Demonstrators protesting against the South African President Jacob Zuma in Johannesburg in April.GULSHAN KHAN/AFP / Getty Images
Africa's economy will barely keep pace with its population growth this year as it makes only a weak recovery from its worst slump of the past two decades, the International Monetary Fund says.
The stagnation in sub-Saharan Africa is often seen as the consequence of declining commodity prices, but the IMF lays much of the blame on African governments for poor policies and rising public debt.
In a report to be released on Tuesday, the IMF says the recent rebound in commodity prices will provide only limited "breathing space" for hard-hit African countries this year.
It says the region's growth fell to just 1.4 per cent last year, its slowest in more than two decades, and the recovery is expected to be modest, with an expansion of just 2.6 per cent this year – far worse than the booming growth of 5 per cent to 6 per cent that had become normal just a few years ago.
Much of the recent progress in reducing African poverty could be reversed if the situation continues, the IMF says in the report.
Only a few countries, such as Senegal and Kenya, are expected to enjoy a high growth rate of 6 per cent or more this year. Two-thirds of African countries are suffering a slowdown, despite their "tremendous potential for growth," the IMF says.
Even the small uptick in Africa's growth this year will be largely driven by temporary factors in the three largest economies: an improvement in oil production in Nigeria, a boost in public spending in Angola, and the fading of a damaging drought in South Africa.
Three years after oil prices plunged, African oil exporters have still failed to adjust to the loss of revenue and the balance-of-payments pressures, according to the IMF report.
The region's two biggest economies, Nigeria and South Africa, are forecast to grow just 0.8 per cent this year, meaning that per-capita incomes will decline for the second consecutive year. And this forecast was issued before South Africa's credit rating was relegated to junk status by two ratings agencies last month.
In South Africa this year, "political risks continue to loom large," the IMF said, alluding to the factional feuding within the ruling African National Congress and the left-wing populist rhetoric of President Jacob Zuma as he attempts to fend off corruption allegations.
In Nigeria and Angola, governments continue to impose restrictions on foreign exchange, refusing to allow their currencies to float freely. This will "continue to depress activity in the non-oil sector and enhance the risk of a disorderly adjustment," the IMF says. The restrictions have "generated deep economic distortions," it says.
In a separate study to be released in the same report, the IMF analyzed Africa's economic record since 1950 and found a worrying tendency for its growth surges to be shorter and more volatile, and to culminate in costly "hard landings," compared with those in other regions of the world.
To unlock their growth potential and increase their resilience to shocks, African countries should diversify their economies, deepen their adoption of technology, accelerate their financial reforms, and improve their investment climate, the IMF said.
Economic turnarounds could be sped up and sustained if African governments took more steps to integrate with the global economy, promote openness and provide more political stability, it said.