The World Bank made the forecast about Nigeria's economy in its latest edition of Africa's Pulse report published on its website on Wednesday.
Amidst an elusive economic recovery in Sub-Saharan Africa, the World Bank has hinted that Nigeria's Gross Domestic Product (GDP) is projected to grow at 2.9 per cent in 2023.
The bank made the forecast in its latest edition of Africa's Pulse report published on its website on Wednesday.
The 130-page report, titled: "Delivering Growth to People through Better Jobs," indicated that economic growth in Sub-Saharan Africa is forecast to decelerate from 3.6 per cent recorded in 2022 to 2.5 per cent this year.
It said South Africa's GDP is expected to only grow by 0.5 per cent in 2023 as energy and transportation bottlenecks continue to bite.
"Nigeria and Angola are projected to grow at 2.9% and 1.3% respectively, due to lower international prices and currency pressures affecting oil and non-oil activity," the report said.
The World Bank's Africa's Pulse is a bi-annual publication of the Office of the Chief Economist in the World Bank Africa Region. The report analyses the short term economic prospects for the continent and current development challenges, as well as a special development topic.
Challenges
According to the newly released report, rising instability, weak growth in the region's largest economies, coupled with the lingering uncertainty in the global economy are dragging down growth prospects in the region.
"Increased conflict and violence in the region weigh on economic activity, and this rising fragility may be exacerbated by climatic shocks," the report said.
In Sudan, the report said economic activity is expected to contract by 12 per cent because of the internal conflict which is halting production, destroying human capital, and crippling state capacity.
In per capita terms, it said growth in Sub-Saharan Africa has not increased since 2015.
According to the report, the region is projected to contract at an annual average rate per capita of 0.1 per cent over 2015-2025, thus potentially marking a lost decade of growth in the aftermath of the 2014-15 plunge in commodity prices.
Commenting on the report findings, World Bank Chief Economist for Africa, Andrew Dabalen, lamented that the region's poorest and most vulnerable people continue to bear the economic brunt of this slowdown.
He noted that weak growth translates into slow poverty reduction and poor job growth.
"With up to 12 million young Africans entering the labour market across the region each year, it has never been more urgent for policymakers to transform their economies and deliver growth to people through better jobs," he said.
Bright spots
Despite the gloomy outlook, the World bank report hinted that there are a few bright spots in the region's economy.
It said inflation is expected to decline from 9.3 per cent in 2022 to 7.3 per cent in 2023 and that fiscal balances are improving in African countries that are pursuing prudent and coordinated macroeconomic policies.
"In 2023, the Eastern African community (EAC) is expected to grow by 4.9% while the West African Economic and Monetary Union (WAEMU) is set to grow by 5.1%," the report said.
However, it noted that debt distress remains widespread with 21 countries at high risk of external debt distress or in debt distress as of June.
Overall, the report said current growth rates in the region are inadequate to create enough high-quality jobs to meet increases in the working-age population.
"Current growth patterns generate only 3 million formal jobs annually, thus leaving many young people underemployed and engaged in casual, piecemeal, and unstable work that does not make full use of their skills," the report noted.
Job opportunities
According to the report, creating job opportunities for the youth will drive inclusive growth and turn the continent's demographic wealth into an economic dividend.
"The urgency of the jobs challenge in Sub-Saharan Africa is underscored by the huge opportunity from demographic transitions that we have seen in other regions," said Nicholas Woolley, World Bank Economist and contributor to the report.
He said: "This will require an ecosystem that facilitates private-sector development and firm growth, as well as skill development that matches business demand."
The report noted that the development of labour-intensive manufacturing seems to be missing in Africa, limiting further effects for the indirect job creation in support services and international trade.
This, it said, might be partly due to a lack of capital, which continues to hamper the structural transformation required for good quality jobs.
While the region contributes 12 per cent of the global working age population, the report said Sub-Saharan Africa owns only 2 per cent of the global capital stock.
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This, the bank said, means people have fewer assets with which to be productive in Sub-Saharan Africa, compared to other regions.
Way forward
The report also identified a set of policies to overcome hurdles and unleash job creation in Sub-Saharan Africa.
It called for cost-effective private sector reforms, focused on increasing competition, uniform policy enforcement across firm sizes, and regulatory alignment with regional trading partners.
The bank said Governments can also help identify and support early-stage growth of businesses through more inclusive procurement practices and promotion of local businesses abroad.
"Investment in education is necessary to boost semi-skilled occupations for the region," the bank said.
According to the report, interventions that improve learning in school are more effective than those increasing school attendance alone, while vocational education can be useful for addressing the underemployed and those who have missed out on education as children.
It said education of girls and access to jobs for women can reduce potential productivity loss from the misallocation of female labour.
"Cash transfers have proven effective in increasing girls' school enrollment and attendance, as well as in curbing pregnancies among school-age girls," the report said.
