An analysis of issues shaping Africa’s economic future
Summary, World Bank report Africa’s Pulse
February 27, 2017
Agriculture remains the cornerstone of the development of the African continent. The latest edition of Africa's Pulse from the World Bank Group1, confirms this. Recalling that agriculture “accounts for one-third of regional GDP and employs two-thirds of the labour force”, the report states that “agricultural growth reduces poverty three times more effectively than growth in other sectors”.
Unfortunately, at a rate of 1.6% in 2016, the lowest in more than 20 years, sub-Saharan Africa's growth is decreasing at an alarming rate. The cause: the fall in commodity prices. The World Bank is not very optimistic for the coming years, forecasting commodity prices which "are expected to remain well below their 2011-2014 peak". Nonetheless, no solution has really been advanced to remedy the situation and stem the risks associated with permanently depressed international prices.
Of course, the World Bank argues that it is important for these countries to “adjust their macroeconomic policies”, “in order to mitigate budgetary vulnerabilities, improve the mobilization of national resources and build sufficient reserves to cope with turbulence in the global economy and the tightening of external financial conditions”. In short, all this sounds like an admission of a disengagement by international institutions in favour of a position of “God helps those who help themselves”. In terms of macroeconomic policy, we could have nevertheless expected some elements of discussion on the consequences of the fixed parity between the CFA zone and the Euro, widely denounced in particular by Kako Nubukpo, former Minister of Togo2.
Finally, even though the authors find Africa's decline in agricultural productivity in relation to countries of the Green Revolution, and they argue that the bulk of the increase in agricultural production in Africa comes from the increase in cultivated areas, the report3 also sidelines aid for the purchase of inputs, nonetheless increasingly more common in African countries.
Though the potential for African agricultural development is enormous, with 45% of the world's land “suitable for the sustainable expansion of production, i.e., not woodland, unprotected, with a low population density”, Africa “does not embrace this” as much as it could and it is not the World Bank that will be its most dynamic vector for agricultural take-off.
Momagri Editorial Board
After slowing to 3 percent in 2015, economic growth in Sub-Saharan Africa is projected to fall to 1 6 percent in 2016, the lowest level in over two decades. Low commodity prices and tight financial conditions, exacerbated by domestic headwinds from policy uncertainty, droughts, and political and security concerns, continued to weigh on activity across the region The overall slowdown in Sub-Saharan Africa’s growth reflects economic deterioration in the region’s largest economies. Economic performance was notably weak across oil exporters. At the same time, in about a quarter of the countries, economic growth is showing signs of resilience.
Indeed, the pattern of growth across countries is far from homogeneous, suggesting that Sub-Saharan Africa is growing at diverging speeds. While many countries are registering a sharp slippage in economic growth, some countries—Ethiopia, Rwanda, and Tanzania—are continuing to post annual average growth rates of over 6 percent, exceeding the top tercile of the regional distribution; and several other countries—including Côte d’Ivoire and Senegal—have moved into the top tercile of performers. The “established” and “improved” performers tend to have stronger quality of monetary and fiscal policies, better business regulatory environment, more diverse structure of exports, and more effective public institutions.
Commodity prices are expected to remain largely below their 2011–14 peaks, despite a recent pickup, reflecting the weak global recovery. Faced with growing financing needs, commodity exporters have begun to adjust, but the adjustment efforts remain uneven and insufficient. Against this backdrop, a modest rebound is foreseen in Sub-Saharan Africa in 2017 Economic growth is forecast to rise to 2 9 percent, before strengthening somewhat to 3.6 percent in 2018. Again, the regional average hides considerable heterogeneity among countries. The region’s largest economies and other commodity exporters are expected to see a modest increase in output growth as commodity prices continue to stabilize and inflationary pressures decline, lifting growth of private consumption and investment. Elsewhere, activity should continue to expand at a robust pace, supported in part by infrastructure investments.
Risks to the outlook remain tilted to the downside. On the external front, old risks remain salient and include slower improvements in commodity prices and tighter global financial conditions. On the domestic front, policy makers may not enact the reforms needed to rebuild policy buffers and achieve macroeconomic stability. Uncertainties around upcoming elections, referenda, and policy direction in a number of countries represent risks as well. In some countries, security threats pose an additional source of risk.
Adjustments to macroeconomic policy are needed in many countries to address fiscal vulnerabilities, improve domestic resource mobilization, and build adequate buffers to withstand periods of global economic turbulence and tighter external finance conditions. In tandem, as countries look to bolster medium-term growth prospects, accelerating the pace of structural reforms will remain key.
Increasing agricultural productivity is central to transforming Sub-Saharan African economies and promoting sustained and inclusive growth. However, agriculture output growth in the region has largely been a result of expanding the area under cultivation rather than productivity gains: the contribution of area expansion accounted for more than three times as much of the growth in agriculture in the region relative to other developing countries.
Yet, conditions are in place for boosting the productivity of African agriculture and for sustainable agricultural growth African regional markets are growing rapidly—driven by population, urbanization, and income growth—providing demand incentives and import substitution potential. On the supply side, the prospects are promising as well, thanks to untapped yield potential and a supportive political environment.
Unleashing productivity improvements requires public investments in rural public goods. Although investments to strengthen markets, develop and disseminate improved technologies, promote input use, and build an agricultural information base have increased, they remain well under targets and needs. Addressing the quality of public spending and the efficiency of resource use is even more critical than addressing the level of spending. Sub-Saharan African countries grossly underfund high-return investments, and rebalancing the composition of public agricultural spending could reap massive payoffs. Most importantly, experience teaches us that investments need to tackle constraints on different fronts. For reforms to be sustainable, they need to be anchored in managing political pressures and use external processes as commitment devices.
1 The entire report and summary is available from
2 Sortir l'Afrique de la servitude monétaire : A qui profite le franc CFA ? , de Kako Nubukpo (Under the direction of), Bruno Tinel (Under the direction of), Martial-Ze Belinga (Under the direction of), Demba Moussa Dembélé (Under the direction of), published october 3rd 2016, la Dispute
3 See page 74 and following