The World Bank Group has projected the Nigerian economy to grow by 2.4 per cent in 2021, an increase from the earlier projection for the economy by the global financial institution.
The World Bank had in January this year projected the Nigerian economy to grow by 1.8 per cent in 2021, even though there was high uncertainty about the outlook.
The bank also disclosed that sub-Saharan Africa is set to emerge from the 2020 recession sparked by the COVID-19 pandemic with growth expected to expand by 3.3 per cent in 2021. This is one per cent higher than the April 2021 forecast according to the latest edition of Africa’s Pulse.
This rebound is currently fuelled by elevated commodity prices, a relaxation of stringent pandemic measures and recovery in global trade, but remains vulnerable given the low rates of vaccination on the continent, protracted economic damage and a slow pace of recovery.
According to analysis in the Pulse, the World Bank’s twice-yearly economic update for the region, growth for 2022 and 2023 will also remain just below 4 per cent, continuing to lag the recovery in advanced economies and emerging markets, and reflecting subdued investment in Sub-Saharan Africa.
“Fair and broad access to effective and safe COVID 19 vaccines is key to saving lives and strengthening Africa’s economic recovery. Faster vaccine deployment would accelerate the region’s growth to 5.1 per cent in 2022 and 5.4 per cent in 2023 – as more containment measures are lifted, boosting consumption and investment,” said Albert Zeufack, chief economist for Africa at the World Bank.
The analysis shows that current speeds of economic recovery in the region are varied, with the three largest economies: Angola, Nigeria, and South Africa, expected to grow by 0.4 per cent, 2.4 per cent, 4.6 per cent respectively.
Excluding South Africa and Nigeria, the rest of SSA is rebounding faster at a growth rate of 3.6 per cent in 2021, with non-resource-rich countries like Côte d’Ivoire and Kenya expected to recover strongly at 6.2 and 5.0 per cent, respectively.
A positive trend, according to the report authors, is that African countries have seized the opportunity of the crisis to foster structural and macroeconomic reforms. Several countries have embarked on difficult but necessary structural reforms, such as the unification of exchange rates in Sudan, fuel subsidy reform in Nigeria, and the opening of the telecommunications sector to the private sector in Ethiopia.
Additionally, thanks to prudent monetary and fiscal policies, the region’s fiscal deficit, at 5.4 per cent of GDP in 2021, is expected to narrow to 4.5 per cent of GDP in 2022 and 3 per cent of GDP in 2023. However fiscal discipline, combined with limited fiscal space, has prevented African countries from injecting the level of resources required to launch a vigorous policy response to COVID-19.
Apart from mounting fiscal pressures and rising debt levels as they implement measures for a sustainable and inclusive economic recovery, Sub-Saharan African countries are also faced with worsening impacts of climate change. The Pulse authors advise that just as the countries have used the crisis to introduce reform measures, they should also harness this opportunity to make sustainable, resilient transitions toward low-carbon economies that can provide long-term benefits in the form of reduced environmental hazards as well as new economic development openings.