Post COVID-19:  W/Bank warns Nigeria, sub-Saharan Africa of steep GDP contraction

Post COVID-19:  W/Bank warns Nigeria, sub-Saharan Africa of steep GDP contraction

World Bank, Nigeria
World Bank

By Nkiruka Nnorom

ECONOMY

The World Bank, yesterday, warned that post-Covid-19 recovery in Nigeria and other Sub-Saharan Africa countries will be long and steep if fiscal reforms that would stimulate growth are not put in place to address the economic impact of the pandemic.

The bank indicated that African economies would shrink by 3.3 percent at the end of 2020, while the continent would suffer deeper fiscal deficit of about 3.5 percentage point.

Albert Zeufack, World Bank’s Chief Economist for African Region, stated this at the launch of new Africa Pulse, the region’s bi-annual macroeconomic analysis.

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Speaking at the launch of the report with the theme, “Africa’s Pulse: Charting the Road to Recovery”, Zeufack said that debt exposure for African countries is set to grow by 67 percent in 2021 given increased borrowing by the regional governments and increasing cost of servicing the debts.

“What is clear from our report is that we have a sharp contraction in economic activities. The Covid-19 has taken a large toll on African economies and it’s threatening to erase a decade of hard earned economic progress in the continent. GDP per capital will record a decline of close to six percent in 2020 and by 2021, GDP per capita would have decreased to the level where it was in 2007, that’s 13 years of progress completely erased.

“Entering the crisis, African countries were already facing weak institutions and de-gradating quality of governance that will make it difficult to catch up and launch the kind of recovery that is needed.

“A number of African countries, in fact, most of them, will emerge from the crisis with deeper fiscal deficit and debt burden. Fiscal deficit will increase by 3.5 percentage point across the continent. Debt is likely to reach 67 percent in 2021 and that makes it dangerous,” he said.

He, however, noted that countries like Nigeria, Ethiopia, and South Africa, are already making positive moves and are seizing the opportunity within the crisis to accelerate reforms and investments that would be crucial for long-term development.

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