The World Bank has projected that the growth of Sub-Saharan Africa will slow down in 2015. According to the bank, the region is expected to grow at 4.0 per cent as against the 4.5 per cent recorded in 2014.
"This downturn largely reflects the fall in the prices of oil and other commodities", the bank said, quoting Africa's Pulse, a twice-yearly World Bank Group analysis of the issues shaping Africa's economic prospects which was released early this week at the start of the World Bank Group's 2015 Spring Meetings.
The 2015 forecast is below the 4.4 per cent average annual growth rate of the past two decades, and well short of Africa's peak growth rates of 6.4 per cent in 2002-08. Excluding South Africa, the average growth for the rest of Sub-Saharan Africa is forecast to be around 4.7 per cent.
Meanwhile a statement from the bank quoted its President for Africa, Mr Makhtar Diop, as saying that "Despite strong headwinds and new challenges, Sub-Saharan Africa is still experiencing growth and with challenges come opportunities".
According to him, "The end of the commodity super-cycle has provided a window of opportunity to push ahead with the next wave of structural reforms and make Africa's growth more effective at reducing poverty."
Primary commodities dominate Africa's market
The report indicated that Sub-Saharan Africa is a net exporter of primary commodities.
"Oil is the most important commodity traded in the region, followed by gold and natural gas. Over 90 per cent of the total exports of eight major oil-exporting countries come from the three biggest exports of each country, which represents nearly 30 per cent of their GDP", it said.
In Ghana, high inflation and fiscal consolidation are still weighing on growth. In South Africa, growth continues to be curtailed by problems in the electricity sector and Ghana is again not spared.
Due to lack of adequate power supply, industry and many private sector players are on their knees.
Cost of production has shot up many folds and as a result, the most affected are laying off workers to be able to cut cost and keep their businesses running.
The mining companies in the country have laid off more than 1,000 workers for instance while Coca Cola also reduced its workforce by about 200 a month ago and many more are threatening should the situation remain the same.
Apart from the banking sector, all the other private companies are recording huge losses, a phenomenon which is expected to impact the growth rate in the country.
The report points to the fact that foreign direct investment inflows were subdued in 2014, reflecting slower growth in emerging markets and declining commodity prices. African countries continue to tap international bond markets to finance infrastructure projects; Cote d'Ivoire returned to the market this February and Ethiopia had a debut issue in December 2014.
Although debt burdens remain generally manageable, debt-to-GDP ratios for countries with increased bond market access have picked up in recent years.The uncertainty about future global monetary conditions are an additional reason for caution.
The World Bank's Chief Economist for Africa said: "As previously forecast, external tailwinds have turned to headwinds for Africa's development. It is in these challenging times that the region can and must show that it has come of age, and can sustain economic and social progress on its own strength."
"For starters, recent gains for the poorest Africans must be protected in those countries where fiscal and exchange rate adjustments are needed", he added.

Source: Graphic Online