At the beginning of the global financial crisis in late 2008, it was generally believed that the West Africa sub-region would not seriously be affected in view of the sub-region’s limited integration in the global finance market.
The Voice Newspaper’s News Editor Modou S. Joof looks at the prospects and the realities as per the 2009 Annual Report of the West African Institute for Financial and Economic Management, WAIFEM.
The severity and impact of the global economic crisis resulted in lower real gross domestic product, GDP (the total value of goods and services that a country produces in a year) of 3.0 percent compared with 5.5 percent in 2008.
“The GDP per capita (based on calculations that show the average amount for each person affected) was also affected; it declined from US$1, 625 in 2008 to US$867,” the Sub-regional financial institution said.
The report noted that inflation declined from 11.6 percent in 2008 to 9.7 percent. The gross domestic investment of 25.2 percent of GDP in 2009 was an improvement over that of 2008 of 24.6 percent.
On the external front, the terms of trade declined from 3.3 percent in 2008 to 0.4 percent. Although the regional account balance remained surplus, it also declined from 7.8 percent in 2008 to 6.6 percent.
While the regional debt service obligation as a proportion of exports declined to 3.7 percent from 4.7 percent in 2008, but the overall regional economic development as indicated above hinged significantly on country variations as depicted.
In countries using the French currency, CFA, the report said Mali achieved an output growth rate of 5.1 percent for 2010. The growth rate of the rest of the countries remained poor within a range of -0.9 to 3.8 percent.
“All the CFA countries experienced low inflation pressures causing consumer price index (CPI) inflation to fall to new historic levels ranging between -1.1 and 4.3 percent,” the report outlined.
In Senegal, it said inflation (the process in which prices increases so that money becomes less valuable) declined from 5.8 percent in 2008 to -1.1 percent with a projection inflation of 1.6 percent. Guinea Bissau’s double digit inflation of 10.4 percent in 2008 fell to 1.7 percent. However, this was expected to rise to 2.5 percent in 2010.
Togo’s CPI dropped from 8.7 percent in 2008 to 2.0 percent, but it was projected to edge up slightly to 2.1 percent in 2010 as well.
Among the seven countries with different currencies (non-CFA), Nigeria had the highest GDP growth rate of 5.6 percent with a projected growth rate of 7.0 percent in 2010. With the exception of Guinea which recorded a growth rate of 0.3 percent, the growth rates of the remaining countries ranged between 3.5 percent and 4.6 percent.
However, higher growth rates were projected for this group in 2010, ranging from 3.0 percent (Guinea) to 7.0 percent (Nigeria).
In contrast to the situation in the CFA zone, Non-CFA West Africa continued to face strong inflationary pressures in 2009, with Ghana and Nigeria recording double digit inflation figures of 19.3 percent and 12.4 percent respectively.
The rest of the countries however, witnessed single digit inflation figures ranging from 1.2 percent (Cape Verde) to 9.2 percent (Sierra Leone). Cape Verde, Guinea, Liberia and Sierra Leone were more successful in stemming the inflationary pressures.
The financial institution (WAIFEM) of the Sub-region said inflation in Cape Verde moved down from 6.8 percent in 2008 to 1.2 percent while that of Guinea also declined to 4.7 percent from 18.4 percent.
For Liberia, it said the country recorded an inflation of 17.5 percent in 2008, reducing to 7.4 percent, while Sierra Leone’s inflation fell from 14.8 percent in 2008 to 9.2 percent in 2009.
“Only three countries: Cape Verde, The Gambia and Liberia, were expected to achieve single digit inflation in 2010,” the report concluded.