You can also listen to this podcast on iono.fm here. ADVERTISEMENT CONTINUE READING BELOW JIMMY MOYAHA: The World Bank recently put out a report or an analysis from their perspective around their expectations for the African region, particularly where it relates to southern Africa.I’m joined on the line by the World Bank’s chief economist for Africa, Andrew Dabalen, to take a look at this and try to unpack what is in the report. Good evening, Andrew. Thanks so much for taking the time.
We see that inflation has declined from about 7% to about 5% from 2023 to 2024, and it’s expected to stay there or decline further in coming years. And when that happens we begin to see that, in fact, household finances will begin to have this space for discretionary spending. That’s what we see. The risk remains that when interest rates continue to remain high – because inflation hasn’t really come down to the levels that the central bankers in rich countries want it to come to – then investment will be depressed; investment returns will be depressed for a while.
Then the third reason is because a lot of business people are still probably sitting on the sidelines because they don’t know which way these economies are going to go. If you combine all these three things you get the sense that there are these global factors that are going to weigh down on investments.
So we hope that the recovery of private consumption is just a leading indicator and that soon we will see recovery of broad investments, government consumption – and of course trade recover.
Policy slippages are very common in Africa – and that’s a major risk, especially around election time. We have so many elections this year across the board, including in fact the one that that’s about to take place in May in South Africa. In the case of southern Africa, for example, there are these risks related to the deterioration in infrastructure. So that’s important, like the energy crisis which has been a major problem for a while now. It continues to be, and unless that issue is resolved it’s going to very difficult to see factories becoming more competitive, or industries in general becoming more competitive, lowering their costs of production and being able to expand and hire more people. So that’s a major risk.
It’s really important that African countries and African policy makers not miss this opportunity, because it’s an enormous opportunity.
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