West Africa will be striving for economic growth against the backdrop of a major pair of twin shocks: the lingering COVID-19 pandemic and the Russia-Ukraine conflict. While GDP is set to decline by 1.2% in Burkina Faso, Mali, Cote d’Ivoire, and Senegal, Niger’s GDP is forecast to increase (AfDB,2022). As most West African countries are import dependent, the soaring inflation rates both within the sub-region and globally, will undoubtedly lead to higher import bills and thus risk eclipsing the level of exports (WADO,2022). The challenge for the Economic Community of West African States (ECOWAS), which forms the financial backbone of the sub-region, will be to try to contain inflation rates low without supressing inclusive growth.
These global crises have increased the potential for a food crisis, with West Africa positioning itself at the centre of it given the possibility for social unrest. Higher prices for fertiliser have led to fertiliser shortages which will lead to less agricultural yields in the sub-region. However, this presents policymakers and ECOWAS with the opportunity to re-orientate economic and social policies to enhance intra-regional trade and strengthen the resilience of food systems in West Africa to better cope with future international market shocks. The unpredictable character of the global energy sector as an upshot of the Russia-Ukraine conflict has signaled for West African countries to achieve greater levels of energy self-sufficiency. Petroleum producers in the sub-region such as Nigeria and Ghana have the potential to attract wider invest from the private sector. They will need to increase their refining capacity to promote further intra-regional trade and provide an avenue for West African countries to source cheaper products at a competitive rate.
Security concerns and domestic political turmoil remain of paramount importance for achieving inclusive growth in sub-region. Cross-border attacks in Cote d’Ivoire, Burkina Faso, and Benin will fail to aid both public and private investment. The volatile political circumstances in Mali and Burkina Faso in conjunction with their increased ties to Russia’s paramilitary organisation, Wagner Group, will also prevent ECOWAS’ ability to achieve project growth and development targets. The result and impact of the upcoming Nigeria election in February will also be critical for the region as Benin’s President warned in 2016 “if Nigeria sneezes, the whole of West Africa catches a cold.”
Speakers:
Senior Analyst | Control Risks
Chief Economist and Head of Research, Africa and Middle East | Standard Chartered Bank
Vice President Senior Credit Officer | Moody’s Investors Service
Partner | DLA Piper Africa, Nigeria