A report by African Development Bank (AfDB) released recently reveals East Africa is expected to post the fastest growth on the continent, which will likely attract more investors into the region.
The report says Prices of goods region are expected to remain stable this year, a reprieve for consumers, following near double-digit inflation last year.
Inflation in the region is also expected to fall sharply due to improved crop harvests, having spiked to nearly 10 per cent last year.
“Growth is expected to remain buoyant, reaching 5.9 per cent in 2018 and 6.1 per cent in 2019. Strong growth is widespread in the sub-region, with many countries -Djibouti, Ethiopia, Kenya, Rwanda, Tanzania and Uganda growing five per cent or more,” said AfDB in its 2018 Africa Economic Outlook report, titled African Development Bank makes a compelling case for Africa’s industrialization
Some of the factors expected to contribute to faster economic growth are increased private consumption and manufacturing and investment in public infrastructure in Djibouti and Ethiopia.
“African economies have been resilient and are gaining momentum. Challenges remain, especially for the structural transformations that would create more jobs and reduce poverty by deepening investment in agriculture and developing agricultural value chains to spur modern manufacturing and services.” said Akinwumi Adesina, president of AfDB.
However debt repayment has become problems to some countries in some cases it has become the single-largest public expenditure item. Like Kenya, AfDB raised concerns about Uganda, which has been taking up debt to bridge budget deficits attributed to low revenue collections.
“At these growth rates, the debt burden is growing faster than government resources; the revenue-to-GDP ratio stands at only 13.4 per cent,” noted AfDB in the report.
Uganda was also cited for high public spending on contingencies, which are mainly attributed to security concerns. The country also has to deal with the challenge of weak public financial and investment management systems.The high cost of electricity and its availability have been of concern to foreign investors especially in Uganda.
The African Economic Outlook has become the flagship report for the African Development Bank, providing data and reference material on Africa’s development that are of interest to researchers, investors, civil society organizations, development partners and the media.
This year’s edition focuses on macroeconomic development and structural changes in Africa, and outlines economic prospects for 2018. The report emphasizes the need to develop Africa’s infrastructure, and recommends new strategies and innovative financing instruments for countries to consider, depending on levels of development and specific circumstances.