IMF prescribes options for economic growth in Sub Saharan African countries

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The International Monetary Fund, IMF, says countries in sub-Saharan Africa need to get their budgets in order, diversify their economies and look after their poorest people to attain economic growth.

Map of Africa
Map of Africa

The three-pillared prescription, according to Reuters, was highlighted Monday by a top researcher of the Fund, Celine Allard, in an official IMF podcast.

Ms. Allard co-authored the Fund’s regional economic outlook, released earlier in May.

According to the report, sub-Saharan economic growth hit only 1.4 percent last year, the lowest level in two decades and well off the 5-6 percent rates normally reached.

It was also well below the population growth rate.

Commenting on the report, Ms. Allard said, “This is a quite broad-based deceleration because we see about two-thirds of the countries having slowed down last year, which is quite substantial.”

While some of the reasons for the slowdown are beyond the region’s immediate control — low global commodity prices, drought etc — the IMF researcher said some problems are down to a lack of governmental response.

“Part of the deteriorated outlook is a reflection of limited policy adjustment in the region,” she said, adding that the countries sjoukd focus on renewed focus on debt reduction, fiscal policy to raise domestic revenues, and greater exchange rate flexibility.

Ms. Allard noted that some of the countries in the region that had kept growth up, such as Senegal and Ivory Coast, had run up large budget deficits to help this along.

With that comes vulnerability, she said, and now is the time to shift gradually to reduce this.

Similarly, the IMF said sub-Sahara needs to focus on economic diversification and improving the business climate so that the private sector can feel confident about investing.

Many countries in the region are overly dependent on commodities, getting a huge boost when they are in demand but suffering when prices fall.

A Bank for International Settlements paper last year estimated that the share of commodities in of sub-Sahara African exports rose to 76 percent in 2010–14 from 57 percent in 1990–99.

Meanwhile, Ms. Allard said the third pillar was to provide social safety nets to protect the most vulnerable in society.

“We know that in some countries there are some programs, but they are usually fragmented and they need to be better targeted,” she submitted.

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