World Bank sees positive trajectory for Nigeria’s economy at 4.1% in 2022

BY CHARLES ABUEDE

The World Bank has predicted that Nigeria and South Africa’s economy will grow 4.1 percent in 2022, and 4.9 percent in 2023 as the sub-Saharan African economy grapples with recovery from the 2020 recession caused by the Covid-19 pandemic and now faced with new economic growth challenges, compounded by the Russian invasion of Ukraine.

The World Bank, in its latest Africa’s Pulse, a biannual analysis of the near-term regional macroeconomic outlook, projects economic growth of the sub-Saharan African region at 3.6 percent in 2022, down from four percent in 2021 as the region continues to deal with new Covid-19 variants, global inflation, supply disruptions and climate shocks. Adding to the region’s growth challenges are rising global commodity prices, which are increasing at a faster pace since the onset of the conflict between Russia and Ukraine.

According to the report, the Western and Central Africa sub-region is projected to grow 4.2 percent in 2022 and 4.6 percent in 2023. Not including Nigeria, the World Bank said the subregion is projected to grow at 4.8 percent in 2022, and 5.6 percent in 2023. While the growth trajectory for Cameroon, which has a somewhat diversified economy, shows sustained robust performance, reaching 4.4 percent in 2024, the Ghanaian economy is projected to pick up pace in 2022, growing by 5.5 percent, then slowing gradually to five percent in 2024, lower than the seven percent pre-pandemic growth.

Elsewhere, the international economic organisation said the Eastern and Southern Africa sub-region shows persistent recovery from the recession, at 4.1 percent in 2021, down to 3.1 percent in 2022 and settling around 3.8 percent in 2024. Also, the DRC and Zambia are expected to benefit from rising metal prices in the short and medium-term and gain from the transition away from fossil fuels in the long term.

Meanwhile, Rwanda and Seychelles are expected to register the biggest decline in 2022, down by 4.1 percent, and 3.3 percent respectively while, without including Angola, the World Bank said the regional growth of Nigeria and South Africa is projected at 4.1 in 2022, and 4.9 percent in 2023.

Analysis of the Pulse from the Bretton Woods institution indicates that recovery remains uneven, incomplete and is happening at varied rates of speed across the region.

It said of the three largest economies in Africa, which are Angola, Nigeria, and South Africa, growth in South Africa is expected to decline by 2.8 percentage points in 2022, dragged by persistent structural constraints. Angola and Nigeria are expected to continue their growth momentum in 2022, up by 2.7 and 0.2 percentage points respectively, in part due to elevated oil prices and good performance in the non-oil sector.

Meanwhile, the bank said resource-rich countries, especially their extractive sectors, will see improved economic performance due to the war in Ukraine, while non-resource rich countries will experience a deceleration in economic activity.

A further analysis of the report shows that as top world exporters of food staples Russia, which ranks as the world’s largest exporter of fertilisers, and Ukraine, which accounts for a substantial share of wheat, corn and seed oil exports, could see these halted if the conflict persists.

Similarly, the World Bank said while sub-Saharan Africa economies are also likely to be impacted by tightening of global conditions and reduced foreign financial flows into the region, high fuel and food prices will translate into higher inflation across African countries, hurting poor and vulnerable citizens, especially those living in urban areas.

However, a major point of concern is the increased likelihood of civil strife as a result of food and energy-fueled inflation, particularly in this current environment of heightened political instability.

Albert Zeufack, World Bank’s chief economist for Africa, noted that, “As African countries face continued uncertainty, supply disruptions and soaring food and fertiliser prices, trade policy can potentially play a key role by ensuring the free flow of food across borders throughout the region. Amid limited fiscal space, policymakers must look to innovative solutions such as reducing or waiving import duties on staple foods temporarily to provide relief to their citizens.”

The report also highlights the importance of expanding social protection programmes beyond safety nets to strengthen economic resilience and responsiveness to shocks, particularly for poor and vulnerable households.

It, therefore, made recommendations including, developing social insurance, savings and labour market programmes that contribute to economic resilience by protecting urban informal workers and helping the population invest in their health and education.