IMF highlights 3 areas of concern for policy makers in sub-saharan Africa
The International Monetary Fund (IMF) on Thursday highlighted three areas which need concerted action by policymakers in Sub-saharan African countries and the international community.
The first of these is inequality. The IMF said the pandemic has thrown some 30 million people back into extreme poverty and has worsened inequality not only across income groups but also across within subnational geographic regions.
Abebe Aemro Selassie, Director, African Department, IMF, said this at a press briefing on regional economic outlook for Sub-Saharan Africa on Thursday.
He said the condition of the region conditions are set to be exacerbated further in many cases by the pronounced rise in food (and fuel) prices.
Lower incomes and rising food prices are a recipe for further erosion of past gains in poverty reduction, health outcomes, and improved food security. Policies need to be squarely focused on addressing this challenge. Left unaddressed it will be a further source of misery to people and indeed rising insecurity, he said.
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The second area of concern policy makers in sub-Saharan Africa the IMF pointed out was the need to navigate an increasingly difficult and complex policy environment.
Against an environment or weaker-than-expected growth, policymakers need to navigate among three formidable pressures, including pressing spending needs to address the many social, human capital, and infrastructure needs; limited borrowing capacity given already high public debt levels in most cases; and the time consuming and politically difficult nature of mobilizing tax revenues.
The third area of concern for the policy makers the IMF noted was divergent health, poverty, and economic outcomes “we are seeing point to the critical importance of international solidarity and support”.
On COVID-19, the Washington based Fund said the threat of new variants highlights the need for a global response, with a particular focus on the unvaccinated people of Africa.
The IMF has proposed a plan to vaccinate at least 40 percent of the total population of all countries by the end of 2021 and 70 percent by the first half of 2022.
For sub-Saharan Africa, these goals are ambitious and will require a marked change in strategy by both advanced economies and sub‑Saharan African countries.
IMF estimates that sub-Saharan Africa’s economy will grow by 3.7 percent in 2021 and 3.8 in 2022. The recovery is supported by favorable external conditions on trade and commodity prices.
It has also benefited from improved harvests and increased agricultural production in a number of countries.
The recovery follows the sharp contraction in 2020 and is of course much welcome. But it still represents the slowest relative to other regions.
Giving an example, the Fund said while advanced economies are projected to return to their pre-crisis path by 2023, the pandemic looks to have durably lowered the path of real GDP in sub-Saharan Africa, suggesting a loss of real per capita output of close to 5½ percent relative to the pre-crisis path.
This divergence reflects sub-Saharan Africa’s two factors: the slow vaccine rollout and stark differences in policy space.
Sub-Saharan Africa’s vast potential remains undiminished. Over the next three decades, the global population is set to grow by about 2 billion people, with half of that increase coming from sub-Saharan Africa.
“This presents a huge opportunity: a growing pool of human talent and ingenuity that will have a telling effect on the economic, social, and political trajectory of our planet. We need to pay more heed to this phenomenal opportunity,” Selassie said.
