World Bank says region remains ‘risky business’

SUB-SAHARAN Africa will face a ‘large external financing debt’ this year, and especially low-income countries will suffer from a shortfall in concessional lending, which is needed to finance a swift return to growth, the World Bank has warned in its latest publication, ‘Global Economic Prospects: Crisis, Finance and Growth’.

The bank expects the region’s external financing debt to rise to 14 per cent of gross domestic product (GDP). Expenditure estimates that were tabled by Finance Minister Saara Kuugongelwa-Amadhila as part of her budget last March show that Namibia’s total debt is expected to increase from N$15,1 billion this financial year to N$19,4 billion in 2010-11. As a percentage of GDP, it will climb from 21,7 per cent to 26,3 per cent.Domestic debt stock is expected to rise from N$9,9 billion in 2009-10 to N$13,4 billion in 2010-11, while foreign debt stock is estimated to grow from N$5,2 billion to around N$6 billion.In terms of the GDP, domestic debt stock is expected to increase from 14,2 per cent to 18,1 per cent, while foreign debt stock is forecast to rise from 7,5 per cent to 8,1 per cent.In its report, The World Bank said that ‘given the increased global growth uncertainties, investment flows to the (Sub-Saharan) region may be adversely affected’.’Given the role that foreign investment flows play in the region, a reversal in these flows not only would directly affect external financing needs, but would also have a severe impact on investment and growth,’ the bank said.Foreign financing is but one of the challenges facing Sub-Saharan Africa in 2010, according to the report.’The major risk facing the Sub-Saharan economies is that the world economy could experience a double dip or economic stagnation.’This would undermine the recovery in external demand for the Sub-Saharan economies and put pressure on commodity prices, undermining government revenues and possibly pushing debt to unsustainable levels,’ the World Bank said.’This could in turn force governments to implement pro-cyclical fiscal cuts, increase taxation, or both, with adverse implications for poverty, health, education, and long-term growth prospects. Tourism, remittances, and private capital flows may also decline further, thereby negatively affecting growth and incomes and ultimately causing more people to fall into poverty.’The World Bank warned that the impact on the poor cannot be ‘cushioned’, as many countries in the region do not have sufficient safety nets.The bank furthermore cautioned that there is a ‘marked risk that non-performing loans will rise sharply during the economic downturn affecting the financial sector’ in countries that experienced rapid credit growth during the boom years. This, in turn, could have an adverse impact on the real sector, the World Bank said.In its report, the Bank painted a gloomy picture for economic recovery in Namibia. According to World Bank forecasts, Namibia is one of only six countries in Sub-Sahara Africa which suffered an economic growth contraction last year. The other 37 recorded positive GDP growth. Namibia’s economy shrunk by 1,9 per cent in 2009, the bank estimates.It doesn’t expect 2010 to be a much better year for the country. According to World Bank estimates, Namibia’s GDP is likely to grow only three per cent this year.jo-mare@namibian.com.naTop performing Sub-Saharan economies 2009, World Bank forecastGDP at market prices (2005 US$)1. Ethiopia 7,2 per cent2. Republic of Congo 6,8 per cent3. Malawi 6,5 per cent4. Zambia 5,2 per cent5. Rwanda 5,1 per cent6. Uganda 5,1 per cent7. Mozambique 5,0 per cent8. Zimbabwe 4,7 per cent9. Tanzania 4,6 per cent10. Gambia 4,6 per centWorst performing Sub-Saharan economies in 2009, World Bank forecastGDP at market prices (2005 US$)1. Seychelles -10,1 per cent2. Botswana -8,3 per cent3. Namibia -1,9 per cent4. South Africa -1,8 per cent5. Gabon -1,2 per cent6. Angola -0,9 per cent7. Swaziland 0,2 per cent8. Comoros 0,5 per cent9. Lesotho 0,6 per cent10. Chad 0,8 per centTop performing Sub-Saharan economies 2010, World Bank forecastGDP at market prices (2005 US$)1. Republic of Congo 11,0 per cent2. Zimbabwe 7,1 per cent3. Ethiopia 7,0 per cent4. Angola 6,5 per cent5. Uganda 5,6 per cent6. Tanzania 5,5 per cent7. Rwanda 5,5 per cent8. Mozambique 5,5 per cent9. Malawi 5,4 per cent10. Zambia 5,4 per centWorst performing Sub-Saharan economies in 2010, World Bank forecastGDP at market prices (2005 US$)1. Swaziland 1,1 per cent2. Comoros 1,7 per cent3. Togo 2,0 per cent4. South Africa 2,0 per cent5. Lesotho 2,3 per cent6. Gabon 2,3 per cent7. Cameroon 2,6 per cent8. Guinea 2,6 per cent9. Seychelles 2,7 per cent10. Chad 2,7 per cent* Namibia 3,0 per cent