Climate change
Nine out of the 10 countries in the world most vulnerable to climate change are in sub-Saharan Africa. The region has at least 10 vulnerable coastal cities with a population of more than 1 million people, including Accra, Dakar, Durban and Lagos, according to the Forum report.
Africa is expected to be one of the continents hardest hit by climate change, with increasing extreme weather events threatening the health of its people and economies. At the same time, mass-migration as a result of flooding or droughts could put resources such as food, water and housing under pressure in areas less affected.
Unemployment and underemployment
Unemployment in sub-Saharan Africa stands at around 6 percent, according to the International Labour Organisation (ILO). But most of the work available is unskilled or low-skilled, in part because the region has the world’s lowest levels of access to higher education.
So, although many Africans are
employed, 70 percent of sub-Saharan Africa’s workforce is vulnerable. The
global average for vulnerable occupations is 46 percent.
Business leaders in 22 out of 34
sub-Saharan African countries told the World Economic Forum’s 2018 Executive
Opinion Survey that unemployment and underemployment was their most pressing
concerns.
Underinvestment
in infrastructure
Physical infrastructure across
much of the continent is a challenge to productivity, according to the African
Development Bank. It calculates an estimated $130-to $170 billion needs to be
invested each year on Africa’s infrastructure, despite a financing gap of as
much as $108 billion.
A lack of funding for roads,
telecommunications, water, electricity and more are impeding the continent’s
productivity by around 40 percent, according to World Bank estimates. This
“failure of critical infrastructure” is a major risk to business in the region,
respondents to the World Economic Forum’s survey said last year.
Fiscal
crises
Nearly 40 percent of sub-Saharan
African countries are at risk of slipping into a major debt crisis, according
to the Brookings Institution. And the “number of African countries at high risk
[of] or in debt distress has more than doubled from eight in 2013 to 18 in
2018.”
The region’s aggregate
debt-to-GDP ratio rose to 46 percent in 2017, up from from 23 percent in 2008.
As debt levels increase, so does the pressure of servicing the debt; money that
could be invested in society goes to repaying loans. This could make it less
likely that the region can achieve the African Union’s Agenda 2063 development
targets.
Political
change
“Failure of national governance”
is a leading risk to business, according to executives in sub-Saharan Africa.
“Since the beginning of 2015,
Africa has experienced more than 27 leadership changes, highlighting the
continent-wide push for greater accountability and democracy,” according to the
Brooking Institution.
Sub-Saharan Africa’s two largest
economies both recently held presidential elections.
In May, Cyril Ramaphosa was
elected president of South Africa with a commitment to promote economic growth
and fight corruption. At the start of the year, Muhammadu Buhari was re-elected
president of Nigeria on a similar pledge to fight corruption, while
strengthening national security and the economy.
“The
political changes taking place offer an opportunity to address citizens’
concerns and priorities. However, leaders — and economies — will face
considerable risk should policy agendas fail to deliver results,” the Forum
report cautions.
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