Sub-Saharan Africa Faces Slowest Growth Since 2009

Low commodities take toll, oil-exporting countries hardest hit

Growing deficits a concern

Diversification, boosting tax revenues way forward

Speaking to reporters during the IMF-World Bank Annual meetings in Lima Peru, Antoinette Sayeh, head of the IMF’s African department, said the vastly improved business and macroeconomic environment that has allowed for strong growth in recent years now risks being eclipsed by falling commodity prices and less accommodating financial conditions.

There is considerable variation across the region, however, said Sayeh. Hardest hit are the eight oil-exporting countries—including Nigeria and Angola—which together account for half of the region’s GDP. “Falling export incomes and sharp fiscal adjustments are taking their toll on growth, which is expected to decelerate sharply to 3½ percent this year, from 6 percent in 2014”, Sayeh said, adding these numbers are weighing down on the regional average.

Sayeh noted while low-income countries continue to experience growth rates of around 6 percent, thanks to sustained private consumption and investment in infrastructure, growth in several middle-income countries is being hampered by electricity shortages, increasingly difficult financing conditions and weaker commodity prices.

Limited savings to offset drag

The prospects for many countries are further compounded by modest savings and growing deficits, Sayeh said: “In many cases, savings from the recent period of rapid growth have been limited, and countries are now entering this period with larger fiscal and external deficits than at the onset of the 2008 global financial crisis.”

Sayeh also described the security situation in a number of countries as a further risk: “The civil war in South Sudan and the acts of violence perpetrated by Boko Haram and other insurgency...