Sub-Saharan Africa incomes falling further behind rest of world, IMF says


FRIDAY APRIL 19 2024

Street vendors wait for customers at an open market in Awka, Anambra State, Nigeria

Incomes in Sub-Saharan Africa are falling further behind the rest of the world amid a "tepid" economic recovery, the International Monetary Fund (IMF) said on Friday, warning of risks from geopolitics, domestic instability and climate change.

The IMF earlier this week said the region's economy would grow 3.8 percent this year, up from 3.4 percent in 2023, as it begins to emerge from four years of shocks, from the Covid-19 pandemic to Russia's invasion of Ukraine and rising global interest rates.

"When accounting for population growth, the income gap with the rest of the world is widening," the fund said in its biannual Regional Economic Outlook report, launched during its Spring Meetings this week in Washington.

It noted that other developing countries saw real income per person more than triple since 2000, while they grew 75 percent in Sub-Saharan Africa and 35 percent in developed countries.

"Two-thirds of the countries are already experiencing acceleration in growth; diversified and fairly broad-based growth," said Abebe Selassie, director of the IMF's African Department, said in an interview with Reuters in Washington.

Many of the more diversified economies had already enjoyed some growth recovery since the pandemic, he added.

Inflation falling

Economic conditions have started to ease for many countries this year, with Ivory Coast, Benin and Kenya issuing international bonds and median inflation falling to 6 percent in February from almost 10 percent a year earlier, the IMF said.

But political instability is rising and denting investor confidence, it said, pointing to junta-led states Burkina Faso, Mali and Niger leaving the Economic Community of West African States (Ecowas) and 18 elections across the region this year.

Devastating droughts last year in the Horn of Africa and currently in Southern Africa, as well as cyclones and floods, have also increased the region's struggles.

Read: Zimbabwe declares drought a national disaster

South Africa is set to grow just 0.9 percent this year, a slight increase from 0.6 percent in 2023, amid ongoing rolling power cuts and problems with the country's railways and ports, the IMF said, adding that "electoral uncertainties" could derail ongoing energy sector reforms.

Africa's most industrialised economy holds an election on May 29, in which the ruling African National Congress (ANC) party could lose its majority for the first time since the end of apartheid in 1994.

West Africa's largest economy, Nigeria, is set to grow 3.3 percent this year, as it struggles with high inflation amid painful currency and subsidy reforms.

In its northern neighbour Niger, meanwhile, growth is predicted to rocket from 1.4 percent last year to 10.4 percent, as oil exports ramp up.