- The potential economic growth across Sub-Saharan Africa rose to 3.3 percent in the past five years.
- With targeted and intelligent investments and various policy changes, positive growth can be sustained in Sub-Saharan Africa.
- Despite the many changes needed to secure growth, the top 10 fastest growing global economies in 2018, are still projected to be mostly African.
Earlier this year the World Bank released a report about economic growth across the African continent. The report details the current and projected economic growth in Sub-Saharan Africa, and shows that although economic growth recuperated in the region’s largest economies like Angola, Nigeria, and South Africa, it still remains low. In fact, the largest economic growth was not seen in these African giants, but rather non-resource-intensive countries, whose growth had been stabilized by infrastructure investment.
It’s important to understand that Sub-Saharan Africa is defined as the 48 countries that the World Bank recognizes as being contained in the region. The term, Sub-Saharan Africa has, unfortunately, become an overgeneralizing catch-all phrase for multiple, entirely different African countries and economies.
The potential growth across Sub-Saharan Africa rose to 3.3 percent in the past five years alone. This growth was greater than the economic growth seen in the region before the global financial crisis and was due to several contributing factors which were mainly country specific. For instance, in the Giant of Africa, Nigeria, the lessening of militant attacks on oil pipelines and rehabilitation of the oil sector brought economic growth. According to the data produced by the World Bank, continued economic growth in the region can be enabled by key policy changes.
How to Keep the Growth Coming
Keeping in mind that public investment rose significantly in the 2000s, reaching an all-time high of almost 6 percent of the GDP in 2014 (5.8 percent), an increase in public investment, particularly infrastructure investments would be a significant boost to the region. The boost would be short term but it could have various positive after effects like an increased private investment. The report furthermore, offers possible suggestions to achieve a greater public investment, including a new tax scheme to relocate resources across the region.
More Human Capital Accumulation
Human capital commonly refers to intangible assets that individuals possess which can be mobilized to generate economic value. For instance, education is considered an investment towards human capital because, with it, better paid, skilled work is possible. According to the World Bank, robust support of education and healthcare could potentially support better financial growth through the potential for greater labor force numbers.
In half of the countries in Sub-Saharan Africa, less than half of the youth population has completed lower secondary school and less than 10 percent continue to higher education. Educational outcomes vary conspicuously along gender and income lines.
Changes could be made to create more favorable educational outcomes, and while some are country specific, the overall recommendations are more effective teachers and active dedication to closing the gender and poverty gaps in educational outcomes.
The Bigger the Better
Increasing the labor supply is another factor that could secure better economic growth for the region. In 2015 the labor force participation rates for women were at 65 percent, overshadowed by their male counterparts coming in at 76 percent. These statistics in addition to numerous studies support one fact: Gender equality, particularly in the workforce is integral to increasing the labor supply.
The Bigger Picture
All of these considerations taken together could mean an increase of 0.7 percent by 2027 with additional gains from labor market policy changes that encourage women to join the workforce. Additional suggestions include a move away from strong dependence on the resource sector, a diversification of investments and stronger property rights to effectively encourage greater investment. Despite the long journey ahead of the great continent, six out of ten of the fastest growing economies in 2018, according to the World Bank are African.
The top 10
Some of the top performing countries won’t come as a surprise, like Ghana and Ethiopia, however, many on the list are non-commodity intensive economies and may have flown under the radar before.
The fastest GDP growth, from greatest to least includes the following 10 countries: Ghana (8.3%), Ethiopia (8.2%), India (7.3%), Côte d’Ivoire (7.2%), Djibouti (7%), Cambodia, Bhutan and Senegal tie each other for 6.9% and Tanzania and Philippines round up the list at 6.8% and 6.7% respectively.