By Frank Kamuntu
The World Bank has called for rapid COVID-19 action, including a faster vaccination process, to limit the barriers of the economy and extreme poverty amongst African countries especially those battling with international debts Uganda inclusive.
In its Global Economic Prospects report, the World Bank forecast the global economy would expand 4% in 2021 after shrinking 4.3% in 2020.
While 2020’s global economic activity was not as drastic as expected –due to a more robust recovery in China and shallower contractions in many countries — the impact on emerging markets and developing economies have been more severe.
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The report said that in Sub-Saharan Africa activity shrank an estimated 3.7% last year.
Extreme Poverty
South Africa and Nigeria, the two largest economies in the region, saw output fall sharply in 2020 and agriculture growth slowing. Both countries also saw a dramatic drop in per capita income, which has pushed tens of millions of more people into extreme poverty, striking questions about the survival of lower-class economy countries.
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The report said the decline in per capita income is expected to set average living standards back by a decade or more in a quarter of Sub-Saharan African economies.
“Financial fragilities in many of these countries, as the growth shock impacts vulnerable household and business balance sheets, will also need to be addressed”, said Vice President and World Bank Group Chief Economist, Carmen Reinhart.
It said in a press statement that the pandemic has caused “a heavy toll of deaths and illness, plunged millions into poverty, and may depress economic activity and incomes for a prolonged period”.
Growth in Sub Saharan Africa is expected to resume at a “moderate average pace of 2 per cent” in 2021, which is essentially zero in per capita terms and well below previous projections.
“While the recovery in private consumption and investment is forecast to be slower than previously envisioned, export growth is expected to accelerate gradually, in line with the rebound in activity among major trading partners,” the report said.
“The resumption inactivity in major advanced and emerging economies and key trading partners of the region (Europe, China, US) are chiefly underpinned by positive news on vaccine development and roll-out as well as new rounds of fiscal stimulus,” it added.
While the Bank said “the near-term outlook remains highly uncertain,” it said pandemic control and a speedier vaccination process could accelerate global growth to nearly 5%.
Solutions
World Bank says that policymakers must put in place “comprehensive reforms to improve the fundamental drivers of equitable and sustainable economic growth, the World Bank said, adding that they need to gradually shift from income support to growth-enhancing policies.
It adds that in the longer term emerging and developing economies need to improve digital infrastructure, climate resilience, health services, and business and governance practices to handle the economic fallout and mitigate poverty caused by the pandemic.
