Regional economy to grow at 4.1 percent- AfDB report

The economies of Rwanda and 12 other countries in eastern Africa, are projected to collectively grow by 4.1 percent this year, up from 0.4 percent in 2020, according to the African Development’s Bank (AfDB’s) latest report. The performance, according to the report dubbed “East Africa Regional Economic Outlook 2021” will be supported by the global economic recovery. The findings also indicate that East Africa is the only region to have avoided a recession last year, owing to activities like agriculture, sustained public suspension on large infrastructure projects, and increased economic integration. However, the slow rollout of Covid-19 vaccines and risks of spikes in infections could dampen that outlook. The pandemic has had diverse impacts across the region, with countries highly dependent on tourism being the hardest hit, reads part of the statement. The regional economy is expected to accelerate to 4.9 percent next year and 5.6 percent the following year due to the rising commodity prices and growing economic diversification, the report said. “The pandemic has had sharper impacts on the poor, with the number of people falling below the poverty line projected to increase. Covid-related shocks have increased poverty in the region, with the share of people living in extreme poverty rising to 35% in 2021, or 134.3 million human beings.” Higher rollover risks While there remains signs of recovery however, the flip side, according to the findings, is that the region’s public debt widened considerably in 2020. The agency attributed this to several factors including, a slowdown in real GDP growth, emergency spending in the health sector, and reduced inflows of commodity revenues. “East Africa’s external public debt, like that of many African countries, has become more market-based and less concessional, which increases rollover risks,” the report reads in part. To stabilise public debt, according to the lender, countries must deal with debt related to state enterprises and contingent liabilities, clear domestic arrears, and also improve debt governance and transparency. “In addition, increased non-debt equity or donor-funded capital, along with innovative financing instruments and risk-sharing tools, must be explored to combine funding for East Africa’s development needs.” Also recommended are strategies of ramping up vaccinations, designing and implementing economic stimulus packages and recovery strategies towards credible fiscal consolidation programs, among others.

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Regional economy to grow at 4.1 percent- AfDB report