The World Bank says digital transformation could increase growth by nearly two percentage points per year and reduce poverty by nearly one percentage point in Sub-Saharan Africa.
In a report released this week titled ‘Africa’s Pulse’, World Bank Chief Economist for Africa, Albert Zeufack believes the digital revolution could unlock inclusive growth and job creation across the continent.
With the continent said to be lagging behind in terms of economic growth, the World Bank observes that growth in Sub-Saharan Africa remains below population growth for the fourth consecutive year.
With regional growth expected to rebound to 2.8 percent this year, it means it will have remained below three percent since 2015.
The slower-than-expected overall growth is reportedly a reflection of ongoing global uncertainty, which is said to be increasingly coming from domestic macroeconomic instability, including poorly managed debt, inflation and deficits. This is believed to negatively impact the performance of several smaller economies that continue to grow steadily.
Resource-intensive countries such as Botswana are said to have enjoyed economic growth as stronger mining production and commodity prices boosted activity.
The report suggests that commodity prices have improved but have remained below their peak of 2018.
Prices of commodities such as metals are reported to have improved slightly as a result of easing trade tensions between China and the United States.
“Metal prices are expected to remain stable in 2019, partly owing to low inventory levels, helping to support an increase in mining production among metal exporters,” states the report.
Supply shortfalls and declining inventories in most metals markets, particularly copper, nickel, lead and zinc are thought to have contributed to recovery in prices.
The report further outlines that the continued deceleration in global growth and downside risks present a challenging external environment for Sub-Saharan Africa.
A sharper than expected slowdown in the United States and China, the region’s major trading partners, is anticipated to have significant spillover effects on the continent through trade, financial, commodity and confidence channels.
According to the report, a faster than forecast decline in commodity prices would place additional pressure on fiscal and current account balances and the financial sector, which will effectively constrain investment.
Furthermore, the report suggests that global trade growth decelerated in 2018, reflecting effects of weakening industrial activity and the possibility of increasingly protectionist trade policies. Worryingly, it is expected to lose additional momentum this year.
It is also anticipated that escalations in trade tensions could erode external demand.
“This would dampen export growth – a critical factor behind the ongoing rebound in economic activity in the region – and contribute to keeping the recovery subdued in many countries.”
The region is expected to continue to be affected by severe weather conditions, and in addition to droughts, the occurrence of floods, landslides and cyclones are believed to remain elevated and pose significant risks for Sub-Saharan African countries, as the recent experiences in Mozambique, Malawi and Zimbabwe have shown.