however, this would still be weak, averaging 2.5 percent a year over the remainder of the 2020s, compared to 3.5 percent a year for EMDEs as a whole.

The underlying contribution of SSA’s capital stock is projected to moderate to 1 percentage point a year in the 2020s. For 11 of the 13 SSA countries in the sample that are commodity-exporting, private investment in the resource sector is expected to continue growing in response to high commodity prices. Although financing costs are rising across the region as global financial conditions tighten, continued access to concessional financing will allow public investment to remain robust in some countries, supporting progress toward development goals. In contrast to the rest of the region, investment growth in South Africa is expected to recover only moderately during the next decade because of such structural impediments as high unemployment, weak infrastructure and institutions, slow progress with reforms, elevated public debt, and deteriorating profitability of state-owned enterprises, especially in the power generation sector. Excluding South Africa, investment growth is expected to remain robust at around 5.9 percent a year.

This investment growth is also expected to support TFP growth across the region. In South Africa, a stronger record of innovation than in the broader region suggests that despite weaker investment growth than in other SSA economies, TFP growth may pick up in the reminder of the 2020s. South Africa is one of SSA’s leaders in digital infrastructure and services and is therefore more prepared than the rest of the region to adopt frontier technologies, for example in information technology and digital finance (figure 22; World Bank 2017e, 2019c). For SSA as a whole, the contribution of TFP growth to potential output growth is expected to increase by about 0.3 percentage point a year. However, if South Africa is excluded, the contribution is expected to increase by only 0.1 percentage point a year.

SSA is expected to experience a slower decline in fertility rates than other EMDE regions (Canning, Raja, and Yazbeck 2015). As a result, the youth dependency ratio (the population younger than 15 divided by the population aged 16-64) is projected to remain high and the share of the working-age population is projected to continue to rise at a similar rate to the pre-pandemic decade—except in South Africa, where slowing labor force growth is expected to dampen potential growth.

There are substantial risks that potential growth in SSA could slow in the period ahead by more than projected. These risks include the emergence and spread of infectious diseases, including new strains of COVID-19, which could further undermine improvements in health outcomes and disrupt the accumulation of human capital. SSA’s high dependence on commodity exports—over 90 percent of the region’s economies are commodity exporters—leaves the region particularly vulnerable to commodity price swings and resulting volatility of growth. High levels of public debt and weak fiscal revenue mobilization could further constrain much-needed investment in some countries, especially if access to international financial markets and donor support remains restricted. Violence and insecurity amid rising poverty and income inequality could slow reforms, including ones that improve investment climates. Productivity in agriculture may decelerate substantially if costs of farming inputs remain elevated for an extended period