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Sub Saharan Africa From Regional economic outlook for 2021

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COVID-19 has brought unprecedented economic losses to sub Saharan Africa, and the region is still struggling to fight the outbreak.

Although the region’s growth prospects have improved since October 2020, its economic contraction will still reach 1.5% in 2020 . nine % , the worst ever. Sub Saharan Africa will become the slowest growing region in the world in 2021, and it may fall further behind as the global economy recovers. Our latest issue, regional economic outlook: Sub Saharan Africa, carefully analyzes these issues.

According to the current forecast, the per capita GDP of many countries in the region is not expected to reach the pre crisis level until the end of 2025. The region’s limited access to vaccines and lack of financial space are expected to drag down its economic prospects. Therefore, the growth gap between sub Saharan Africa and the rest of the world is expected to widen further in the next five years.

In the next five years, the poorest countries in sub Saharan Africa will have an additional external financing demand of US $245 billion, while the entire region will have an additional external financing demand of US $425 billion. To support the region’s future economic growth and major reforms, the international community must provide assistance to meet the above-mentioned financial needs. The G20 has extended the debt moratorium initiative to December 2021 and implemented a new common framework for debt disposal, which can help. The proposed US $650 billion additional SDR issue will provide about US $23 billion for Sub Saharan African countries, which will help the region increase liquidity and support its anti epidemic efforts. However, meeting these needs requires the contribution of all potential donors, including international financial institutions and the private sector, as well as debt neutral support from donors.

Only when all countries come out of the crisis can the crisis really end. All countries in the world need to work together to give sub Saharan Africa fair opportunities and achieve a lasting recovery and prosperous future.

The following six maps reflect the situation in sub Saharan Africa :

Sub Saharan Africa will become the world’s slowest economic growth region in 2021. The region is expected to grow by 3.4%, driven by the global economic recovery, trade growth, rising commodity prices and the recovery of capital inflows. However, sub Saharan Africa’s economic recovery is expected to lag behind the rest of the world. The cumulative growth rate of per capita GDP in 2020-2025 is expected to be 3.6%, which is far lower than the rest of the world (14%).

Within the region, the trend of differentiation between resource intensive and non resource intensive countries will continue. By 2025, the average per capita income of resource independent countries is expected to increase by 21 . six %。 During this period, the per capita income of oil exporting countries (the more populous countries in the region) will not increase.

The economic recovery in sub Saharan Africa is hindered by the low level of vaccine popularization, the slow speed of vaccine promotion and the possible high cost of vaccination. Some developed economies have already received enough vaccines for the whole population to be vaccinated many times, while many countries in sub Saharan Africa are still struggling to vaccinate front-line key staff within the year. Sub Saharan Africa accounts for 15% of the global population, but as of April 5, the number of vaccinations in sub Saharan African countries accounted for only 0.5% of the global total. Of the novel coronavirus pneumonia vaccine implementation plans (COVAX), 38 countries in 45 countries in the region are concerned with the International Alliance for the equitable distribution of vaccines and the African Union to obtain vaccines. Covax has begun to provide vaccines to the region, but the supply is very limited.

The key to successful vaccine promotion also depends on distribution infrastructure, such as cold chain storage, which many countries in the region lack. At the same time, for some countries, it is 60 % The cost of vaccinating the population can be daunting, equivalent to 50% of health spending in the Democratic Republic of the Congo and Gambia in 2018 %。 For a quarter of the countries in the region, the cost of vaccination exceeds 2% of GDP %。 If a reinforcing needle is needed, the cost will be doubled or tripled. The international community can play a key role in this process by removing restrictions on the flow of vaccines or medical equipment, providing adequate funding for multilateral mechanisms such as covax, and redistributing excess vaccines as soon as possible.

COVID-19 is expected to cast to the wind its economic and social progress over the years and leave its economy with a lasting trauma. In 2020, the number of people living in extreme poverty in sub Saharan Africa is expected to increase by more than 32 million; the academic loss of students is more than four times that of developed economies; and the employment rate is expected to decline by about 8.5%. In terms of people’s livelihood, the per capita income has fallen back to the level of 2013. The region needs to build a more sound social safety net to quickly and effectively provide support to the most needy groups, so as to prevent permanent trauma.

To create space to support economic recovery, the public and private sectors need to repair their balance sheets.   Before the outbreak of the crisis, sub Saharan African countries faced the problems of high debt vulnerability and small spending space. In 2020, the anti epidemic package of countries in the region will only account for 2% of GDP on average . six % , which is significantly lower than 7 . two %。 However, in 2020, the share of public debt in GDP in sub Saharan Africa will rise to 66 % Above (weighted average 58 %) , the highest level in nearly 15 years, mainly due to the decline of income and GDP. As a result, there are 17 countries in the region (about a quarter of the region’s GDP or 17% of its debt stock) %) Is facing the huge risk of debt distress, or has fallen into debt distress.

Private sector balance sheets have also been hit hard by the epidemic. Compared with before the crisis, the monthly sales of enterprises in 2020 dropped by 40% to 80%. As a result of the epidemic prevention measures, 50% – 80% of the families surveyed reported a decrease in their income during the first peak of the epidemic. So far, the region’s non-performing loan ratio has risen only slightly, given the more tolerant regulatory measures adopted by countries during the crisis.

To release the great potential of sub Saharan Africa, we need to implement bold and major reforms.  

Every day, more than 90000 new users access the Internet for the first time in sub Saharan Africa. Making full use of the opportunities of the digital revolution will enhance sub Saharan Africa’s economic resilience and efficiency, expand global market access, improve the supply of public services, improve transparency and accountability, and create new jobs.

Every week, sub Saharan African economies export about $6.5 billion worth of goods. However, only about a fifth of these exports go to other countries in the region. The implementation of the new continental free trade area will not only reduce Africa’s vulnerability to global disturbances, but also promote regional competition, increase productivity, attract foreign investment and improve food security.

Every year, 20 million new job seekers enter the labor market in sub Saharan Africa, which is one of the biggest advantages of the region for a long time. In the next 10-15 years, nearly half of the world’s new labor force will come from sub Saharan Africa; with the increasing level of population urbanization, major reforms aimed at strengthening the social security system, promoting digital development, improving transparency and governance, and mitigating climate change will help boost consumption in the region, thereby promoting the demand for goods and services in the world Demand. Policymakers will need to create more fiscal space to support these reforms, including mobilizing domestic revenue, improving the effectiveness and efficiency of spending, and managing public debt vulnerability.

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