Second Deputy Governor of the Bank of Ghana (BoG) Mrs Elsie Addo Awadzi has said Africa’s economic challenges have been further compounded by the increasing complexities of the global financial and business environment brought on by the COVID-19 pandemic.
She indicated that the Covid-19 pandemic led to a sharp contraction of economic activity in the region by 1.9 percent in 2020, with countries that were heavily dependent on tourism and commodity exports bearing the biggest brunt of the shock.
The average inflation rate for the region rose from 8.5 percent in 2019 to 10.8 percent in 2020 reflecting a sharp increase in food prices due to the lockdowns, she said.
“Increased Government spending to protect lives and livelihoods and to prevent a total collapse of the real sector widened overall fiscal balance on average from 4.1 percent of GDP in 2019 to 6.9 percent of GDP in 2020, while the average government debt to GDP ratio
in the region also increased from 51.5 percent in 2019 to 57.8 percent in 2020,” Mrs Awadzi added.
She said these during the Business and Financial Times Ghana Money Summit in Accra on Tuesday April 26.
The African continent is the world’s second-largest and second-most populous continent with over 1.3 billion people only after Asia, accounts for about 16% of the world’s human population and covers about 20% of the world’s land area.
It is also endowed with vast deposits of natural resources including diamonds, gold, silver, iron, cobalt, uranium, copper, bauxite, oil and gas, as well as land, sea, and climate resources that produce rich cash crops such as cocoa, timber, and other trees, tropical fruits, food and other items, mostly exported to foreign markets.
Mrs Addo Awadzi said “Notably, the continent is a diverse grouping of low, lower-middle, upper middle, and high-income countries, with mixed economic histories and growth prospects.
“Before the onset of the COVID-19 pandemic, the International Monetary Fund (IMF) estimated in its Regional Economic Outlook for sub-Saharan Africa in 2019, that economic growth would remain strong in non-resource intensive countries (some 24 countries with a population of about 500 million people) averaging about 6 percent with per capita income rising faster than the rest of the world.
“In contrast, growth was expected to slow down in resource-intensive countries (about 21 countries) with per capita growth lower than the world average. Overall, the average economic growth rate in sub-Saharan Africa was 3.5 percent in 2019, 0.5 percentage point higher than the previous year, and was projected to rise to 3.6 percent in 2020.
“The IMF also estimated in 2019, that more than 70 percent of the countries in the region were in the bottom half of countries globally in terms of competition indicators. Firm risk markups in sub-Saharan African countries were about 11 percentage points higher relative to those in other emerging market economies and developing countries, reflecting the perceived weak competitiveness of the business environment.
“The report suggested that increased competition, productivity growth, and investments, could boost real per capita GDP growth rate in the region by about 1 percentage point.”
By Laud Nartey|3news.com|Ghana