Africa will return to development in 2021, but poverty and debt will worsen

Africa will resume economic growth in 2021 after a recession caused by coronoviruses, but a report released on Friday predicts the African Development Bank (AfDB) will continue to increase poverty and public debt will continue.

After experiencing its first recession in half a century (-2.1%) last year, growth is expected to resume in the continent’s GDP growth of 3.4% in 2021, the ADB indicates in its African Economic Outlook. This is a slightly more optimistic forecast than the International Monetary Fund (IMF), which forecast a 3.1% increase in its forecast for January.

The economic impact of the epidemic on the country

Oil exporting countries (including Algeria, Nigeria and Angola) are expected to achieve economic growth of 3.1% in 2021, following a recession of -1.5% last year.

Economies dependent on raw material exports (including South Africa) are projected to decline to 3.1% in 2020 from -4.7% this year. The South African economic giants, after a recession of -8.2% in 2020, are expected to resume growth of 3%.

Tourism-dependent economies (including Morocco, Tunisia, Mauritius) are expected to recover from an 11.5% drop in their GDP in 2020, to experience a 6.2% growth in 2021.

Finally, countries with more diversified economies, some of which managed to maintain positive growth in 2020 (Ethiopia, Côte d’Ivoire), should go from a contraction of 0.9% of GDP to 4.1% growth last year.

Despite the return of development in 2021, the social consequences of the epidemic will continue to be felt: in 2021, 39 million Africans may fall into extreme poverty, with the threshold set to $ 1.90 a day. According to ADB estimates, even compared to last year, when already 30 million people were reduced there.

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All in all, extreme poverty can affect 465 million Africans, a third of the continent’s population, while poverty has been steadily decreasing for over two decades.

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Another long-term consequence of the Kovid-19 epidemic: an increase in the debts of African states.

“The shock of the epidemic and the economic crisis it has caused have had a direct impact on the country’s budget balance and debt burden,” says AfDB.

“The budget deficit is projected to double to reach a historical level of 8.4% of GDP in 2020”, and is expected to result in “Africa’s average debt-to-GDP ratio of 10 to 15 percent in the short term” Is “and medium term” to reach 70% according to the report.

In December 2020, of the 38 countries for which debt stability analyzes were available, “14 were at high risk of a debt crisis and six were already in a debt crisis”. The Afbi notes, “Sixteen countries were at moderate risk of a debt crisis,” and only “two were considered low-risk.”

“Africa can face serious debt problems, and defaults and diffuse resolutions can impede the prosperity of Africa,” Afba president Akinuwami Adesina said in the report.

Mr Adesina called for “to meet the debt challenge and to finance Africa’s development”, to increase support from the international community and private creditors, but also for “bold governance reforms” of African states.

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