Experts at Africa Growth Initiative (AGI) have advocated strong macroeconomic and tax policies to help Nigeria and other African economies bounce back from recent external shocks that may further hurt their economies.

According to the experts, Africa is at a tipping point in 2016 as new and old dangers including economic, political, and security-related issues threaten to derail its progress in the new fiscal year.

Besides, the report identified Nigeria and South Africa as the countries mostly at risk from external shocks, noting that vulnerabilities arise from oil and metal exports, combined with falling commodity prices and structural problems in the continent, especially the sub-Saharan African region.

To address these vulnerabilities, the experts noted that sub-Saharan African countries need a two-pronged approach to accelerate their growth momentum.

“Basically, countries need to implement macroeconomic policies to cope with the short-term effects of the external shocks, and they need to stay the course in implementing medium- to long term structural policies. A typical policy risk for countries facing external shocks is to sacrifice long-term gains to avoid short-term pain; for example, by cutting public investments in order to avoid fiscal adjustment instead of cutting current expenditures. This is often because politicians—who at the end of the day lead the way—have a short-term horizon dictated by the electoral calendar”, the experts recommended.

Director and Senior Fellow, Africa Growth Initiative, Global Economy and Development, Brookings Institution, Amadou Sy in the AGI’s latest report tagged “Foresight Africa” noted that: “The path of the region’s economic growth was a sharp V-shape in 2007-2009 as African countries were able to quickly recover from the effects of the global financial crisis thanks to existing policy buffers that allowed for countercyclical measures. For 2015-2016, however, growth forecasts point to a less pronounced economic recovery.

“Such a path means that the growth momentum in the region may be running out of steam. This trend is worrisome: When looked at on a per capita basis, Africa’s growth rate is still too low to make a permanent dent on human development indicators. GDP per capita growth has averaged 3.4 percent in 2004-2014 but is now scheduled to fall to 1.4 percent in 2015 and hover around 1.9 percent in 2016”.

Sy explained that the continent needs to take its first steps in meeting the Sustainable Development by achieving faster and better-quality economic growth that has a high growth elasticity of poverty reduction and relies on more engines of growth, such as agriculture and manufacturing than exports of oil and other commodities.

In his views on the effect of China’s growth slowdown on Africa, Senior Fellow, Foreign Policy and Global Economy and Development, Brookings Institution, David Dollar said while China’s growth has had positive spillovers for Africa for the past decade, a deceleration of investment from China may become too acute, as it would fuel even larger capital outflows that could lead to a disorderly devaluation of the Chinese currency, an outcome that would almost certainly lead to further devaluations of other emerging market currencies.

“China is undergoing a difficult transition towards a new model that relies more on innovation and productivity growth on the supply side and on consumption on the demand side. The hangover from the investment-led model is excess capacity throughout the economy. There are many empty apartments, low-capacity utilization in heavy industry, and under-utilized infrastructure. Given the excess capacity, it is natural that investment has slowed quite sharply, dragging down the overall growth of the economy.

“This trend has an immediate effect on Africa because it is one factor leading to declining prices for primary products and to declining volumes of exports for African economies. Through the first three quarters of 2015 the gloomy news for China’s old economy was matched by some positive news from the new economy so that the overall growth rate was close to the target of 7 percent. However, markets are nervous because it is not clear if China’s growth will stabilize in this 6-7 percent range or decline further in 2016 and beyond”, Dollar added.