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IMF projects slight economic growth for Sub Saharan Africa

Publishing Date : 21 May, 2018


International Monetary Fund (IMF) Regional Economic Outlook Report on Africa released last week projects that Sub Saharan Africa economies will grow from 2.8 percent in 2017 to 3.4 percent in 2018 on average.

The report anticipates growth to accelerate in about two-thirds of the countries in the region aided by stronger global growth, higher commodity prices, and improved capital market access. Further, the report says the region is set to enjoy a modest growth uptick adding that decisive policies are needed to both reduce vulnerabilities and raise medium-term growth prospects. “On current policies, average growth in the region is expected to plateau below 4 percent barely 1 percent in per capita terms over the medium term highlighting the need for deliberate actions to boost growth potential,” reads the report. 

According to the Washington Based Global Economic Policy think tank turning the current recovery into sustained strong growth consistent with the achievement of the SDGs would require policies to both reduce vulnerabilities and raise medium-term growth prospects.
The report further shares that prudent fiscal policy was needed to rein in public debt, while monetary policy must be geared toward ensuring low inflation. The IMF also advices that countries should also strengthen revenue mobilization and continue to advance structural reforms to reduce market distortions, shaping an environment that fosters private investment.


As for the Botswana economy, the International Monetary Fund projects a 4.6 percent economic growth in 2018 compared to 4.8 percent in 2017. IMF economic researchers underscored in the report that the risk of spillover into the region from the weak performance of the South African economy will not spare Botswana. “The recent weak economic performance in South Africa has slowed growth in neighboring countries,” reads the report.

 “The regional spillovers are likely to be transmitted through various channels, including intraregional trade such as the Southern African Customs Union and Fast Moving Consumer Good trade for Botswana.” The mixed forecasts for the economy this year signals the performance of Botswana economic engine diamond sector where output from Debswana rose 12% in the first quarter to 5.8 million carats, while rough diamond sales dropped eight percent to P8.8 billion. The IMF said recovering commodity prices would support sub-Sahara African growth, although broadly the average growth rate per capita remains around zero.

The global economic organ has maintained Botswana’s 2018 inflation projection at 3.7 percent, while marginally upping its 2019 forecast from 3.7 percent to 3.8 percent. The IMF emphasizes private investment as a critical factor for the Sub Saharan region to achieve sustainable growth and improve social outcomes over the medium term.

 “While public investment in the region is a similar level to other regions of the world, private investment in sub Saharan Africa lags well below other regions. As such reforms such as Public –Private Partnerships (PPP), Special Economic Zones (SEZs) and proper mechanism to attract foreign direct investment needed to be given more attention,” underscores the report.

The organization however highlights that PPPs need to be considered carefully in view of the risks, advising that proper management of PPPs requires the adopting of institutional and legal frameworks to asses and limit risks as such projects often entrain contingent liabilities.
In terms of Special Economic Zones, the IMF says while in some cases others are successful in attracting investors to the region the SEZs benefit their economies more where they establish strong links with host country firms and become better integrated in the national and regional development strategies.

Botswana has adopted the concepts of Public Private Partnerships (PPPs) and Special Economic Zones as cardinal instruments in reshaping the country‘s economic direction. The country recently set up the Special Economic Zones Authority to facilitate harnessing the ideal of SEZs fully.

To further fully tap into these observers underscores that Botswana needs to restructure the country administrative setup. Calls by experts reiterate that local authorities cannot remain under an underfunded ministry that Local Government is arguing that District Councils were actually the institutions in direct contact with the ordinary and masses of Botswana’s citizenry. “They have to be capacitated and well resourced with investment acumen, management ability and research capacity to be in position to unearth the economic potential of their parameters better.”



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