Sub-Saharan Africa is lagging behind other regions in terms of economic growth according to the World Bank’s report Reinvigorating Growth in Resource-Rich Sub-Saharan Africa.
The report points out that while resource-rich countries should be drivers of economic growth and reduce poverty, key challenges are holding sub-Saharan countries back, especially the lack of human capital, infrastructure and regional cooperation.
Despite boasting a reputation of being ‘exceptionally resource abundant,’ sub-Saharan Africa is also lagging behind other regions in terms of resources reported. Per capita, sub-Saharan Africa is one of the least resource-rich regions in the world, but it also depends on these resources more than other resource-rich economies.
“Until recently, exploration efforts and discoveries in sub-Saharan Africa were modest. As a result, the value of sub-Saharan Africa’s natural wealth has stagnated for more than 20 years, and its per-capita natural wealth has plunged to just above that of South Asia,” Ivailo Izvorski, lead economist for the World Bank said in a Brookings Institute article.
Izvorski argues that African countries should improve their regulatory environments, invest in human capital, reduce the political and contract risks in their exploration sectors and decrease project development timeframes.
“Natural wealth per capita could be as much as 25 percent higher if the quality of sub-Saharan Africa’s institutions were to match that of the Organization for Economic Co-operation and Development countries,” he said.
In another Brookings Report, the authors note that integrating regionally and globally is key to boosting growth, but resource-rich countries in sub-Saharan Africa are less likely to integrate in the regional or even global value chains.
“More restrictive borders in resource-rich sub-Saharan Africa put those countries behind both resource-rich countries in other developing regions and the resource-poor sub-Saharan African countries,” said Ivailo Izvorski and Djeneba Doumbia in the Brookings analysis.
“Those that are more open to trade, ideas, and (appropriately sequenced) inflows of foreign capital are better integrated into the global economy and benefit from interactions with other countries.”
In a separate report, the World Bank notes that economic growth for 2018 has been lower than anticipated, picking up to 2.7 percent in 2018 compared to 2.3 percent in 2017, but lower than previous forecasts.
The October forecast predicts a ‘bumpy road ahead,’ with challenges including a stronger U.S. dollar, putting pressure on dollar-denominated debt and projects in emerging markets; high public debt; lower labor productivity and sluggish economic performance in oil-dependent economies including Angola and Nigeria, and in South Africa. An increase in oil production, however, is expected to push regional growth up to 3.3 percent in 2019.
Top 10 Resource Rich Countries
Republic of Congo
Least Natural Resource Rich
Saô Tomé and Príncipe