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WORLD BANK / AFRICA REPORT
STORY: WORLD BANK / AFRICA REPORT
TRT: 02:34
SOURCE: WORLD BANK /FILE
RESTRICTIONS: NONE
LANGUAGE: ENGLISH /NATS
DATELINE: 8 APRIL 2016, WASHINGTON D.C., UNITED STATES OF AMERICA /FILE
FILE
1. Wide shot, Ouagadougou, Burkina Faso, traffic
2. Wide shot, Cotonou, Benin, cityscape
3. Pan right, Accra Ghana, cityscape
4. Med shot, Dar es Salaam, Tanzania, traffic
8 APRIL 2016, WASHINGTON D.C., UNITED STATES OF AMERICA
5. SOUNDBITE (English) Punam Chuhan Pole, World Bank Lead Economist and Report Author:
“We find in The Pulse that the recent drop in commodity prices implies that the terms of trade of Africa have fallen on average by 16 percent in 2016.”
FILE
6. Various shots, Washington, DC World Bank Headquarters
8 APRIL 2016, WASHINGTON D.C., UNITED STATES OF AMERICA
7. SOUNDBITE (ENGLISH) Punam Chuhan-Pole, World Bank Lead Economist and Report Author:
“Those countries that gain from the drop in oil prices are not oil importers, such as Kenya, Rwanda and Ethiopia. We find that on average, the decline in the terms of trade has a larger negative impact on the region because of the large dependence on commodities in the continent.
FILE
8. Wide shot, Bamako, Mali cityscape
9. Pan right, Bamako, Mali trucks
10. Wide shot, Kampala Uganda, woman pumping gas
11. Close up, Kampala Uganda, woman pumping gas
8 APRIL 2016, WASHINGTON D.C., UNITED STATES OF AMERICA
12. SOUNDBITE (English) Punam Chuhan Pole, World Bank Lead Economist and Report Author:
“Lower commodity prices have worsened current account performance, leading to a widening of current account deficits. In turn, this has put pressure on reserves, and on currencies, so that several Africa countries have seen large depreciation of their currencies.
FILE
13. Pan right, Dar es Salaam, Tanzania, cityscape
14. Wide shot, Johannesburg, South Africa, man at ATM
15. Close up, Johannesburg, South Africa, man at ATM
16. Wide shot, Johannesburg, South Africa Stock Exchange
8 APRIL 2016, WASHINGTON D.C., UNITED STATES OF AMERICA
17. SOUNDBITE (English) Punam Chuhan Pole, World Bank Lead Economist and Report Author:
“We find that taxes as a share of GDP are quite low in most African countries, and in countries that are commodity exporters, the non resource sector contributes very little to tax. So there is scope to increase domestic resource mobilization.
FILE
18. Wide shot, Johannesburg, South Africa, people on street
The World Bank issued a report today, saying the economic activity in Sub-Saharan Africa slowed in 2015, with GDP growth averaging 3.0 percent, down from 4.5 percent in 2014, slowing the pace of expansion to the lows last seen in 2009.
These figures are outlined in Africa’s Pulse, the World Bank’s twice-yearly analysis of economic trends and latest data for the region. The 2016 growth forecast remains subdued at 3.3 percent, way below the robust 6.8 percent growth in GDP that the region sustained in the 2003-2008 period. Overall, growth is projected to pick up in 2017-2018 to 4.5 percent.
The plunge in commodity prices – particularly oil, which fell 67 percent from June 2014 to December 2015 – and weak global growth, especially in emerging market economies, are behind the region’s lackluster performance. In several instances, the adverse impact of lower commodity prices was compounded by domestic conditions such as electricity shortages, policy uncertainty, drought, and security threats, which stymied growth. There were some bright spots where growth continued to be robust such as in Côte d’Ivoire, which saw a favorable policy environment and rising investment, as well as oil importers such as Kenya, Rwanda, and Tanzania.
The external environment confronting the region is expected to remain difficult. In a number of countries, policy buffers are weaker, constraining these countries’ policy response. Delays in implementing adjustments to the drop in revenues from commodity exports and worsening drought conditions present risks to Africa’s growth prospects.
Several countries are expected to see moderate growth. Among frontier markets, growth is expected to edge up in Ghana, driven by improving investor sentiment, the launch of new oilfields, and the easing of the electricity crisis. In Kenya, growth is expected to remain robust, supported by private consumption and public infrastructure investment.
The projected pickup in activity in 2017-2018 reflects a gradual improvement in the region’s largest economies – Angola, Nigeria, and South Africa – as commodity prices stabilize and growth-enhancing reforms are implemented.
As Africa undergoes rapid urban growth, there is a window of opportunity to harness the potential of cities as engines of economic growth. The rapid decline in oil and commodity prices has adversely affected resource-rich countries and signaled an urgent need for economic diversification in Africa. Urbanization and well managed cities provide a major opportunity to offer a springboard for diversification.
The growth of cities, when well managed, can spur economic growth and productivity. But African cities are currently not delivering agglomeration economies or reaping urban productivity benefits. Instead they suffer from high housing and transport costs, in addition to the high cost of food that takes up a large share of urban household budgets.
Housing and transport are particularly costly in urban Africa. Housing prices are about 55 percent higher in urban areas of African countries relative to their income levels. Urban transport, which includes prices of vehicles and transport services, is about 42 percent more expensive in African cities than cities in other countries. Like households and workers, firms also face high urban costs. Cross-country analysis confirms that manufacturing firms in African cities pay higher wages in nominal terms than urban firms in other countries at comparable development levels.
To build cities that work—cities that are livable, connected, and affordable, and therefore economically dense—policy makers will need to direct attention toward the deeper structural problems that misallocate land, fragment development, and limit productivity.
Commodity price drops have lowered Africa’s terms of trade in 2016 by an estimated 16 percent, with commodity exporters seeing large terms-of-trade losses. Across the region in 2016, the impact of this shock is expected to lower economic activity by 0.5 percent from the baseline, and to weaken the current account and fiscal balance by about 4 and 2 percentage points below the baseline, respectively.
Sub-Saharan Africa countries will continue to face low and volatile prices in global commodity markets. Governments must take steps to adjust to a new, lower level of commodity prices, address economic vulnerabilities, and develop new sources of sustainable, inclusive growth. Africa’s growing urban centers offer a springboard for diversification. But they need better institutions for effective planning and coordination that can raise urban economic density and productivity, and spur the region’s transformation.
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