (AFE).
AFW displayed incremental improvements, with scores edging up slightly from 3.2 to 3.3, while AFE’s score remained stagnant at 3.0. However, this divergence can primarily be attributed to the performance of fragile and conflict-affected states (FCS).
Notably, in 2022, the four lowest-scoring countries—South Sudan, Eritrea, Somalia, and Sudan—resided in AFE and were grappling with conflicts and fragility.
Africa’s social policies on inclusion
Excluding these four nations, the score disparity between the sub-regions becomes negligible. It’s worth highlighting that AFW, despite housing its own share of fragile and conflict-affected states, demonstrated relatively strong performance, particularly in economic management, possibly attributable to the beneficial influence of currency unions in West Africa.
Beyond just presenting scores, the CPIA report identifies notable policy trends and showcases best practices in specific domains, such as inflation management, currency stability, financing strategies, economic growth, social policies on inclusion, transparency, and accountability.
“The frequency, comprehensiveness, and rigor of the CPIA review can help drive country engagements and underpin an evidence-based dialogue around countries’ reform agenda,” the World Bank Chief Economist for Africa Andrew Dabalen said.
While Sub-Saharan Africa continues to confront an array of challenges, the resilience demonstrated through improved social policies on inclusion and structural reforms offers a ray of hope for the region’s future. These positive developments indicate a commitment to equitable growth and development, even in the face of adversity.
Slow economic growth amid social policies reforms
Sub-Saharan Africa, which is home to over 1.3 billion people, with half projected to be under 25 years old by 2050, is poised at a defining moment in its development journey.
This continent boasts vast human and natural resources that hold the potential to drive inclusive growth and eliminate poverty.
With the world’s largest free trade area and market, Africa is charting a new development trajectory by harnessing its abundant resources and youthful population.
In 2022, economic growth in SSA experienced a slowdown, dropping from 4.1 percent in 2021 to 3.6 percent. Unfortunately, economic activity in the region is projected to further decelerate, with a forecasted growth rate of 3.1 percent in 2023.
According to the World Bank, several factors contribute to this downward trend. These include persistent sluggishness of the global economy, and elevated inflation rates. The complexity of global and domestic financial conditions in the face of high debt levels is equally exacerbating the challenge.
The silver lining emerges as growth is anticipated to rebound in the coming years, with estimates of 3.7 percent in 2024 and 3.9 percent in 2025.
However, the conditions remain insufficient to drive a substantial reduction in extreme poverty and foster shared prosperity over the medium to long term.
Per capita income growth is also expected to remain modest, with a projected 1.2 percent increase in the next year and 1.4 percent in 2025, falling short of accelerating poverty reduction to pre-pandemic levels.
Deepening energy crisis
Economic growth in SSA is far from uniform, varying significantly across sub-regions and individual countries. Western and Central Africa, for instance, is expected to experience a decline in GDP growth to 3.4 percent in 2023, down from 3.7 percent in 2022.
Similarly, Eastern and Southern Africa are projected to see a dip to 3.0 percent growth in 2023, compared to 3.5 percent in the previous year. The sluggish performance of the region as a whole can be attributed to the challenges faced by some of the continent’s largest economies.
In South Africa, for instance, economic activity is set to weaken further in 2023 (0.5 percent) due to a deepening energy crisis.
Meanwhile, Nigeria’s growth recovery in 2023 (2.8 percent) remains fragile, with subdued oil production acting as a significant constraint.
Of the top 10 largest economies in SSA, representing over three-quarters of the region’s GDP, eight are experiencing growth rates below their long-term averages. This includes countries like Sudan, Nigeria, Angola, and Ethiopia.
While Sub-Saharan Africa navigates these economic challenges, the region’s leaders and policymakers are actively exploring strategies to unlock the full potential of its resources and youthful population.
The pursuit of inclusive growth and poverty eradication remains at the forefront of their agenda, marking a commitment to shaping a brighter future for the continent.