Nigeria’s economy is expected to grow by 2.4% in 2021, due to accelerated growth in Nigeria’s service sectors, however, it still falls behind the sub-Saharan growth forecasts of 3.3% in 2021 and 3.5% in 2022.
The World Bank disclosed this in its recently published Africa’s Pulse report, titled “Climate Change Adaptation and Economic Transformation in Sub-Saharan Africa”.
The World Bank also warned that despite Sub-Saharan Africa exiting recession in 2021, recovery is still fragile, citing that as the global economy continues its rapid recovery from the global recession of 2020, inequities in vaccine supply and access to external finance are leading to a two-track recovery. The World Bank suggests faster vaccine development would accelerate growth to above 5% rate for 2022.
What the World Bank is saying
The World Bank report stated that “In Sub-Saharan Africa, the economy is set to expand by 3.3% in 2021, one percentage point higher than the forecast of the April 2021 Africa’s Pulse, with projections for 2022 and 2023 just below 4 percent.”
The report added that the rebound was fueled by elevated commodity prices, relaxation of stringent measures, and recovery in global trade as commodity prices remain well above their pre-pandemic levels, with several reaching all-time highs.
The World Bank warned that economic recovery in Sub-Saharan Africa remains timid and fragile as the slow pace of vaccination continues to expose the region to emerging strains of coronavirus, holding back economic performance.
However, growth in economic activity for the region is projected at 3.5 % in 2022 and 3.8 % in 2023, subject to substantial uncertainty around the pace of vaccination. It added that faster vaccine deployment would accelerate growth to 5.1% in 2022 and 5.4% in 2023 in Sub-Saharan Africa—as containment measures are lifted faster than in the baseline and spending increases.
“In contrast, slower vaccine delivery and coverage would impede the relaxation of COVID-19 disruptions in economic activity and project growth to slow down to 2.4 percent in 2023,” the report said.
Within Africa, the bank says recovery will be multi-speed, citing that Angola, Nigeria, and South Africa, the largest economies in the region, are expected to emerge from the 2020 recession, yet at different paces.
“Angola is expected to grow by 0.4 percent in 2021, after five consecutive years of recession. The country is still battling to gain momentum, with elevated debt levels and weak performance of the oil industry.
“Nigeria is expected to grow by 2.4 percent in 2021, supported by the service sector.
“South Africa is projected to grow by 4.6 percent in 2021, reflecting better performance in services, industry, and somewhat agriculture. The country provided stimulus to support businesses and households that were affected by the pandemic as well as by riots and lootings that mostly affected the Kwazulu-Natal and Gauteng provinces.”
The report stated that in addition to rising public debt, the unemployment rate rose to record high levels, from 32.6 percent in 2021Q1 to 34.4 percent in 2021Q2.
“Excluding South Africa and Nigeria, the rest of Sub-Saharan Africa is rebounding faster, with a growth rate of 3.6 percent in 2021, adding that Non-resource-rich countries, such as Côte d’Ivoire and Kenya, are expected to recover strongly at 6.2 and 5.0 percent, respectively.”
The World Bank urged policymakers in the region to leverage climate technologies to boost agricultural productivity and increase industrialization as well as the non-agricultural labour force, highlighting that creating jobs for more than 12 million people entering the job market every year will require not only green jobs, but also brown jobs.
“Financing climate change adaptation in Sub-Saharan Africa is essential, and policies to mobilize resources are critical to create more, better, and sustainable jobs.
“Policymakers will need to harness (environmental) policy reforms and taxes. However, the reality of financing and technology gaps, which will rapidly escalate in the near to medium term, remains and will need innovative thinking and collective action.”
In case you missed it
Nigerians finance Minister stated in August that GDP growth of 5.01% recorded in the second quarter of 2021 by Nigeria is a sign the economic recovery is gradually picking up steam, citing that the services sector recorded a strong performance growing at 9.27% during the quarter, representing the fastest growth in the services sector since 2010.
She added that as local conditions continue to improve to allow business activities, the Nigerian economy is expected to maintain a steady path to more inclusive growth.