from non-resource sectors. Public investment surges, often debt- financed during periods of booming commodity prices, tend to fizzle out quickly when external conditions deteriorate.

For SSA as a whole, investment growth averaged 3.3 percent a year in 2011-21—almost half of its annual average in 2000-08 (figure 17.A). Rapid public investment growth cooled after 2014, and private investment decelerated sharply. For example, investment growth in Ethiopia averaged almost 28 percent a year in 2008-14, driven by exceptionally rapid public infrastructure investment (World Bank 2015). However, investment growth slowed sharply to just 9.3 percent in 2015-21 because of elevated public sector debt, unfavorable external environment, and rising insecurity. Severe economic slowdowns in the region’s two largest economies, Nigeria and South Africa, had adverse spillovers on investment across the region as well. In 2021, investment growth was below its 2000-21 average in almost half of SSA countries, and negative in about 16 percent of countries (figure 17.B).

Investment fell by 0.7 percent per year, on average, in South Africa in 2011-21, compared with over 9 percent average annual growth in 2000-08, reflecting a sharp deterioration in the country’s economic fundamentals stemming from the lack of policies to tackle underlying structural constraints, including substantial inefficiencies in state-owned enterprises (SOEs), high unemployment, and the energy crisis triggered by worsening power cuts. Investment by SOEs has played a major role in South Africa, representing almost 45 percent of all public sector capital expenditure in 2014-20, although this share has declined over time. Much of the recent weakness in public investment spending can be attributed to Eskom, a public utility supplying electricity, which has had significant governance and profitability problems, although it still accounts for about a half of all capital expenditure by SOEs (Statistics South Africa 2021).

Among oil exporters, investment growth also slowed significantly after 2014 in Angola, Chad, and Nigeria, and turned negative in Equatorial Guinea, where oil production fell by nearly 60 percent from 2014 to 2021. The effects of the sharp decline in oil prices in the mid-2010s were exacerbated by combinations of weak business environments, new capital and foreign exchange controls (Angola, Nigeria), austerity measures to offset falling commodity revenues (Angola, Chad, Nigeria), and deteriorating security situations (Nigeria, Chad). Together, these weighed heavily on investor sentiment. Falling capital spending in the SSA oil sector also reflected a secular decline in oil production because of aging oil fields and increasing production costs; investment was further depressed in 2020 by pandemic-related stoppages, supply chain problems, and maintenance delays (Cherif and Matsumoto 2021). Fiscal space also diminished considerably for many of the region’s oil producers, with sharp declines in tax revenues from the oil sector, which constrained public investment. Even so, in some countries (Cameroon, Gabon) large infrastructure investment programs continued, boosting investment growth despite declining oil industry investment.

As in SSA oil exporters, investment growth in other commodity-exporting countries slowed sharply in 2015-17. Strong economic growth during 2011-14 had been accompanied