Nigeria, Others Must Boost Private Sector To Avoid 50-year Income Delay, Says IMF

The International Monetary Fund (IMF) has warned that Nigeria and other countries in sub-Saharan Africa could take about 50 years to double per capita income if the region continues to grow at the current pace, urging governments to embrace private sector-driven reforms to unlock faster economic growth and job creation.

In its latest Regional Economic Outlook for Sub-Saharan Africa titled “Africa Needs a Growth Reset,” the IMF said growth across the region has remained too weak to deliver meaningful income convergence despite strong performances in a few countries.

According to the Fund, “at current growth rates, per capita income in sub-Saharan Africa would take roughly half a century to double.” The IMF noted that over the past three years, real GDP per capita in the region expanded by about 1.4 per cent annually, far below the 3.4 per cent average recorded by emerging markets and developing economies globally.

The report stated that previous growth episodes in many African countries were largely driven by commodity booms and inefficient public investment, adding that such gains faded quickly because they failed to stimulate sustained private investment and productivity growth.

“The point is not reform for reform’s sake. It is to shift the growth model from one led mainly by the state to one driven more by private investment, productivity, and jobs,” the IMF said.

It added that the public sector led growth model had become unsustainable as debt levels remain elevated, borrowing costs rise and foreign aid declines. “The public sector led growth model is now spent. With debt high, borrowing costly, and aid falling, the state can no longer be the main engine of growth,” the report stated.

The IMF identified governance, business regulation and market openness as the three major areas where sub Saharan Africa lags behind other developing regions, noting that fragile states and oil exporting countries face the widest gaps.

The Bretton Woods institution, however, pointed to countries such as Rwanda and Benin as examples of economies that have improved the ease of doing business through digital reforms and reduced bureaucracy.

It also called for reforms in state-owned enterprises, especially in the energy and transport sectors, warning that keeping tariffs below cost recovery levels weakens investment and results in unreliable services for businesses and households.

Highlighting the potential gains from reforms, the IMF said its analysis showed that closing just half the reform gap with frontier emerging markets could increase output by about 20 per cent within five to 10 years, provided macroeconomic stability is maintained.

“Governance reforms matter especially because their gains are lasting. A fairer competitive field, stronger tax compliance, and better state capacity can unlock investment and build confidence at the same time,” the fund stated.

The IMF further stressed that implementing reforms remains politically difficult because benefits often materialise slowly while vested interests resist change. “Political feasibility matters as much as technical design,” the report noted.

To make reforms successful, the Fund advised governments to prioritise macroeconomic stability, build broad political support, bundle complementary reforms, protect vulnerable groups through targeted cash transfers and strengthen institutional capacity.

It also urged African governments to take advantage of regional integration opportunities under the African Continental Free Trade Area by harmonising rules to improve market access. “For policymakers, the choice is increasingly clear: press ahead with well sequenced, inclusive reforms now or risk another decade of missed convergence,” the IMF warned.

The Fund added that with rising debt burdens, declining aid flows and worsening global economic headwinds, the opportunity for Africa to reset its growth model is narrowing rapidly.