Sub-Saharan Africa should prioritise addressing the power sector if it is to alleviate domestic impediments to growth, according to the World Bank.
In a 2016 report entitled Global Economic Prospects: Spillovers amid Weak Growth released last week, the World Bank said structural reforms are needed to alleviate domestic impediments to growth and to accelerate economic diversification.
“Creating the conditions for a more competitive manufacturing sector would require, in particular, a major improvement in providing electricity,” said the global bank.
“Addressing power sector problems should therefore be a priority.”
The World Bank said growth in Sub-Saharan Africa is expected to pick up to 4.2% in 2016 after slowing to 3.4% in 2015.
“This projection assumes that commodity prices stabilize and electricity constraints ease,” it said, but added that the assumption that electricity constraints will ease might prove too optimistic.
“The power supply crisis may worsen, as a result of a lack of reforms, which would hold economic activity back in many countries,” said the bank.
The report comes at a time when most sub-Saharan countries are experiencing crippling power shortages.
In Zambia, power authorities had to cut electricity supply to mining firms by 30% due to a power deficit which threatened to bring the economy to its knees.
Rising power deficits also hobbled economic activity in an already struggling Zimbabwean economy.
According to the World Bank, in some countries (Botswana and Zambia) shortages of hydroelectric power were due to drought. However, in others they were driven by underinvestment in new capacity (South Africa) and lack of reforms to encourage private investment (Ghana and Nigeria).
The World Bank, however, noted that investments in new energy capacity (South Africa), attention to drought and its effects on hydropower (Botswana and Zambia), and a new focus on encouraging private investment (Ghana and Nigeria) would help build resilience in the power sector.