Arab Today, arab today subdued economic growth demands paradigm shift
Last Updated : GMT 06:55:27
Arab Today, arab today
Arab Today, arab today

Subdued economic growth demands paradigm shift

Arab Today, arab today

Arab Today, arab today Subdued economic growth demands paradigm shift

Oil prices
Nairobi - XINHUA

The slumps in commodity and oil prices, weaker-than-expected global growth, and climate change-induced disasters are holding back Africa's growth, raising concerns over the region's vulnerability to external shocks, and capacity to nurture new growth drivers.

The International Monetary Fund (IMF), in its April World Economic Outlook Update released on Tuesday, cut global growth projection for 2016 to 3.2 percent, a 0.2 percentage point downward revision from its January update.

Meanwhile, it projects only a modest 3-percent growth this year for the sub-Saharan Africa (SSA) region, after regional growth slowed to 3.4 percent last year from 5.1 percent the year before.

Nigeria and South Africa, the top two economies in Sub-Saharan Africa that account for more than half the region's gross domestic product, appeared to be the drag on regional growth last year.

Growth for Nigeria, the region's largest oil exporter, fell sharply to 2.7 percent last year from 6.3 percent in 2014 while South Africa, the region's major mineral exporter, saw growth further slide to 1.3 percent in 2015 from 1.5 percent a year before, IMF data revealed.

Reports from other regional economies dependent on resources were no better. The African Development Bank estimated growth in Equatorial Guinea, a leading regional oil producer, contracted more than 8 percent last year after more than a decade of high growth spurred by an oil boom. The doldrums in the copper sector also left almost 9,000 workers out of jobs in Zambia last year.

The message from these setbacks is clear: the regional economies must seek a paradigm shift in economic development so as to defend themselves against negatives from other parts of the world. There are examples of peers in the region doing better against the headwind.

Economies which put high public investment in infrastructure and agriculture such as Ethiopia, prove to be more resilient from the regional slowdown, with the World Bank projecting Ethiopia's growth to hit 10.2 percent this year. In east Africa's tourism hub Kenya, where the economy is more diversified and witnessing rising infrastructure investment, growth is forecast to reach 6.3 percent in 2016, according to the Treasury.

In positive signs, monetary authorities in Zambia have revealed its policy stance in favor of developing agriculture to compensate for volatile copper prices, while in Nigeria, the oil price slump warns of an urgency to reduce the economy's over-reliance on oil.

"The current difficulty is forcing the government to change growth model and diversify its economy so as to advance industrialization," said Mohammed Jamu, a parliamentary legal advisor in Nigeria.

Efforts in this regard can also be seen as Nigerian President Muhammadu Buhari is paying a five-day state visit to China that began on Monday. The visit is aimed at securing greater support from China for the development of Nigeria's infrastructure such as power, roads, railways, aviation, water supply and housing.

In an interview with Xinhua prior to his visit, Buhari said his country also stands ready to expand the development of industries, especially in manufacturing and textile industries.

The visit, in the words of Chinese ambassador in Nigeria Gu Xiaojie, is of importance as leaders of world's most populous country and Africa's most populous country meet for discussions on deepening cooperation. Buhari is the first African Head of State to visit China since the Johannesburg China-Africa summit held in December.

According to Gu, 10 cooperation plans outlined in the summit, covering industrialization, agriculture and infrastructure, will aptly address the major livelihood issues of employment, food and health and break the bottlenecks holding back Africa's development, including backward infrastructure, lack of professional and skilled personnel and capital shortage.

Such cooperation is most welcome at a time of difficulty, but the region will need to tackle more challenges that are equally detrimental to economic development, including terrorism, domestic strife, and particularly natural disasters due to climate change.

The United Nations World Food Programme said in January an estimated 14 million people in southern Africa were facing hunger due to prolonged dry spells that led to a poor harvest last year.

The region, even though historically contributing little to today's climate change problems, has to suffer the most negative impacts. The developed economies, meanwhile, look short of meeting their obligations in providing the pledged financing to help the region improve adaptation. More actions are expected from the developed economies on this front.

On the whole, a growth forecast below the global average in sub-Saharan Africa has like never before necessitated the urgent need for the region to pursue a paradigm shift and generate growth internally, and such efforts need to be undertaken sooner to build Africa into a prosperous continent as envisioned in its 2063 agenda.

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Arab Today, arab today subdued economic growth demands paradigm shift Arab Today, arab today subdued economic growth demands paradigm shift

 



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