IMF prescribes diversification for oil-producing sub-Saharan countries

To cushion the effects of plummeting crude oil prices and sustain rapid growth in sub-Saharan Africa, there is a need to diversify away from commodities, increase export sophistication, and integrate into global value chains, the International Monetary Fund (IMF) has said.

According to IMF in its regional Economic Outlook: Sub-Saharan Africa, released on Tuesday, oil-exporting countries, including Nigeria and Angola, have been hit hard by falling revenues and the resulting fiscal adjustments while middle-income countries such as Ghana, South Africa, and Zambia are also facing unfavorable conditions.

IMF disclosed that the prices of many commodities exported by the region have fallen by around 40 to 60 per cent in the past two years, and borrowing costs have risen amid a reassessment of global risk in anticipation of a U.S. interest rate hike.

It, therefore, emphasized the need for Nigeria and other oil-producing countries to diversify into manufacturing.

Hardest hit is the region’s oil exporters as falling oil prices have drastically reduced export revenue and forced a sharp fiscal adjustment. “The oil producers account for about half of the region’s GDP and include the largest producers, Nigeria, and Angola. Several middle-income countries, including Ghana, South Africa, and Zambia, are also facing unfavorable conditions, ranging from weak commodity prices to difficult financing conditions and electricity shortages”, it added.