News Guide Africa

Tag: World Bank

  • World Bank Supports Ghana to Strengthen its Financial Sector.

     

     

     

    The World Bank today approved a $250 million International Development Association (IDA)* credit for a five-year Ghana Financial Stability Project. The project will support Ghana’s Financial Sector Strengthening Strategy (FSSS) by contributing to financial stability through the recapitalization of viable Banks and Specialized Deposit-taking Institutions (SDIs) impacted by Ghana’s Domestic Debt Exchange Program (DDEP).

     

    The financial system is critical to the functioning of the Ghanaian economy, providing critical services to households, firms, government, and supporting economic growth. To address the severe impact of the DDEP on financial institutions, the Government established the Ghana Financial Sector Stability Fund (GFSF) to provide solvency support to banks, pension funds, insurance companies fund managers and collective investment schemes.

     

    “This project will contribute to Ghana’s financial stability, by providing solvency support to banks and SDIs impacted by the DDEP through the GFSF.” said Robert R. Taliercio, World Bank Country Director for Ghana, Liberia, and Sierra Leone. “Through direct support to banks and SDIs, the project will benefit Ghana’s financial sector and the economy by supporting the access of depositors and other financial consumers to savings, payments, and other core financial services provided by adequately capitalized banks and SDIs.“

     

    The Ghana Financial Stability project is expected to immediately benefit eligible undercapitalized but viable banks and SDIs and become accessible to other banks and SDIs that may need support in the future due to potential new losses and providing a backstop against unexpected losses.

     

    The World bank

    The project promotes financial stability, a key requirement to protect people and preserve jobs,” said Carlos Leonardo Vicente, Senior Financial Specialist and Team Lead.

     

    The project complements the World Bank’s Development Program Financing series and the IMF-Extended Credit Facility, which support reforms to improve the macroeconomic environment and enable financial institutions to operate profitably and generate internal capital. It also complements other World Bank funded projects aimed at economic recovery and job creation in Ghana, such as the Ghana Development Financing Project which supported the establishment of the Development Bank of Ghana and provides long-term financing to small and medium enterprises and small corporates.

  • African Economies Projected to Grow by 3.4 % in 2024… But Faster and More Equitable Growth Needed to Reduce Poverty

     

    African marketplace 

     

    Increased private consumption and declining inflation are supporting an economic rebound in Sub-Saharan Africa.

     

    However, the recovery remains fragile due to uncertain global economic conditions, growing debt service obligations, frequent natural disasters, and escalating conflict and violence, according to the World Bank’s latest Africa’s Pulse report.

     

    Transformative policies are needed to address deep-rooted inequality to sustain long-term growth and effectively reduce poverty.

    Africa economy growth

    The report projects that growth will rebound in 2024, rising from a low of 2.6 percent in 2023 to 3.4 percent in 2024, and 3.8 percent in 2025. However, this recovery remains tenuous. While inflation is cooling across most economies, falling from a median of 7.1 to 5.1 percent in 2024, it remains high compared to pre-COVID-19 pandemic levels. Additionally, while growth of public debt is slowing, more than half of African governments grapple with external liquidity problems, and face unsustainable debt burdens.

    Overall, the report underscores that despite the projected boost in growth, the pace of economic expansion in the region remains below the growth rate of the previous decade (2000-2014) and is insufficient to have a significant effect on poverty reduction. Moreover, due to multiple factors including structural inequality, economic growth reduces poverty in Sub-Saharan Africa less than in other regions.

    “Per capita GDP growth of 1 percent is associated with a reduction in the extreme poverty rate of only about 1 percent in the region, compared to 2.5 percent on average in the rest of the world,” said Andrew Dabalen, World Bank Chief Economist for Africa. “In a context of constrained government budgets, faster poverty reduction will not be achieved through fiscal policy alone. It needs to be supported by policies that expand the productive capacity of the private sector to create more and better jobs for all segments of society.”

     

    The report highlights that external resources to meet gross financing needs of African governments are shrinking and those available are costlier than they were prior to the pandemic. Political instability and geopolitical tensions weigh on economic activity and may constrain access to food for an estimated 105 million people at risk of food insecurity due to conflict and climate shocks. African governments’ fiscal positions remain vulnerable to global economic disruptions, necessitating policy actions to build buffers to prevent or cope with future shocks.

     

    What’s more, inequality in Sub-Saharan Africa remains one of the highest in the world, second only to the Latin America and Caribbean region, as measured by the region’s average Gini coefficient. Access to basic services, such as schooling or healthcare, remains highly unequal despite recent improvements. Disparities also exist in access to markets and income-generating activities, irrespective of people’s skills. Taxes and poorly targeted subsidies may also have an outsized impact on the poor.

     

    “Inequality in Africa is largely due to the circumstances in which a child is born and accentuated later in life by obstacles to participating productively in markets and regressive fiscal policies,” said Gabriela Inchauste co-author of a forthcoming World Bank report on tackling inequality in Sub-Saharan Africa. “Identifying and better addressing these structural constraints across the economy offers a road map for a more prosperous future.”

     

    Africa’s Pulse calls for several policy actions to foster stronger and more equitable growth. These include restoring macro-economic stability, promoting inter-generational mobility, supporting market access, and ensuring that fiscal policies do not overburden the poor.

  • Ghana tops electricity access in Sub-Saharan Africa – Africa Pulse Report

    Ghana tops electricity access in Sub-Saharan Africa – Africa Pulse Report

    Memuna Asuma

     

    World Bank’s April 2023 Africa Pulse Report has rated Ghana as the first Sub-Saharan Africa with the largest electricity access rate.

     

    The West African nation recorded about 81% access to electricity rate in 2021, beat African power houses including South Africa, Kenya and Nigeria.

     

    In 2015, the country’s access to electricity in Africa stood at about 75%. That still placed it number one on the continent. However, between 2015 and 2021, the country added a little over 5.0% power to the electricity access rate. The World Bank’s Africa Pulse Report pointed out that the COVID-19 pandemic has had a sharp, adverse effect on access to electricity, adding, the pandemic eroded gains made in the preceding five years.

     

    “The pandemic eroded gains made in the preceding five years—the number of people without access to electricity increased by 4% in 2021, compared to 2019. This was the result of compounding challenges, including (1) limited fiscal and financial capacity to develop new grid and off-gird connections by both governments and households, and (2) lockdowns resulting in supply chain disruptions and other logistical disruptions”.

     

    However, in Ghana, Kenya, Rwanda, Senegal, and Côte d’Ivoire, the numbers were stable or reduced.

     

    The pandemic, it mentioned, had the largest effect on the installation of new stand-alone off-grid systems, as the majority of new connections since 2020 have been grid connections. Sales of independent solar home systems, including solar panels and batteries with a capacity of at least 20 watts, declined by roughly 20% in Sub-Saharan Africa between 2019 and 2021.

     

    Meanwhile, Côte d’Ivoire and Kenya were ranked 2nd and 3rd respectively in Sub-Saharan Africa with the biggest electricity access rate.

     

    COUNTRIES ELECTRICITY ACCESS RATE POSITIONS

    Ghana 81.2% 1st

    Côte d’Ivoire 77.0% 2nd

    Kenya 76.0% 3rd

    Senegal 73.5% 4th

    Nigeria 69.1% 5th

    Rwanda 65.0% 6th

    The Gambia 61.0 7th

  • Rising debt levels could worsen – World Bank

    Rising debt levels could worsen – World Bank

     

    The World Bank has said debt levels and vulnerabilities which remain high could worsen, especially for countries that have lost access to the credit market and are in or at risk of debt distress.

     

    If not addressed, it stressed that debt dynamics could escalate into a full-blown crisis, setting countries even further back.

     

    “The international community needs to find more adequate ways to speed up debt treatments. The current resolution mechanisms need to be strengthened so that they can effectively address a potential debt crisis, and additional instruments may need to be set in motion”,  the World Bank’s April 2023 Africa Pulse Report has noted.

     

    However, the Bank has urged African economies including Ghana to increasingly rely on their own policy reforms and domestic space for action in three areas.

     

    “First, restoring macroeconomic stability is essential for growth. Raising interest rates and avoiding policy conflicts that reduce the effectiveness of monetary transmission (say, fiscal dominance, and foreign exchange distortions) are crucial to reduce inflation to target levels.”

     

    “Second, structural reforms that foster private investment should be at the top of the pro-growth policy agenda of countries in the region. A premium should be put on policy measures that boost long-term competitiveness—including actions to improve market contestability and promote a sound regulatory framework”, it explained.

     

    “Third, African policy makers need to seize the opportunities that are available to them during the low carbon transition”, it concluded.

     

  • Economy to be among 12 best economies in  Sub-Saharan Africa in 2022

    Economy to be among 12 best economies in  Sub-Saharan Africa in 2022

    Adnan Adams Mohammed

    The International Monetary Fund (IMF) has projected that Ghana’s economy is likely to rank 12th among 49 Sub-Saharan African nations in 2022 with an expected growth rate of 5.2%.

    Ghana is expected to jointly rank 12th position with Cape Verde among league of Sub-Saharan African economies. In West Africa, the nation will place 6th again with Cape Verde.

    Although the expected growth of 5.2% is the lowest among other economic researchers, the World Bank has projected a growth of 5.5% for 2022. Also, the parent company of Stanbic Bank, Standard Bank has predicted an economic growth rate of about 6.2% in 2022 and 6.8% in 2023 amidst tough times for the Ghanaian economy.

    The Word Bank in its latest report said the government’s significant progress in vaccinations and the further easing of COVID-19 restrictions will stimulate demand and supply within the economy. But, it pointed out that the country’s ability to tap the Eurobond market may further diminish, whilst the foreign exchange reserves could remain under pressure unless the government acquires alternative sources of external financing.

    “As global risk may worsen further in the first-half of 2022, and Ghana’s ability to tap the Eurobond market may further wane. Foreign exchange reserves could remain under pressure in 2022 — unless the government acquires alternative sources of external bilateral and multilateral funding.”

    The 5.2% expected expansion in the economy in 2022 will be slightly lower than the Gross Domestic Product (GDP) growth rate recorded in 2021.

    In 2021, the IMF projected a growth rate of 4.2%, but the economy expanded by 5.4%, according to provisional estimates from the Ghana Statistical Service.

    This was as a result of strong growth in the Services sector (9.4%), particularly Information, Communication and Technology (33.1%) and Agriculture (8.4%), particularly the Fisheries (13.4%) sub sector.

    In 2023, the Fund forecasts a growth rate of 5.1%, which will place the country in the 21st position in the league of African economies.

    This is due to the expected strong growth rate by most African economies.

    In 2022, Niger will become the fastest growing economy in Sub Saharan Africa with a growth rate of 6.9%, whilst Senegal will lead the league of African economies in 2023 with 9.2% in the economy.

    Meanwhile, Sub-Saharan Africa is expected to grow at a rate of 3.8% in 2022 and subsequently 4% in 2023.

    COUNTRY GDP RANKING

    Niger                 6.9% 1st

    South Sudan 6.5% 2nd

    DR Congo 6.4% 3rd

    Rwanda                6.4% 3rd

    Mauritius 6.1% 5th

    Equat. Guinea 6.1% 5th

    Coted’lvoire 6.0% 7th

    Benin                 5.9% 8th

    Kenya                 5.7% 9th

    The Gambia 5.6% 10th

    Togo                5.6           10th

    Ghana                 5.2% 12th

    Cape Verde 5.2% 12th

  • Food crisis looming… WB warns amidst Ghana’s rising food inflation

    Food crisis looming… WB warns amidst Ghana’s rising food inflation

    Adnan Adams Mohammed

    Ghanaians are already feeling the heat of food insecurity as World Bank Group warns of imminent food shortage.

    World Bank has indicated that, the world faces a “human catastrophe” from a food crisis arising from Russia’s invasion of Ukraine. The Bank is worried at the rate in which food prices are rising, saying it would push hundreds of millions of people into poverty and lower nutrition, if the crisis continues.

    The World Bank calculates there could be a “huge” 37% jump in food prices (inflation). Already, Ghanaians are witnessing a record high inflation spurred by leapfrogging food inflation. According to the Ghana Statistical Service (GSS) reported that, March 2022 inflation hit the highest in nearly 13 years to record 19.4%.

    “The higher inflation was pushed largely by food prices”, the Government Statistician announced fortnight ago.

    According to the figures, food inflation recorded a rate of 22.4% in March 2022, compared to 17.4% in February 2022. Stapple (commonly consumed)0 foodstuffs such as: Oil and Fats (28.2%), Water (27.1%), Cereal Products (25.0%), Vegetables (23.8%), Fish and Other Seafood (23.7%), Fruits and Nuts (22.1%), Soft Drinks (20.5%), Live Animals, and Meat (20.2%) recorded inflation rate, higher than the national average.

    Consequently, the Brtton Wood institution  has shared that, the trend would hit the poor hardest, who will “eat less and have less money for anything else such as schooling”.

    In an interview with BBC economics editor Faisal Islam, World Bank president, David Malpass, who leads the institution charged with global alleviation of poverty, said the impact on the poor made it “an unfair kind of crisis… that was true also of COVID”.

    “It’s a human catastrophe, meaning nutrition goes down. But then it also becomes a political challenge for governments who can’t do anything about it, they didn’t cause it and they see the prices going up,” he said on the sidelines of the IMF-World Bank meetings in Washington.

    The price rises are broad and deep, he said: “It’s affecting food of all different kinds oils, grains, and then it gets into other crops, corn crops, because they go up when wheat goes up”.

    There was enough food in the world to feed everybody, he said, and global stockpiles are large by historical standards, but there will have to be a sharing or sales process to get the food to where it is needed.

    Mr Malpass also discouraged countries from subsidising production or capping prices.

    Instead, he said, the focus needed to be on increasing supplies across the world of fertilisers and food, alongside targeted assistance for the very poorest people.

    The World Bank chief also warned of a knock on “crisis within a crisis” arising from the inability of developing countries to service their large pandemic debts, amid rising food and energy prices.

    “This is a very real prospect. It’s happening for some countries, we don’t know how far it’ll go. As many as 60% of the poorest countries right now are either in debt distress or at high risk of being in debt distress,” he said.

    “We have to be worried about a debt crisis, the best thing to do is to start early to act early on finding ways to reduce the debt burden for countries that are on have unsustainable debt, the longer you put it off, the worse it is,” he added.