An increase in mining output in Sub Saharan Africa, along with a pickup in the agriculture sector is boosting economic activity for countries that export precious metals.
A study compiled by a team led by World Bank Economist For the African region, Punam Chuhan Pole states that the increase was occasioned by a rise in the prices of metals, along with a recovery in the region’s agriculture sector, which is supporting a rebound in activity for exporters.
However, Pole and his colleagues say growth is expected to remain below its long-term average, due to weaknesses in the non-metals sector.
The World Bank has since warned that political instability in countries like the Democratic Republic of Congo and floods and landslides in Sierra Leone have hampered the recovery. In Mozambique, the government’s ongoing default on its foreign debt has deterred investment.
An October report from the global lender indicates that in Zambia, a recovery in agriculture and copper production, along with strengthening activity in services, has supported the rebound in growth.
The researchers say that growth in non-resource intensive countries, which consist mostly of an agricultural exporter, has remained broadly stable.
They add that countries in the West African Economic and Monetary Union (WAEMU) and in East Africa have continued to expand at a solid pace, with infrastructure investment continuing to stimulate growth.
The research finds that higher commodity prices are helping to narrow current account deficits in the region, especially for oil exporters. International bond and equity inflows in the region are rising, helping to finance the current account deficits and cushion foreign reserves.
In Sub-Saharan Africa, the ongoing recovery in metals exporters is likely to continue with steadily rising metals prices expected to spur further investment in the mining sector. By contrast, growth prospects will remain weak in Central African Economic and Monetary Community countries, as most of them continue to struggle to adjust to low oil prices amid depressed revenues and elevated debt levels.
Growth is projected to recover in Kenya, as inflation eases, and firm in Tanzania on a rebound in investment growth. Ethiopia is likely to remain the fastest-growing economy in the region, although public investment is expected to slow down.
“Stronger-than-expected activity in some large economies could strengthen further the anticipated pickup in exports, mining and infrastructure investment, and growth in the region,” Pole’s team said.
They, however, warned that the region’s varied economies will still be vulnerable to a number of risks, including, lower commodity prices and a faster-than-expected normalization of monetary policy in the United States, as well as delays in implementing appropriate policies to improve macroeconomic stability. These risks, they say, will be heightened by policy and political uncertainty, rising security tensions, and inadequate rainfall.