What are the problems facing Africa in developing their economy?

Sub-Saharan Africa, home to more than 1 billion people, half of whom will be under 25 years old by 2050, is a diverse continent offering human and natural resources that have the potential to yield inclusive growth and eradicate poverty in the region. With the world’s largest free trade area and a 1.2 billion-person market, the continent is creating an entirely new development path, harnessing the potential of its resources and people.

The region is composed of low, lower-middle, upper-middle, and high-income countries, 22 of which are fragile or conflict-affected. Africa also has 13 small states, characterized by a small population, limited human capital, and a confined land area.

Economic growth in Sub-Saharan Africa (SSA) is estimated at 4 percent in 2021, up from a contraction in economic activity of 2 percent in 2020. However, growth in the region is expected to decelerate in 2022 amid a global environment with multiple (and new) shocks, high volatility, and uncertainty. The economy is set to expand by 3.6 percent in 2022, down from 4 percent in 2021, as it struggles to pick up momentum amid a slowdown in global economic activity, continued supply constraints, outbreaks of new coronavirus variants, high inflation, and rising financial risks due to high and increasingly vulnerable debt levels.

The invasion of Ukraine compounds the factors holding back recovery in the region. Although the direct trade and financial linkages with Russia and Ukraine are small, the war will likely impact Sub-Saharan African economies through higher commodity prices, higher food, fuel and headline inflation, tightening of global financial conditions, and reduced foreign financing flows into the region. The growth effects in the region are expected to be marginal however, the largest impact is on the increasing likelihood of civil strife as a result of food- and energy-fueled inflation amid an environment of heightened political instability. 

Prospects for the East and Southern African subregion show a sustained recovery (4.1 percent) from the recession, down to 3.1 percent in 2022, and then settling around 3.8 percent in 2024. The Western and Central Africa subregion is projected to grow 4.2 percent in 2022 and 4.6 percent in 2023. The 2022 forecast is revised up by 0.6 percentage point compared to the October 2021 forecast, largely reflecting upgrades in Nigeria.

Economic activity in Sub-Saharan Africa is projected to grow at 3.9 percent and 4.2 percent in 2023 and 2024, respectively. A recovery in global demand is expected in 2023 as most of the shocks dragging down the global economy are expected to dissipate.

As a result of supply shocks predating the war in Ukraine, emerging signs of stagflation are posing challenges to monetary policymaking. Central banks are facing a trade-off between accommodating the weak economy with the risk of exacerbating inflationary prospects and fighting inflation at the high cost of triggering a recession. Many central banks in the region have chosen the second policy option so far and embarked on a tightening cycle, but others have maintained a more dovish stance.

Since October 2021, countries in the region are either at moderate or high risk of debt distress, with the share of countries in high risk of debt distress growing from 52.6 to 60.5 percent. To address the rising risks of debt sustainability, some countries in the region implemented austerity measures; however, these actions have been insufficient to reduce debt levels.

The looming threat of stagnation worldwide amid a landscape of multiple new and covariate shocks emphasizes the need for African policymakers to implement policies that accelerate structural transformation through productivity-enhancing growth and creating more and better jobs. Boosting agricultural productivity is essential to drive a growth-enhancing structural transformation process. Amid soaring food prices and supply constraints, policy makers need avoid making previous policy mistakes (bans or tariffs/taxes on exports and imports), and ensure international trade flows.

Last Updated: Apr 13, 2022

Two years into the pandemic, recovery in the region remains stymied amid multiple challenges such as the ongoing pandemic, global inflation, and climate shocks. The Russian invasion of Ukraine compounds to the already mentioned factors holding back growth in Sub-Saharan Africa.

As part of the global response since the start of the COVID-19 crisis, the World Bank Group has committed over $157 billion to address the impacts of the pandemic, which includes more than $39 billion for African countries to help them strengthen health systems and services, establish and expand social safety nets, and weather the economic impacts of the crisis. More operations are under preparation for FY22 for about $46 billion.

Our response efforts are focused around four main areas: saving lives, protecting poor people, protecting and creating jobs, and building back better.

Saving Lives: The World Bank has taken fast action to help African countries strengthen their preparedness and health system strengthening capacities and, after two years of the crisis, continues to step up its support on vaccine purchase and deployment. After almost a year of vaccine roll-out in 53 of the 54 countries of the African continent (Eritrea has no vaccine program so far), ensuring an adequate supply of affordable COVID-19 vaccines and proper deployment capacities are priorities for the region. The World Bank has made available $4.7 billion for the procurement and deployment of COVID-19 vaccines in 41 out of the 48 countries in sub-Saharan Africa. This emergency vaccine financing complements ongoing COVID-19 emergency projects in 36 countries (amounting to $988 million) which focused, and continues to support, strengthening prevention, expanding testing, enhancing communication campaigns, and providing medical equipment such as portable ventilators, oxygen concentrators, personal protective equipment and masks.

Protecting poor people: To protect poor and vulnerable citizens and cushion the impact of the crisis on their livelihoods, the Bank is helping African countries scale up and adapt social safety net programs and ensure food security by supporting farmers to expand agricultural production as well as sustain food supply chains. Since the start of the pandemic, more than $5.7 billion new financing has been approved for social safety net programs across the continent, including in Somalia, Togo, Niger, and the Democratic Republic of Congo. This boost to safety net programs is helping address chronic poverty through cash transfers and supporting those who lost their livelihoods following the pandemic.

Protecting and creating jobs: Micro, Small and Medium-Sized Enterprises, which provide the majority of jobs, have been particularly hard hit across the region where informal firms dominate employment. Public works and urban programs in countries such as the Central African Republic and Kenya are being launched or scaled up to facilitate job creation in low income communities and to help increase access to livelihood support for extremely poor and vulnerable people like women and the youth. Meanwhile, the World Bank Group’s private sector arm, the International Finance Corporation (IFC), is working to increase financing for small businesses, develop digital infrastructure, help keep agriculture supply chains running, and enable local manufacturers to access working capital.

Building Back Better: While addressing the immediate impacts of the COVID-19 pandemic, the focus on recovery remains central to the Bank’s response and support to countries. More than 20 SSA countries have requested development policy operations or budget support from the Bank to assist them to manage the fiscal impacts of the pandemic. As of March 31, 2022, since the beginning of the pandemic, the World Bank has approved 53 Development Policy Operations in SSA for more than $8.7 billion provided by the International Development Association (IDA) and $2.8 billion provided by International Bank of Reconstruction and Development, in support for policy actions to help with the recovery process.

The World Bank Group continues to prioritize investments in human capital and digital economy. It supports initiatives in favor of climate change adaptation and mitigation and is deploying efforts  to address the drivers of fragility, conflict, and violence (FCV). Over the last few years, the WBG has strengthened its engagement in the most volatile situations, such as the Sahel and the Horn of Africa, facilitated by enhanced diagnostics, footprint, financing, implementation tools, and partnerships. Finally, the World Bank is scaling up its work on regional integration, taking a holistic view of the continent to improve connectivity, leverage economies of scale, and advance collective action to address shared challenges. Regional approaches to mitigate FCV drivers and risks, and strengthen resilience, have also been expanded.

Research and analysis: Knowledge is essential for governments to make better policies and institutions to make aid more effective. Our most recent regional studies can be found here, and analytical work by country is published on each country’s website.

Last Updated: Apr 07, 2022

In response to the COVID-19 pandemic, more than $39 billion has been dedicated to operations that support health services, establish and expand social safety nets, and help governments to weather the economic impacts of the crisis. In addition, $2.92 billion has been committed for the procurement and deployment of COVID-19 vaccines in 41 countries in the region. More operations are under preparation for FY22 for about $46 billion.

A few development results include:

Adapting to climate change and building climate resilience

In 2020, the World Bank launched The Next Generation African Climate Business Plan (NG-ACBP), setting out an innovative blueprint to help Sub-Saharan African economies achieve low carbon, climate-resilient outcomes. Under the Plan, the Bank is channeling $22.5 billion to Sub-Saharan Africa for climate adaptation and mitigation from 2021–25. This complements the World Bank Group global Climate Action Plan, which sets a target for 35% of our financing to have climate co-benefits, on average, over the next five years and that 50% of this financing supports adaptation and resilience.  The NG-ACBP also underscores the World Bank’s efforts to support a green, resilient and inclusive recovery from the impacts of the COVID-19 pandemic while addressing the longer-term challenge of climate change in Sub-Saharan Africa as we head towards COP27, the African COP, in November.

The $75 million Madagascar Integrated Urban Development and Resilience project for Greater Antananarivo will benefit 65,000 low income neighborhoods and another 2 million indirectly through flood protection investments, citywide infrastructure improvements, and enhanced capacities to respond promptly to crises.

Between 2015 and 2021, more than 2 million people have benefited from the $248 million Regional Sahel Pastoralism Support Program. The program has also improved animal health thanks to the construction and rehabilitation of nearly 300 vaccination parks - where more than 200 million animals have been vaccinated - as well as the construction of nearly 70 veterinary units and training for more than 50 veterinarians. A second phase of the program ($375 million) launched in March 2022 to scale up activities and benefit additional 13 million people in the Sahel.

Supporting inclusive governance and transforming economies 

Enabling efficient and inclusive delivery of services, such as judicial courts, waste management, water, electricity, ICT and safety nets, and building strong and accountable institutions and systems that are resilient to economic, social and environmental pressures are the foundations of the Bank’s work on governance and inclusion in Africa.

The $67 million Democratic Republic of Congo Strengthening Public Financial Management (PFM) and Accountability Project has been helping to improve domestic revenue mobilization, public expenditure management, and accountability, at central level and in selected provinces. Project support for the Inspection Générale des Finances (IGF), which includes the development of risk-based audit approaches, training for more than a hundred new staff, and the acquisition of IT equipment and audit applications, has helped IGF undertake effective financial investigations that are contributing to reining in corruption and misappropriation of public resources.

Between 2020 and early 2022, the World Bank’s Financial Inclusion Support Project (FISP) in Burkina Faso enabled 3,000 borrowers, a third of whom were women, to access $48.5 million in credit from banks and microfinance institutions. More than 80 percent of them were new borrowers, who would not have been able to access this credit without the guarantee provided by the FISP.

Empowering women and girls to boost Sub-Saharan Africa’s human capital

The World Bank's Africa Human Capital plan sets ambitious targets to boost Sub-Saharan Africa’s human capital—the knowledge, health and resilience of its people. To support these ambitions, the World Bank is investing over $34.2 billion across 228 human development projects in the region, and nearly $1.2 billion in new investments are in the pipeline for FY22 (as of April 4, 2022). Since the Africa Human Capital Plan launched in 2019—of which women and girls’ empowerment is a central tenant — the World Bank has approved over $11.5 billion in investments that champion women and girls. Together with governments, regional institutions, and development partners, the World Bank has expanded multi-sectoral programs with immediate and long-term solutions that invest in women and girls.

For example, the Sahel Women’s Empowerment and Demographic Dividend Project (SWEDD) works across the Sahel to improve the availability and affordability of reproductive health services, strengthen specialized training centers for rural-based midwives, improve nursing services, and pilot and share knowledge on adolescent girls’ initiatives, increasing their agency and productivity. SWEDD has so far reached more than 2 million girls in nine countries, beyond the Sahel region, with $680 million in Bank funding.

In Angola, the Strengthening the National Social Protection System Project, known locally as the Kwenda Project, has registered nearly 600,000 households across 18 provinces to receive cash transfers, of which about 60 percent are female headed. By 2023, 1.6 million households will be beneficiaries of Kwenda cash transfers which represents all poor households in the country. This would make Kwenda one of the largest cash transfer programs in Sub-Saharan Africa.

Stepping up to support regional integration in Africa

The COVID-19 pandemic has highlighted the importance of regional integration as a key element of Africa’s recovery efforts to better coordinate on regional disease surveillance and response plans, keep regional trade flows open, address fragility that could spill across borders, support private sector recovery, and much more. The current Regional Integration program supported by the World Bank amounts to over $16 billion, with over 90 projects. These are helping to (i) expand infrastructure to build greater regional connectivity in the key areas of energy, digital and transport; (ii) promote trade and market integration; (iii) support human capital development, particularly in the areas of health, education and women’s empowerment; and to (iv) reinforce resilience by helping to address climate-change related challenges and other cross-border risks and vulnerabilities caused by conflicts and insecurity. The World Bank Group is committed to scale up its partnership and support to strengthen regional cooperation and integration in Africa towards the Agenda 2063 and its flagship projects such as the implementation of the African Continental Free Trade Area agreement, digital and energy integration, and trade facilitation.

Harnessing technological developments to improve digital connectivity and access to clean and reliable energy

Energy access remains a challenge in Africa where one in three people are still without access to electricity. To address this challenge, the Bank is helping to increase access to affordable reliable and sustainable energy across Africa. Operations support grid extension and expansion of transmission networks, innovative off-grid electrification solutions, expansions of renewable generation capacity, development of regional power pools, and improvement of service efficiency. 

The COVID-19 pandemic exacerbated poverty and threatened livelihoods in Liberia. The need to respond to this challenge spurred the expansion and digitization of the government’s ongoing cash transfer program. The Liberia Social Safety Nets Project launched the government’s first-ever urban cash transfer program. It provided emergency cash transfers for close to 15,000 households living in vulnerable communities in the Greater Monrovia area, which had recorded the highest number of COVID-19 cases in Liberia. These households received the cash transfers in their mobile wallet accounts. Importantly, up to 70 percent of cash recipients were women.

This year, the Rwanda Energy Access and Quality Improvement Project (EAQIP) will enhance the availability and efficiency of low-cost renewable energy and expand grid connections for residential, commercial, industrial, and public sector consumers. The project includes the World Bank’s largest clean cooking operation in Africa, and the first project co-financed by the recently launched Clean Cooking Fund (CCF), hosted by the World Bank’s Energy Sector Management Assistance Program (ESMAP).

Last Updated: Apr 07, 2022

The World Bank Group (WBG) leverages partnerships, knowledge, and financing instruments to further its twin goals of ending poverty and promoting shared prosperity. Deepened and accelerated support for African development requires working in partnership with a broad range of actors, aligning objectives and exploiting synergies and comparative advantages.

The World Bank has been working closely with the African Union (AU) Vaccine Acquisition Trust (AVAT) and the United Nations Children Fund (UNICEF) since January 2021 to reach the AU’s ambitious goal of vaccinating at least 70% of the African population against COVID-19 as quickly as possible through a continental approach.

The World Bank Group is a founding member of the Sahel Alliance, along with France, Germany, the European Union (EU), African Development Bank (AFDB), and United Nations Development Programme (UNDP). The alliance coordinates development efforts and financing in Burkina Faso, Chad, Mali, Mauritania and Niger, with the goal of supporting resilient growth and stability in the Sahel. It aims to expand access to services and economic opportunities in the G5-Sahel countries. The WBG has scaled up its financial support to the G5 Sahel countries through the International Development Association (IDA) to support conflict prevention, resilience, and emergency responses, with IDA financing estimated to reach $6.5 billion for fiscal years 21-22. 

The Horn of Africa (HoA) Initiative is a partnership of the Finance Ministers of the countries in the Horn, supported by the African Development Bank, European Union and the World Bank Group, for scaling up regional integration and cooperation on the priority pillars of infrastructure connectivity, trade and economic integration, resilience, and human capital. The Initiative has a priority package of $15 billion. The Bank is on its way to fulfil its promise of investing over $2 billion on the priority pillars during IDA19 on pandemic preparedness, transport, energy, digital development, groundwater, disease surveillance, regional value chains, livestock, and fragility. The World Bank will continue to support the Initiative with knowledge, analytics, and investments.

The World Bank also supports countries to address forced displacement and refugees. Collaboration with the United Nations High Commissioner for Refugees (UNHCR), the EU, the African Union Commission (AUC), and the International Committee of the Red Cross (ICRC) underpins World Bank programs implementing a development approach to forced displacement and fragile contexts in the Great Lakes, Horn of Africa, Sahel, and Lake Chad countries.

The World Bank is working with the AUC, the AfCFTA Secretariat and UNECA to facilitate implementation of the African Continental Free Trade Area. The Bank also has strategic partnerships and collaboration with regional economic commissions, regional development banks and other regional bodies including SADC, IGAD, EAC, COMESA, ECOWAS, UEMOA, CEMAC, ECCAS, BEAC, BOAD, and Trade and Development Bank, the Southern, Eastern and West African Power Pools and River Basin Authorities.

We are stepping up support for digital transformation in Africa in collaboration with the AUC, AFDB, UNECA, China, the French Development Agency (AFD), the UK Commonwealth & Development Office (FCDO), Japan International Coordination Agency (JICA), EU, European Investment Bank (EIB), Bill and Melinda Gates Foundation, the International Telecommunications Union, and Smart Africa. To date, we have launched 34 digital economy country diagnostics, with eight more in progress, as part of the African Union’s Digital Economy for Africa Initiative, aiming to ensure every individual, business and government in Africa are digitally enabled by 2030.

The Africa Region also leverages the combined strength of the entire World Bank Group by working closely with the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) in energy, digital, agribusiness, water, transport, and other priority areas.

Last Updated: Apr 27, 2022