and investment in green and resilient infrastructure fails to pick up. Insufficient access to agricultural inputs may lead to more low-productivity subsistence farming, rendering regional food systems even more vulnerable to shocks, especially in countries where climate change has already depressed productivity in farming. Many of these risks, however, can be mitigated through policy actions that promote sustained improvements in the fundamental drivers of potential growth.

# 10.4. Policy options to lift potential growth in SSA

Potential output growth in SSA could be increased by meeting the region’s investment needs for climate adaptation and resilience, boosting human capital, and increasing labor force participation. For example, in a scenario in which the largest ten-year increases on record in each country in investment growth, education outcomes, life expectancy, and female labor force participation are assumed to be repeated, it is estimated that SSA’s potential growth over the remainder of this decade could be boosted by about 0.8 percentage point a year, to an annual average of about 3.7 percent. Much of this boost would come from meeting investment needs, including investment in climate change mitigation and adaptation projects (figure 22).

In a separate scenario representing increased investment in climate change adaptation and mitigation, it is assumed that all SSA economies increase investment to limit climate change to 2°C, and also to become more resilient to its effects. The scenario is based on the World Bank’s Country Climate Development reports. The additional capital spending includes, for example, investment in resilient infrastructure, flood prevention, and renewable power generation, and is estimated at about 1.2 percent of SSA GDP per year in the 2020s. The estimated boost to potential growth is 0.1 percentage points a year over this period.

Although public investment in SSA picked up in the mid-2000s and reached a peak of 5.8 percent of GDP in 2014, this rate was well below the average in other EMDE regions (World Bank 2017f). Partly as a result, SSA still has substantial infrastructure investment needs. Furthermore, public investment fell sharply during the pandemic, reversing some of the progress in meeting these needs. Additional financing equivalent to 27-37 percent of SSA’s 2022 GDP could be needed to return SSA to its pre-pandemic income convergence path by the mid-2020s (IMF 2021d). The region’s annual infrastructure investment needs, the largest among all EMDE regions, are estimated at over 9 percent of regional GDP—nearly four times higher compared to estimates of the actual infrastructure spending in SSA (Fay et al. 2019; Rozenberg and Fay 2019). In all likelihood, a substantial boost in private as well as public sector investment is needed to cover infrastructure gaps and accelerate capital accumulation. If the region’s best ten-year investment growth rates were repeated, the boost to potential growth in the 2020s is estimated at about 0.4 percentage points.

Increasing public investment could boost output in the short term, including by spurring private investment (World Bank 2017f). Many countries in the region have little fiscal space to raise public spending because of elevated public debt, weak revenue mobilization,