According to the World Bank, the Nigerian economy will grow by 2.8 percent this year from its previous 3.3 percent. In the bank’s Africa Pulse Report April 2023 edition, entitled “Leveraging resource wealth during the low carbon transition”, Nigeria’s economic growth is projected to have a slight improvement to a 3 percent average annual rate in 2024-25. As a result, there will be a translation into growth per capita of 0.2 percent and 0.4 percent in 2023 and 2024-25 respectively; still not enough to reduce extreme poverty in citizens.
However, it was predicted that growth will continually be fostered by services, construction, agriculture, trade and manufacturing. There is a projection too that oil production will still be subdued in 2023 due to inefficiencies and insecurity; but will have slight recovery in 2024-25. Also, the mega-refinery project — that will contribute to the country’s economic growth — will receive support from industry by 5.6 percent. The economic performance of sub-Saharan Africa has been imbalance across sub-regions and countries.
Western and Central Africa GDP will drop to 3.4%.
An explanation in the report says the growth of the actual Gross Domestic Product (GDP) of the Western and Central Africa (AFW) sub-region is predicted to drop from 3.7 in 2022 to 3.4 percent this year. Likewise, Eastern and Southern Africa’s (AFE’s) Gross Domestic Product (GDP) has been predicted to decline from 3.5 percent in 2022 to 3.0 in 2023. Slow growth of the largest countries in the continent has visibly led to reduction of the economic performance of the region.
In South Africa, there is a tendency that there would be further weakening of economic activity by 0.5 percent, owing to the deepening energy crisis. In Nigeria, there is fragility of growth recovery — 2.8 percent — as oil production is yet to thrive well and diverse policy challenges confront the new administration. This situation poses a difficulty to policymakers in the region who work towards speedy improvement of the post-pandemic recovery, elimination of poverty and restoration of the economy on the path of sustainable growth.
Oil-rich countries experience more persistent downturn in investment.
Regardless of the economic fallout of the pandemic and the Russian-Ukraine war, there is an expectation that investment growth does not cease to be moderate and lower than the average growth rate of an investment over the past twenty years in sub-Saharan Africa and other emerging markets and under-developed countries. Oil-rich countries in the region have witnessed the most persistent downturn in investment, compared to countries with less abundant resources which display a more subdued decline in investments.
The report states that declining investment growth in sub-Saharan Africa is impeding long-term growth of output and per capita income, and achievement of sustainable development goals (SDGs). Poor investment growth contributes to macro-fiscal pressures, limited fiscal space, huge financing needs and increasing borrowing costs. Even domestic food prices have maintained highly inflated prices despite the gradual reduction in the prices of domestic food across the world. This is also coupled by weaker currencies, owing to inflate food and energy prices.
Countries with two-digit inflation will drop to 12.
Additionally, the World Bank’s report stated that there have been an increase in the number of countries with two-digit annual rate of inflation from 9 in 2021 to 21 in 2022. But the report affirmed that deceleration in aggregate demand, declining commodity prices, and the impacts of the monetary policy tightening across Africa will foster a reduction in inflation in the region to 7.5 percent in 2023 and 5.0 in 2024, next year. Likewise, there is an expectation that the number of countries with two -digit inflation will reduce to 12 this year.
The World Bank: Website