Although West Africa economy is forecast to improve in the near term, with regional growth projected to average about 3.6 percent in 2019 and 2020, driven by gradual recovery of commodity prices especially gold, cocoa, cashew nuts, iron ore and oil prices and most importantly, improved production, the region’s growth is being overshadowed by the continent’s biggest economy, Nigeria, the African Development bank said in a newly released report.
“Nigeria’s dominance in the region continues to overshadow other smaller economies and determine the economic performance of the region. This was evident during the 2pq6 economic recession and even last year’s much improved growth rate of 1.9 percent masks faster growth in some economies in the region such as Cote d’Ivoire (7.4%) and Senegal (7%),” the report said.
Nigeria, Africa’s largest economy is expected to pay 48 percent of total revenue in 2019 and 45 percent in 2020 in external debt service payments, while its estimated revenue excluding grants is put at seven percent.
According to the bank, Nigeria is expected to raise 3.0 percent in tax revenues, 3.6 percent in oil revenue and 0.4 percent in other revenue, bringing total revenue excluding grants to 7.0 percent lower than Burkina Faso’s total revenue of 26.1 percent and Guinea-Bissau’s 13.2 percent.
Nigeria’s inflation, according to the bank, is projected to rise to 12.2 percent in 2019 from 11.9 percent in 2018 and is expected to decline to 11.4 percent in 2020; while it’s real GDP is projected to grow by 2.3% in 2019 and 2.4% in 2020. Nigeria accounts for nearly 20% of continental GDP and about 75% of the West Africa economy.
The region’s tepid real GDP growth estimated at 3.3 percent, up from 2.7 percent in 2017 is reflected lower commodity prices, shrinking oil production in Nigeria by far the largest economy in the region, and the impact of Ebola virus outbreak. Growth contraction in Nigeria overwhelmed the high growth in some smaller economies, pulling down the region’s average, the bank said in the report, the 2019 West Africa Regional Economic Outlook.
The bank sees the West African economic growth as being threatened by risks from uncertainty in escalating global trade tensions including China-US trade war and Brexit normalization of interest rates in advanced economies and uncertainty in global commodity prices; as well as tighter global financial conditions, adverse weather conditions and political and regional security crisis.
“Amidst many global and regional risks, Africa has continued to show growth resilience and remains the second fastest region in the world, after East Asia. Nevertheless, there are also many and persistent challenges and pattern of growth has not been transformative enough.
“Shocks from reduce commodity prices and tighter global financial conditions, which are exacerbated by underlying domestic pressures arising from policy uncertainties, adverse weather conditions, political insecurity challenges have all continued to weigh down on the economies of Africa,” Ebirama Faal, Senior Director, Nigeria Country Department of the African Development Bank said at the launch of the bank’s two reports – the 2019 African Economic Outlook and the 2019 West Africa Regional Economic Outlook, in Abuja.
Growth in the West African region is projected to remain subdued at 3.6 percent in 2019 and 2020, while macroeconomic indicators including inflation fuelled in part by expansionary fiscal policy and supply-side constraints remain a challenge to investment and sustainable growth in West Africa.