In its latest regional economic outlook for sub-Saharan Africa, the International Monetary Fund (IMF) reveals a severe financing shortage for sub-Saharan Africa, linked to the drying up of development aid and the increasingly restricted access to private funding.
In this context, the financial institution forecasts an overall decline in economic growth in the region, for the second consecutive year, to 3.6% before rebounding to 4.2% in 2024.
IMF African Department Director Abebe Aemro Selassie said, “Growth in the region varies from country to country. Some countries, especially those in the East African Community and non-oil resource-rich countries, are expected to fare better than others.”
According to the IMF, public debt and inflation are at levels not seen in decades; half of the countries in the region are plagued by inflation above 10%, which reduces the purchasing power of households and hits the most vulnerable sections of the population hard.
The rapid tightening of monetary policy at the global level has increased the borrowing costs of sub-Saharan African countries in both domestic and international markets, the institution also underlines, adding that all pre-emerging countries in sub-Saharan Africa have been deprived of access to financial markets since the spring of 2022.
This, together with reduced development aid budgets and capital inflows from partners in the region, is resulting in a severe funding shortfall in the region.
Selassie points out that “people in sub-Saharan Africa are feeling the effects of the funding crisis. Since Russia invaded Ukraine, the cost of living has risen, borrowing has become more expensive, and access to affordable finance has been restricted.”
« Together with the long-standing decline in development aid and the recent decrease in investments made by partners in the region, » he continues, « these factors lead to the reduction of resources devoted to basic services such as health, education and infrastructure.
He also believes that, « without appropriate measures, this shortage of financing will hamper the initiatives deployed by the leaders of the region to promote the emergence of an educated and qualified population and to become the driving force of the world economy in the years to come. coming ».
The IMF says it is playing its part to remedy this situation. Between 2020 and 2022, it claims to have provided the region with more than $50 billion in financing, more than double the amount disbursed over a 10-year period since the 1990s. has entered into loan agreements was 21 as of March 2023, and more applications are under consideration.
The institution recommends four measures likely to help overcome the current difficulties. This involves strengthening the management of public finances and rebalancing budgets; curbing inflation; allow exchange rates to adjust, while mitigating negative effects on the economy; as well as ensuring that the essential fight against climate change is not carried out at the expense of funding basic needs such as health and education.
By OMA Newsletter N° 1135 of 17/04/2023
Article published under the direction of Dr. Najib Kettani
The OMA, NGO with an Intercontinental vocation
For the development of cultural exchanges
Valuing human potential
The promotion and consolidation of Africa’s development, and
Inter-African integration
