IMF warns high costs and weak state firms are slowing Africa’s growth

The International Monetary Fund (IMF) has called on Sub-Saharan African countries, including Ghana, to accelerate private sector-led growth, deepen structural reforms, and improve public spending efficiency to sustain economic recovery in a challenging global environment.

In its April Regional Economic Outlook for Sub-Saharan Africa, the IMF said persistent structural bottlenecks—such as high business costs, weak performance of state-owned enterprises, and limited regional trade integration—continue to constrain productivity, investment, and long-term growth across the region.

The Fund stressed that targeted reforms in key sectors including energy, transport, and telecommunications are critical. It urged governments to strengthen governance, improve transparency, and enhance cost recovery mechanisms in state-owned enterprises, while ensuring social protection for vulnerable groups.

It also called for faster implementation of the African Continental Free Trade Area (AfCFTA), particularly through the reduction of non-tariff barriers and modernisation of customs systems. According to the IMF, such steps would help lower trade costs, improve supply chain efficiency, and expand market access for businesses.

On public finance management, the IMF warned that inefficiencies in spending on health, education, and infrastructure are limiting development outcomes, despite significant budget allocations to these sectors.

Beyond fiscal reforms, the Fund encouraged greater adoption of digital technologies, including the use of cost-effective artificial intelligence in revenue mobilisation and public service delivery. However, it cautioned that such digitalisation efforts must be supported by investments in energy reliability, skills development, cybersecurity, and data infrastructure.

The IMF further called for the deepening of domestic financial markets to enhance local currency financing, reduce exposure to external borrowing risks, and support private sector expansion. It also emphasised the need for stronger regulatory frameworks to safeguard financial stability across the region.