The Most Under-performing Economies in Africa According to the World Bank

The World Bank group has categorised 19 other African countries that did not show any progress in their economic performance between 1995 and 2018. The new findings, titled Africa’s Pulse which was released on the 8th of April, 2019 is a reflection of issues shaping Africa’s future.

The list of 19 countries who were at the bottom include: Angola, Burundi, Botswana, the Republic of Congo, the Comoros, Gabon, Equatorial Guinea, Liberia, Lesotho, Mauritania, Malawi, Namibia, Nigeria, Sierra Leone, Eswatini, Chad, South Africa, Zambia, and Zimbabwe.

According to the report: “These countries did not show any progress in their economic performance from 1995–2008 to 2015–18. For instance, their median economic growth rate decelerated, from 5.4 percent per year in 1995–2008 to 1.2 percent per year in 2015–2018.

“The population in this group accounts for 33 percent of the region’s total population (similar to the top and middle terciles) and produces almost 60 percent of the region’s total GDP (which is much greater than the top and middle terciles).

“This group includes the three largest countries in the region—Nigeria, South Africa, and Angola—and comprises many commodity exporters. The bottom tercile’s average GDP per capita is about US$2,696.”

The taxonomy compares the average annual GDP growth rates during 1995–2008 and 2015–18 against predetermined thresholds.

The World Bank, which recently announced David Malpass as president further revealed that these thresholds correspond to the bottom and top terciles of the annual average growth rates across 44 Sub-Saharan African countries between 1995 and 2008 (that is, 3.5 and 5.4 percent, respectively).

According to the World Bank, “If a country’s economic performance declined from 1995–2008 to 2015–18, the country is categorized in the bottom tercile, which includes “falling behind” and “slipping.

“If a country’s growth rate remained invariant over time, between 3.5 and 5.4 percent in both periods, it is categorized in the middle tercile (or “stuck in the middle”).

“If a country’s economic performance improved from 1995–2008 to 2015–18, with a growth of more than 5.4 percent per year, the country is categorized in the top tercile, which includes the “improved” and “established” groups.”

Reliance on foreign investment by low income countries in fact, has only created a capital flight, with very minimal input on household income and overall GDP. A review of the report indicates that many African countries operate a monolithic economy, which is never enough to cater for galloping population growth. 

Also, the debt burden as well as political instability are some of the factors which has made these economies to be continuously in a cycle for over two decades.

The global financial body says, "Amid recent episodes of financial stress, growth in emerging market and developing economies has lost momentum and is projected to stall at 4.2 percent this year, with a weaker-than-expected rebound in commodity exporters accompanied by deceleration in commodity importers. Downside risks have become more acute. Financial market pressures and trade tensions could escalate, denting global activity."

Growth is projected to rise slightly to 2.2 per cent in 2020 and reach 2.4 per cent in 2021, as improving financing conditions help boost investment.

“In Nigeria, although the manufacturing and non-manufacturing PMIs remained above the neutral 50-point mark—which denotes expansion—they fell further in February, due to weaker rises in output and new sales orders across firms.

“Household consumption in Nigeria has remained subdued, while multiple exchange rates, foreign exchange restrictions, low private sector credit growth, and infrastructure constraints have continued to weigh on private investment.”

The Chief Economist for Africa at the bank, Albert Zeufack, said the region could boost annual growth by about nearly two percentage points if it harnessed Information Technology more effectively.

“This is a game-changer for Africa,” he added.

However, the spokesperson for the Central Bank of Nigeria, Mr Isaac Okorafor, said the CBN under the current governor, Mr Godwin Emefiele, had shown so much ingenuity in managing the economy.

“You know the crisis that we have faced in the past three years. The bank has shown ingenuity in managing the situation and ensuring that everything is stable.”

Header Image Credit: The Standard