By Abimbola Fashakin, Lagos
The Managing Director of the International Monetary Fund (IMF), Ms Christine Lagarde HAS stated that Sub-Saharan Africa economic outlook recorded the lowest economic growth in 2016, saying it is the lowest in 20 years.
Speaking on Friday while making her remarks in her speech: “Becoming the Champion: Uganda’s Development Challenge” in Kampala, she said the sub-region’s economy grew in 2016 at about 1.5 per cent.
“Sub-Saharan Africa’s growth in 2016 was the lowest in 20 years at about 1.5 percent, and is projected to reach only 2.7 per cent in 2017. Commodity exporters have experienced a particularly rapid deceleration.
The policy response in many African countries has been delayed and incomplete. So the end result has been uncertainty.
“Private investment is falling, stifling new sources of growth,” Lagarde said in the speech obtained by BLACKFACE.
The IMF chief noted the economic crunch that befell the sub-region in 2008 and how it weathered the global financial crisis.
“Let us begin with the big picture. Sub-Saharan Africa is increasingly integrated into the global economy. The region weathered the 2008 global financial crisis in large measure because it had pursued sensible policies that reduced debt and built up ample reserves.
“It also helped that demand for natural resources from China and other emerging market countries quickly rebounded.”
She regretted, however, that in the past few years, the fortune has turned as emerging market demand had slowed significantly, and many advanced economies continue to struggle.
According to her, commodity prices have fallen sharply while access to market financing has tightened.
“While there are recent signs that global growth may be picking up, there are still serious risks. These include rising protectionist sentiment. Restrictions on trade are never helpful, but they would be even more damaging now, given that global trade has slowed since 2012. But so far, it has been a tale of two Africa’s.
Notably, East Africa has been one of the region’s brighter spots.
“This is partly because policy frameworks have been more effective, and also because its more diversified economies are less reliant on volatile commodities. The end result has been stronger growth,” she said.
The IMF chief called for massive building of infrastructure, institutions and regional economic integration to accelerate economic growth in the sub-region.
“Under-developed infrastructure is a permanent brake on growth. It prevents businesses from connecting to local, regional, and global markets, and limits their willingness to invest,” she said. In addition, there is another “community” emerging in Africa: the community of cross-border banks. Some are Pan-African Banks.
Others are regional institutions, as in East Africa.
“These African banks have moved into the space vacated by other international banks that withdrew from the region after the global financial crisis. This offers new opportunities for countries such as Uganda. But it also presents new challenges for bank regulation and supervision that require unprecedented cooperation.”
IMF says Africa 2016 economic growth lowest in 20 years
By Abimbola Fashakin, Lagos