The 2021 edition of the African Economic Outlook focuses on debt resolution, governance, and growth in Africa. Chapter 1 examines Africa’s growth performance and outlook amid the COVID–19 pandemic. The chapter emphasizes policy options to mitigate the effects of the pandemic in the short, medium, and long terms.
Chapter 2 explores the causes and consequences of Africa’s debt dynamics by showing how the changing structure and composition of debt create vulnerabilities.
In chapter 3, the report takes stock of the challenges in the current global architecture for debt resolution and explores the link between governance and growth with an emphasis on proposed reforms to improve the processes of debt resolution, governance, and sustainable growth.
Chapter 1 : Africa’s growth performance and outlook amid the Covid-19 pandemic
Africa is projected to recover in 2021 from its worst economic recession in half a century
Economic activity in Africa was constrained in 2020 by an unprecedented global pandemic caused by COVID–19. Real GDP in Africa is projected to grow by 3.4 percent in 2021, after contracting by 2.1 percent in 2020. This projected recovery from the worst recession in more than half a century will be underpinned by a resumption of tourism, a rebound in commodity prices, and the rollback of pandemic-induced restrictions. The outlook is, however, subject to great uncertainty from both external and domestic risks.
Chapter 2 : Debt dynamics and consequences
The COVID–19 pandemic has caused a surge in government financing needs in Africa
Since the COVID–19 pandemic began in early 2020, governments have announced fiscal stimu-lus packages ranging in cost from about 0.02 per-cent of GDP in South Sudan to about 10.4 percent of GDP in South Africa. The Bank estimates that African governments need additional gross financ-ing of about $154 billion in 2020/21 to respond to the crisis. These fiscal stimulus packages have largely had immediate, direct implications for budgetary balances, borrowing needs, and debt levels.
Chapter 3 : Debt resolution and the nexus between governance and growth
Debt resolution in Africa has often been disorderly and protracted, with costly economic consequences
The economic consequences of sovereign debt restructuring are less severe in countries that act pre-emptively and collaboratively and in those countries where economic governance is stron-ger. However, the Heavily Indebted Poor Countries initiative took more than a decade to be imple-mented, and recent debt resolution in Africa has been delayed by long-lasting litigation with private and official creditors. The absence of orderly and successful sovereign debt resolution, especially with private creditors, makes the prospects of debt distress worrisome for African economies.
The country notes were prepared by Country Economists under the overall guidance and supervision of Emmanuel Pinto Moreira. Internal review and overall coordination for the preparation of the country notes was done by Anthony Simpasa and Philippe Trape, with support and validation by the Lead Economists for each region: Central Africa (Hervé Lohoues); East Africa (Marcellin Ndong Ntah and Edward Batte Sennoga); Nigeria Country Department (Anthony Simpasa); North Africa (Audrey Verdier-Chouchane); Southern Africa (George Honde and George Kararach); and West Africa (Guy-Blaise Nkamleu). All country notes were cleared by the Country Managers.