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Kenya’s Economic Growth to Expand 5pc as Sub-Saharan Africa Exits Recession

BY Soko Directory Team · October 8, 2021 11:10 am

KEY POINTS

African countries have seized the opportunity of the crisis to foster structural and macroeconomic reforms.

Kenya is among the countries rebounding at a faster rate from the 2020 recession sparked by the Covid-19 with economic growth expected to expand by 5 percent in 2021.

According to the World Bank, Sub-Saharan Africa is set to emerge from last year’s recession economic growth is expected to increase by 3.3 percent this year.

This is one percent higher than the April 2021 forecast according to the latest edition of Africa’s Pulse.

The rebound is currently fueled by elevated commodity prices, a relaxation of stringent pandemic measures, and recovery in global trade, but remains vulnerable given the low rates of vaccination on the continent, protracted economic damage, and a slow pace of recovery.

The region’s growth for 2022 and 2023 will also remain just below 4 percent, continuing to lag the recovery in advanced economies and emerging markets, and reflecting subdued investment in SSA.

“Fair and broad access to effective and safe COVID 19 vaccines is key to saving lives and strengthening Africa’s economic recovery. Faster vaccine deployment would accelerate the region’s growth to 5.1 percent in 2022 and 5.4 percent in 2023—as more containment measures are lifted, boosting consumption and investment,” said Albert Zeufack, Chief Economist for Africa at the World Bank.

ALSO READ: Africa’s Commodity Markets to Remain Volatile Due to Constraints in Supply Chain

The analysis shows that current speeds of economic recovery in the region are varied, with the three largest economies, Angola, Nigeria, and South Africa, expected to grow by 0.4 percent, 2.4 percent, 4.6 percent respectively.

Excluding South Africa and Nigeria, the rest of SSA is rebounding faster at a growth rate of 3.6 percent in 2021, with non-resource-rich countries like Côte d’Ivoire and Kenya expected to recover strongly at 6.2 and 5.0 percent, respectively.

A positive trend, according to the report authors, is that African countries have seized the opportunity of the crisis to foster structural and macroeconomic reforms.

Several countries have embarked on difficult but necessary structural reforms, such as the unification of exchange rates in Sudan, fuel subsidy reform in Nigeria, and the opening of the telecommunications sector to the private sector in Ethiopia.

Additionally, thanks to prudent monetary and fiscal policies, the region’s fiscal deficit, at 5.4 percent of GDP in 2021, is expected to narrow to 4.5 percent of GDP in 2022 and 3 percent of GDP in 2023.

However fiscal discipline, combined with limited fiscal space, has prevented African countries from injecting the level of resources required to launch a vigorous policy response to COVID-19.

Apart from mounting fiscal pressures and rising debt levels as they implement measures for a sustainable and inclusive economic recovery, Sub-Saharan African countries are also faced with worsening impacts of climate change.

Just as the countries have used the crisis to introduce reform measures, they should also harness this opportunity to make sustainable, resilient transitions toward low-carbon economies that can provide long-term benefits.

This can be done in the form of reduced environmental hazards as well as new economic development openings.

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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