Economic recovery in subSaharan Africa is continuing to strengthen with the continent expected to see 3.8% growth next year. According to Abebe Aemro Selassie, director of the International Monetary Fund’s (IMF) African department, recovery in resource-intensive countries has played a role, while non resource-intensive countries have been performing exceptionally well, with several reporting growth of 6% or more. Also, the recovery of the oil price has impacted positively on Africa’s oil exporters. In its latest report, the Regional Economic Outlook for Sub-Saharan Africa, the IMF said macroeconomic outcomes in sub-Saharan Africa had continued to strengthen, inflation was abating and fiscal imbalances were being contained. But, it warned African governments not to be content as they faced serious risk despite the good news of growth. Increased levels of debt were concerning as was the little progress being made in strengthening domestic revenue mobilisation. In oil-exporting countries such as Angola, the Republic of Congo, Gabon and Equatorial Guinea non-commodity revenues declined in real terms in 2017. Stateowned enterprises (SOEs) have also become a major fiscal risk in several countries where budgetary resources were being used to keep inefficient organisations afloat. According to Selassie it is imperative that countries on the continent address these and other rising risks. Failure to do so, he said, would severely hamper efforts to sustain the current growth path. “Underlying vulnerabilities need to be addressed,” he said. “While there has been progress in narrowing fiscal deficits, more focus is needed to raise revenues to support continued development spending and to service debt.” He said now more than ever policy reforms should focus on delivering growth that created the 20 million jobs per year needed to absorb new entrants into the labour market. Selassie said policy actions should include deepening trade and financial integration on the continent, removing market distortions, improving the efficiency of public spending, and promoting digital connectivity and a flexible education system.
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SOEs have become a major fiscal risk with budgetary resources being used to keep inefficient organisations afloat. – Abebe Aemro Selassie
