Africa Economy: Weak commodity prices push down 2015 economic growth in West Africa

The economy of the West African sub-region for the past year was expected to decelerate to 4.7 percent, a 1.3 percentage points lower than the 6.0 percent recorded the previous year.

Mohammed Ben Omar Ndiaye, Director for West Africa Monetary Agency (WAMA), said the slump might have been chiefly on account of the slump in the prices of key exports, which affected income levels and consequently consumption and private investment in some countries in the sub-region.

Speaking at the 28th Joint Ordinary Meeting of the Economic and Monetary Affairs Committee and the Operations and Administration Committee of WAMA, Ndiaye noted that this economic growth incident was happening in a global space where growth was expected to be at an all-time low since 2009.

"Results of the first half of 2015 show a slower economic growth rate, a moderate increase in inflationary pressures, worsening fiscal balance, expansion in money supply, and deterioration in overall balance of payments, giving rise to a drop in gross external reserves," the director observed.

In spite of the relatively weaker results, the macro-economic convergence profile for the sub-region witnessed slight improvements in the first half of 2015, according to the official.

The West African sub-region, which already has one unified monetary zone, Union Economique et Monétaire Ouest Africaine (UEMOA), for the Francophone countries, also seeks to create a second monetary zone for the Anglophone before gradually scaling up to have one monetary union.

Meeting the convergence criteria for this second monetary zone has, however, become a big challenge to member-countries, including Ghana, Nigeria, Sierra Leone, Liberia, The Gambia, and Guinea.

"Overall, the level of performance was satisfactory for all the primary and secondary criteria. The exception to this trend was the criterion on budget deficit, met only by five countries in the first half of 2015 as was the case in the previous year," Ndiaye added.

This is the first meeting of WAMA since it was last held in Nigeria in 2014 due to the outbreak of the Ebola Virus Disease (EVD) in three of the countries in the sub-region.

Millison Narh, Deputy Governor of the Bank of Ghana, who opened the meeting, urged the sub-region to begin to invest in the social systems, including preparedness and early warning systems.

"Although our meetings are primarily for addressing monetary, financial and other macroeconomic policy issues, it is advisable that we take a little time to ponder over issues that border on other forms of development so that we can, in our own small way, help to advance the social development of the region," said Narh.

Narh observed that global developments continued to impact on their efforts, adding that the global challenges remained as the world sought to return to the path of growth.

He said growth in emerging economies, which was sustaining global growth, was also beginning to tapper down, leading to the falling international commodity prices.

"The reliance of most of the member-states on a few primary commodities for over 80 percent of our foreign exchange earnings as well as government revenue, has also made matters worse, and calls for comprehensive structural transformation strategies that would enhance the diversification of our economies from the traditional revenue sources," Narh urged. Enditem