Economic growth in Sub-Saharan Africa not strong enough to reduce poverty - WB

The World Bank has said in its Africa Pulse report that Economic growth in Sub-Saharan African countries, including Uganda, is showing some resilience despite uncertainty in the global economy and restricted fiscal space.

The fiscal space means the budgetary room a government has to allocate resources for various purposes without compromising its long-term financial stability or debt sustainability. Although the government of Uganda is trying to execute a tight fiscal space, the public expenditure has continued to increase. 

In the report released on April 24 in Washington DC, where the finance ministers and central governors attended the Spring Meetings of the World and the International Monetary Fund, the World Bank said regional growth was expected to reach 3.5 per cent in 2025 and further accelerate to 4.3 per cent in 2026-2027 unlikely in 2024 during which the region’s economy grew by 3.3 per cent.

This growth is mainly due to increased private consumption and investments as inflation cools down and currencies stabilise. The median inflation rate in the region declined from 7.1 per cent in 2023 to 4.5 per cent in 2024.

However, growth is still not strong enough to significantly reduce poverty and meet people’s aspirations – a core concern of the 31st edition of Africa’s Pulse, which focuses on Improving Governance and delivering for People in Africa.

Real income per capita in 2025 is expected to be approximately 2 per cent below its most recent peak in 2015. Countries rich in resources and those facing fragility, conflict and violence are growing more slowly than more diversified economies, and the region is struggling to create enough good jobs for its young population.

“There is a growing gap between people’s aspirations for good jobs and functioning public services and often sub-optimal markets and institutions,” said Dr Andrew Dabalen, World Bank Chief Economist for the Africa Region.
Dr Dabalen added: “Urgent reforms, backed by more competition, transparency and accountability, will be key to attract private investments, increase public revenue, and create more economic opportunity for millions of Africans entering the workforce each year.”

However, the World Bank Africa Pulse states that Sub-Saharan Africa faces heightened uncertainty due to changes in trade dynamics, regional conflict, and climate change affecting people and crops. While the direct and indirect impacts of policy changes will materialise and evolve over time, African economies have the option to liberalise and diversify their markets, including leveraging the African Continental Free Trade Area (AfCFTA) to boost regional trade, to expand economic activity and provide jobs for young people.

A breakdown in World Bank Africa Pulse puts Uganda's growth rate at 6.2 Rwanda’s growth is 7.0 percent, Tanzania’s growth has been put at 5.7 per cent, DR Congo 4.8 per cent, Kenya 4.5 per cent, Burundi 3.5 per cent, and South Sudan at 34.7 per cent.
This means that the growth rate in most of the EAC countries is higher than the Sub-Saharan Africa growth rate, except for South Sudan, which is negative.  

However, the World Bank spells out that risks to Sub-Saharan Africa’s growth outlook are still tilted to the downside. Global growth could be lower than projected due to heightened uncertainty and the potential for substantial adverse policy shifts, particularly relating to trade policies, which could result in further trade fragmentation and dampen economic activity.
 Conflicts, such as a prolonged escalation of the conflict in the Middle East, could substantially disrupt oil and natural gas supplies, thereby adversely affecting economic activity.

Furthermore, the World Bank says inflationary pressures, for example, driven by service price inflation, could resurge, even beyond the potential inflationary effects of heightened trade restrictions and conflict-related shocks. This could result in a slower-than-expected easing of monetary policies, reducing support for growth.

“Moreover, more severe and frequent climate events could reduce near-term activity, in addition to worsening food insecurity. However, there are some upside risks. Faster-than-anticipated global disinflation—driven by goods deflation—thanks to stronger productivity gains, might allow central banks to reduce policy rates faster than expected,” the World Bank warns.

 Additionally, the World Bank says growth in major economies could be stronger than anticipated. For instance, more expansionary fiscal policy and resilient consumption could push near-term growth above expectations in the United States.
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