By Judith Ugwumadu | 22 September 2014

The International Monetary Fund has urged the sub-Saharan region of Africa to build institutions to effectively manage natural resources revenues, making public financial management a strong part of this fiscal framework. 

It said Africa’s economy was growing, but warned that the spread of Ebola, a further deterioration of security and a slowdown of emerging market growth made it harder for the continent to achieve strong growth.

Naoyuki Shinohara, IMF deputy managing director, said: ‘These challenges may need to be addressed and, in some countries, policy buffers have been depleted, so the policy response will be more difficult.’

The IMF expects growth to be around 5.5% in 2014, edging toward 6% in 2015, but Shinohara said significant longer term challenges remained.

He suggested that governments in the region build institutions to effectively manage natural resources revenues, adding that: ‘Africa had perhaps one-third of the world’s known mineral reserves and the resources cannot be wasted or used to benefit the few.

‘Strong governance, transparency, and accountability are crucial. But there is also a need for a medium-term fiscal framework to guide decisions about current spending, investments to boost productive capacity, and savings for the future.  

‘This fiscal framework needs to be part of a strong public financial management system, so that spending goes where it is needed and can have the greatest impact.’

Lack of infrastructure was another longer-term challenge to overcome in the region, but was needed to enhance economic growth.

Shinohara said infrastructure projects needed to be carefully selected and implemented and countries must be wary of financing these investments with debt that could prove unsustainable.

Perhaps the most important challenge he said, was Africa's need to develop its people. By 2014, the region’s labour force would probably larger than China’s and India’s combined, according to Shinohara.

He said Africa would benefit from a labour force that is educated, healthy and employed. So growth must be inclusive. ‘Poverty has declined in recent years, but it remains high. A concerted effort is required.’