AI is likely to increase overall inequality in the global job space with a higher impact in the advanced economies than in low-income nations.
The International Monetary Fund (IMF) has warned that soon, the deployment of AI technology across companies will threaten about 40% of global jobs.
The IMF Managing Director, Kristalina Georgieva in a blog post expressed concern that AI is likely to increase overall inequality in the global job space with a higher impact in the advanced economies than in low-income nations.
“Almost 40 percent of global employment is exposed to AI. Historically, automation and information technology have tended to affect routine tasks, but one of the things that sets AI apart is its ability to impact high-skilled jobs. As a result, advanced economies face greater risks from AI—but also more opportunities to leverage its benefits—compared with emerging market and developing economies.” the report stated.
The report further hinted that AI exposure in emerging markets and low-income countries is expected to be 40% and 26% respectively, a lower figure compared to the 60% impact in advanced economies, suggesting that the impact of AI disruption will be less felt in emerging markets and developing economies.
Georgieva’s concerns seem to corroborate warnings by stakeholders who have predicted a high dependence on AI technology by companies while calling for strict regulation of the AI space.
A survey of CEOs conducted by PwC during the annual meeting of the World Economic Forum in Davos, Switzerland, revealed that a quarter intend to cut their headcounts by at least 5% “due to generative AI.”
The survey, however, predicted that CEOs who have keyed into adopted generative AI across their company (about one-third of the sample) are “significantly more likely than others to anticipate its transformative potential over the next 12 months, as well as over the next three years.”
The IMF report further harped on the need for advanced economies to prioritise AI innovation and integration while developing robust regulatory frameworks. Emerging markets and developing economies on the other hand have been advised to work towards laying a strong foundation through investments in digital infrastructure and a digitally competent workforce.
Georgieva noted that this approach will cultivate a safe and responsible AI environment and help maintain public trust.
The International Monetary Fund (IMF) has granted Ghana a $3 billion bailout to aid its economic recovery from the debt crisis. The anticipation of this approval has boosted investor confidence, resulting in Ghana’s currency, the Cedi, becoming the world’s top performer against the dollar.
Ghana’s much-anticipated request for a $3 billion bailout from the International Monetary Fund (IMF) has been approved, per Bloomberg. This signals a positive outlook for the nation’s economy amidst its debt-induced crisis. Investors had been eagerly awaiting this news over the past six months, leading to a surge in confidence and making Ghana’s cedi the world’s top-performing currency against the US dollar.
As of today, the currency reportedly traded 1.7% stronger at 10.8625 per dollar in Accra, Ghana’s capital. Additionally, Ghana’s Eurobond maturing in 2032 experienced a boost, rising 0.5 cents to 40.2 cents on the dollar.
The approved funding will serve to replenish Ghana’s foreign-exchange reserves, which have seen a significant decline of nearly 50% since their peak in August 2021 due to the central bank’s efforts to defend the cedi.
In order to secure this IMF program approval, Ghana had to make tough economic decisions, such as increasing taxes. Notably, a bilateral creditors group—co-chaired by China and France—played a vital role in restructuring Ghana’s debt under the G20’s Common Framework which reportedly influenced the approval greatly.
Although the IMF has not officially announced its decision, Bloomberg reports that sources close to the matter have confirmed the approval following a meeting of the IMF’s executive board on Wednesday. According to Mohammed Amin Adam, the Minister of State for Finance, the government anticipates receiving an initial disbursement of $600 million this week, with another $600 million expected in November. The remaining amount will likely be disbursed in equal instalments of $350 million every six months, subject to IMF reviews.
Furthermore, the government is currently engaged in talks for an additional $900 million in budget support from the World Bank over a three-year period. Simultaneously, negotiations are being planned with eurobond holders to restructure the $13 billion debt owed to private investors, indicating a comprehensive effort to stabilise Ghana’s financial situation.
Sub-Saharan Africa’s recovery has been abruptly interrupted. Last year, activity bounced back, lifting GDP growth in 2021 to 4.7 per cent. But growth in 2022 is expected to slow sharply by more than 1 percentage point to 3.6 per cent as a worldwide slowdown, tighter global financial conditions, and a dramatic pickup in global inflation spill into a region already wearied by an ongoing series of shocks.
According to World Bank, 29 out of 33 countries in the region with available data had inflation of over 5% in July, while 17 were in double digits. The number of countries in debt distress was little changed, while borrowing costs rose significantly.
In Ghana, which has sought help from the International Monetary Fund, amid inflation hitting 33.9% in August and the cedi weakening, growth is forecast to slow to 3.5% this year, compared to a prediction of 5.5% in April, News24 reported. The World Bank also cut its growth forecasts for Nigeria and South Africa from 3.8% and 2.1% to 1.9% and 3.3%, respectively.
Côte d’Ivoire was projected to be West Africa’s fastest-growing economy this year at 5.7%, but Senegal is set to overtake it – expanding 4.8% this year before speeding up to 8% in 2023 and 10.5% in 2024. The forecast for Kenya, East Arica’s largest economy, was kept the same at 5%.
Here are the top 7 fastest-growing economies in Sub-Saharan Africa, according to IMF
AFR-REO-Table-OCT-2022
1. Senegal
Senegal’s economy is set to expand the most in sub-Saharan Africa next year, according to the IMF in its World Economic Outlook. The emerging oil and gas exporter’s output is growing 8.1% in 2023, compared with a projected 4.7% expansion in 2022, after producing its first gas from the BP-backed Greater Tortue Ahmeyim field in the third quarter of 2023.
2. Niger
The economic outlook is favourable over the near and medium term, with growth projected to accelerate from 6.5% in 2022 to 7.2% in 2023, led by agriculture and supported by the new “3N” agricultural initiative—Les Nigériens nourrissent les Nigériens—continued public investment in infrastructure, and increased FDI in the extractive sector. Growth in oil, which has been negative in the last two years, should reach 20.6% and 86.2% in 2022 and 2023.
3. Rwanda
According to the IMF, Rwanda’s economy will grow at 6.7 in 2023, showing accelerated growth from 6.0 in 2022. Interestingly, all the EAC countries are projected to post growths higher than the Sub-Saharan African average of 3.6 per cent, which declined sharply from the 4.7 per cent posted in 2021, according to the IMF.
“We expect real GDP growth to accelerate in 2023. We expect high base effects and moderating global food and fuel prices will see headline inflation gradually decelerate to 8.9% by the end of 2023. This will likely improve consumer confidence, supporting household spending and business conditions. Moreover, we expect strong tourism growth as the hospitality sector’s ongoing development and a high Covid-19 vaccination rate (as of October 16, 69.5% of Rwandans had received at least one dose) encourages rising tourist arrivals”, Fitch Solutions
4. Congo DRC
The economic outlook for the Democratic Republic of Congo is encouraging despite the Russia–Ukraine conflict, with GDP growth in 2022–23 reaching 6.7%, driven by mining and recovery of nonextractives. According to AfDB, priority investments should continue to support internal demand. Improvements to transport and logistical infrastructure are set to support the resumption of non-extractive activities, services, and industries, stimulating export and tax revenue. Furthermore, the 2023 elections are forecast to increase public spending and slightly widen the budget deficit from 1.6% in 2022 to 1.5% in 2023.
5. Côte d’Ivoire
Côte d’Ivoire’s economy remained amongst the few Sub-Saharan African economies that maintained growth in 2020 despite the Covid-19 pandemic, and in 2021 GDP growth accelerated to an estimated 6% (IMF).
The Russia–Ukraine conflict could negatively impact the outlook for 2023. However, the West African nation is expected to benefit from investments and reforms in the Côte d’Ivoire 2030 Strategic Plan, the National Development Plan 2021–2025 (NDP), and a more stable sociopolitical environment. Accordingly, growth should rebound to 6.7% in 2023, driven essentially by agriculture, industrial activity, buildings and public works, transport, commerce, telecommunications, investment, and consumption.
6. Benin
Benin has one of the strongest economic growth rates in the WAEMU area, with an estimated growth rate of +7.2 % in 2021, an increase of +3.4 percentage points compared to 2020. Despite the exogenous shocks linked to COVID-19 affecting some key sectors of the Beninese economy, the country has been able to count on the good performance of sub-sectors such as port activities, agricultural production, and tourism. According to forecasts, the growth of the Beninese economy is expected to reach +6.2 %.
7. Togo
After a slowdown in GDP growth to 1.8% during the COVID-19 pandemic in 2020, the country rebounded to 5.3% in 2021, reflecting progress in the services sector. On the consumption side, household spending and public and private investment have strongly contributed to the recovery. Public investment is expected to remain strong in 2022 due to the “Togo Roadmap 2020-2025” implementation, gradually declining in favour of private investment over the next few years.
The Monetary transfers from citizens of African countries based abroad have been projected to hit $100 billion soon.
According to the latest data from the Migration and Development Brief of the World Bank, Egypt and Nigeria which are Africa’s two most populous countries led the ranking, with $32.3 billion and $20.9 billion transferred to them respectively.
Morocco came closely behind recording a remittance of $7.3 Billion in 2022.
According to the report, when compared to the previous year, remittance flows to Nigeria increased by 7.5% putting it ahead of other countries in Sub-Saharan Africa (SSA) including Ghana ($4.7 billion), Kenya ($4.1 billion) and Senegal ($2.7 billion).
Since the World Bank started taking note of the remittances to African countries, it has been projected that the remittances to the African continent are set to surpass $100 billion for the first time.
During a recent forum organized by the African Development Bank on ways to harness the skills, wealth and dynamism of Africa’s 160-million-strong diaspora to its growth and development, the President of the bank, Dr Akinwumi Adesina noted the importance of the Africans in the diaspora to the economy of the continent.
“The African diaspora has become the largest financier of Africa! And it is not debt; it is 100% gifts or grants, a new form of concessional financing that is the key for livelihood security for millions of Africans,” he said.
Speaking further, Adesina noted that in 2010, remittances from the diaspora to Africa grew from $37 billion to $96 billion in 2021.
While noting the countries that have received the highest remittances in Africa, some other countries have been noted to be the source of such remittances like the US, UAE and Singapore.
The share of remittances emanating from the US, the United Kingdom and Singapore increased from 26% to over 36% between 2016 and 2021.
The share from the five Gulf Cooperation Council countries, GCC (Saudi Arabia, UAE, Kuwait, Oman, and Qatar) however, dropped from 54% to 28% during the same period. With a solo share of 23% of total remittances, the US surpassed the UAE as the top source country by 2020-21.
World Bank reveals that Nigeria’s economy is volatile and subject to both internal and external threats
The World Bank’s report also revealed that Nigeria’s economy is not attracting foreign and domestic investments
Another report shows that only a handful of states are performing well economically
The World Bank recently revealed that Nigeria’s economy is very insecure and subject to factors outside of its control.
The bank noted in its draft report for State Action on Business Enabling Reforms, that Nigeria’s economic ability to attract domestic and foreign investment is declining and the country’s welfare is worsening despite the economic recovery from the recession.
An extract from the report reads: “Although Nigeria’s economy in 2021-2022 recovered from recession induced by the COVID-19 pandemic and lower oil prices, growing by 3.6% in 2021 with an expected growth of 3.2% in 2022, welfare has continued to deteriorate.
The country’s economic outlook remains uncertain and threatened by many issues including the impact of the 2022 Russian invasion of Ukraine on the global economy, lower-than-expected oil production due to technical inefficiencies; heightened insecurity; higher uncertainty on policy direction arising from the upcoming February 2023 general elections; and worsening fiscal risks related to the PMS subsidy deductions.
“Besides, Nigeria’s ability to attract domestic and foreign investment is low and declining compared to its peers. Private sector investment’s contribution to growth has declined due to macroeconomic and financial policies constraining exports and foreign investment.”
The World Bank also stressed that the country needs to be more flexible and transparent with its foreign exchange management regime, accelerate revenue-based fiscal consolidation, strengthened expenditure and debt management, and improved its business-enabling environment.
A National Bureau of Statistics report revealed that 32 states failed to attract foreign capital in the second quarter of 2022.
Cumulative capital inflows totaled $1.54bn. Lagos ($1.05bn) attracted the most capital in the period under review, followed by Abuja at $453.95m, Anambra at $24.71m, Kogi at $2m, and Ekiti at $500,000. In the first quarter, only six states attracted a total of $1.57bn as capital importation.
The states included Abuja, Anambra, Katsina, Lagos, Oyo, and Plateau.
Some African countries are set to benefit from China’s $10 billion International Monetary Fund (IMF) reserve while 17 other African countries will have their loans cancelled as China moves to write off debts.
This position was disclosed by the Chinese Foreign Minister, Wang Yi while speaking with select Chinese and African diplomats in a meeting of the Forum on China-Africa Cooperation (FOCAC)according to a report by Bloomberg.
The gathering was a follow-up meeting of the FOCAC that was held last November in Senegal.
China’s role in bankrolling key infrastructural projects in Africa has established the Asian giant as Africa’s largest bilateral lender.
Although details of the 17 benefiting countries and the amount were not disclosed, it was also revealed that some other countries would still benefit from the Asian superpower’s $10 billion IMF funds which serve to implement the follow-up actions of the eighth ministerial conference of FOCAC.
According to Yang Wi, “We will also continue to increase imports from Africa, support the greater development of Africa’s agricultural and manufacturing sectors, and expand cooperation in emerging industries such as the digital economy, and health, green and low-carbon sectors”
Between 2000 and 2020, governments of some African nations and Chinese lenders signed over 1,180 loan commitments worth $160 billion according to data from the China Africa Research Initiative (CARI).
Documents of the loans reveal two-third of the facility was for transport, power, and mining projects.
Angola, Zambia, Ethiopia, Kenya, and Cameroon were also noted to have borrowed the most from China in dollar terms.
While noting the high debt profile of Nigeria in relation to Chinese loans, details of the benefitting countries did not expressly reveal if Nigeria is listed as a benefiting country.
However, checks on the Debt Management Office (DMO) showed that as of March 31, 2020, the total borrowing by Nigeria from China was $3.121 billion.
This amount represents just 3.94 per cent of Nigeria’s total public debt which stands at $79.303 billion (N28,628.49 billion at USD/N361) as of March 31, 2020.
Also, the value of external sources of funds, loans from China accounted for 11.28 percent of the external debt stock of $27.67 billion on the same date.
