Poor Vaccination, Policy’ll Slow Economic Recovery In Nigeria – IMF
The International Monetary Fund says slow vaccine rollout and stark differences in policy space are the leading reasons why economic recovery in Nigeria and other sub-Saharan African countries will be the slowest in the world.
The Director of the IMF’s African Department, Abebe Selassie, disclosed this during a press briefing on the October Regional Economic Outlook for sub‑Saharan Africa.
In a statement available on the IMF portal, Selassie said, “As sub-Saharan Africa navigates through a persistent pandemic with repeated waves of infection, a return to normal will be far from easy.
“In the absence of vaccines, lockdowns and other containment measures have been the only option for containing the virus.
“At 3.7 per cent this year, the recovery in sub-Saharan Africa will be the slowest in the world—as advanced markets grow by more than five per cent, while other emerging markets and developing countries grow by more than six per cent. This mismatch reflects sub-Saharan Africa’s slow vaccine rollout and stark differences in policy space.”
According to him, vaccination efforts in sub-Saharan Africa are slower than other regions, mostly due to stockpiling by advanced economies, export restrictions by major vaccine manufacturing countries, and demands for booster shots in advanced economies.
He added that only about three per cent of the population in sub-Saharan Africa had been fully vaccinated.
The IMF director said economic recovery in the region, which would grow to 3.8 per cent in 2021, would be aided “by favourable external conditions on trade and commodity prices, and improved harvests and increased agricultural production in a number of countries in the region.”
Selassie said the difficult policy environment of the region before the crisis had been made more demanding by the crisis.
He added that for most countries, urgent policy priorities included spending prioritisation, revenue mobilisation, enhanced credibility, and an improved business climate.
He said, “Policymakers in sub-Saharan Africa need to navigate an increasingly difficult and complex policy environment. Against an environment or weaker-than-expected growth, policymakers need to navigate among three formidable pressures.
“Pressing spending needs to address the many social, human capital, and infrastructure needs; limited borrowing capacity given already high public debt levels in most cases; and the time consuming and politically difficult nature of mobilizing tax revenues.
“How deftly countries navigate this trilemma will have a huge bearing on the macroeconomic wellbeing of countries and growth prospects.”
Selassie added, “Real per capita income is expected to remain close to 5.5 per cent below pre crisis trends, with permanent real output losses ranging between -21 per cent and -2 per cent.”
According to him, about 30 million people in the region were thrown into extreme poverty, worsening inequality not only across income groups, but also across sub-national geographic regions, which may add to the risk of social tension and political instability.
He added, “Furthermore, increasing debt vulnerabilities remain a source of concern, and many governments will have to undertake fiscal consolidation.
“Overall, public debt is predicted to decline slightly in 2021 to 56.6 per cent of GDP but remains high compared to a pre-pandemic level of 50.4 per cent of GDP. Half of sub-Saharan Africa’s low-income countries are either in or at high risk of debt distress. And more countries may find themselves under future pressure as debt-service payments account for an increasing share of government resources.”
Selassie added that there was an imminent need for policymakers in the region to tackle the region’s pressing development spending needs, contain public debt, and mobilise tax revenues.
He said the recent SDR allocation by the IMF had boosted the region’s reserves, easing some of the burden of authorities as they guide their countries’ recovery.
He said “On COVID-19, international cooperation on vaccination is critical to address the threat of repeated waves. This would help prevent the divergent recovery paths of sub-Saharan Africa and the rest of the world from hardening and becoming permanent fault lines, which would jeopardize decades of hard-won social and economic progress.”