World Bank favours SSA, Nigeria with more robust growth outlook

The October 2021 edition of the World Bank bi-annual economic report on Sub-Saharan Africa (SSA) has favored the region and Nigeria specifically with a raise in its expected economic growth.

The Washington-based institution revised upward its 2021 growth projection for SSA by 100 basis points (bps) to 3.3 per cent (April 2021 edition: 2.3 per cent) due to strong rebound in commodity prices, relaxation of COVID-19 lockdown measures, and the recovery in global trade.

It also revised that of Nigeria by 30bps to 2.4 per cent.

This is as analysts at Afrinvest raises concern as the SSA continues to lose on trade. In first half of 2021 imports by SSA countries rose faster (2.2 per cent) compared to exports (1.8 per cent). What this simply implies is that for every $1.00 value of export earnings realised by any SSA countries, $1.22 loss per unit of imports was incurred.

“You can get a better sense of this from Nigeria’s trade statistics in the first half of 2021 where Imports ($33.6 billion) outstripped Exports ($19.5 billion) by $14.1 billion, using the official exchange rate of N410.50/$1.00.

The World Bank also revised Nigeria’s growth projection for 2021 upward by 30bps to 2.4 per cent, to be driven by stronger growth in the services sector. This is not a surprise to us given our earlier projection of 2.5 per cent for the year due largely to the low base-year effect.

Furthermore, the World Bank expressed concerns on the slow pace of vaccination in SSA, as it believes this could hurt the timid and fragile recovery of the region especially with the emergence of a more deadly variant of the virus, the Delta variant. As of September 2021, when the report was compiled, the share of the fully vaccinated population in SSA was below 3.3 per cent (vs. targeted minimum: 10.0 per cent).