- International Monetary Fund. African Dept.
- Published Date:
- October 2013
©2013 International Monetary Fund
Regional economic outlook. Sub-Saharan Africa. — Washington, D.C.: International
Monetary Fund, 2003–
v.; cm. — (World economic and financial surveys, 0258-7440)
Twice a year.
Began in 2003.
Some issues have thematic titles.
1. Economic forecasting — Africa, Sub-Saharan — Periodicals. 2. Africa, Sub-Saharan — Economic conditions — 1960– — Periodicals. 3. Economic development — Africa, Sub-Saharan — Periodicals. I. Title: Sub-Saharan Africa. II. International Monetary Fund. III. Series: World economic and financial surveys.
ISBN-13: 978-1-47555-341-3 (paper)
ISBN-13: 978-1-48435-095-9 (Web PDF)
Publication orders may be placed online, by fax, or through the mail:
International Monetary Fund, Publication Services
P.O. Box 92780, Washington, DC 20090 (U.S.A.)
Tel.: (202) 623-7430
Telefax: (202) 623-7201
- In Brief
- 1. Keeping the Pace
- 2. Drivers of Growth in Nonresource-Rich Sub-Saharan African Countries
- 3. Managing Volatile Capital Flows: Experiences and Lessons for Sub-Saharan African Frontier Markets
- Statistical Appendix
- Publications of the IMF African Department, 2009–13
- 1.1. Africa’s Rising Exposure to China: How Large Are Spillovers through Trade?
- 1.2. Government Debt: Old and New Risks
- 1.3. Sub-Saharan Africa’s Progress in Achieving the Millennium Development Goals (MDGs)
- 1.4. Has Growth in Sub-Saharan Africa Been Inclusive?
- 2.1. Is It Real? Alternative Benchmarks Evaluating GDP Estimates
- 2.2. The Role of Total Factor Productivity in the Growth Acceleration of Nonresource-Rich Low-Income Countries
- 2.3. Investment in Mozambique
- 2.4. Examples of National Programs Aimed at Raising Yields
- 3.1. Drivers of Portfolio Flows to Sub-Saharan African Frontier Markets
- 3.2. Capital Flows Management Measures in Sub-Saharan African Frontier Markets
- 3.3. Examples of Macroprudential Policies
- 3.4. Nigeria—Capital Flows and Policy Response
- 3.5. Ghana’s Recent Experience in Portfolio Flows
- 3.6. Zambia—Copper and Capital
- 1.1. Sub-Saharan Africa: Real GDP Growth
- 1.2. Sub-Saharan Africa: Debt Indicators
- 1.3. Sub-Saharan Africa: Other Macroeconomic Indicators
- 1.4. Sub-Saharan Africa: Bonds Issued, 2013
- 1.5. Scenario Assumptions
- 1.6 Selected Regions; Percentage of Countries Meeting Specific Benchmarks
- 1.7 IMF Statistics Department Technical Assistance Missions in Sub-Saharan Africa
- 2.1. Sub-Saharan Africa Sample Countries: Real GDP and Real GDP per Capita Growth, Average 1995–2010
- 2.2. Sub-Saharan Africa Sample Countries: Sectoral Growth in Real GDP
- 2.3. Sub-Saharan Africa Sample Countries: Annual Change in Relative Employment Shares through 2010
- 2.4. Sub-Saharan Africa Sample Countries: Economic Indicators
- 2.5. Sub-Saharan Africa: Cost of Doing Business Indicators
- 2.6. Burkina Faso: Cotton Reforms, 1992–2008
- 2.7. Determinants of Real per Capita Output Growth
- 3.1. Sub-Saharan African Frontier Markets: Average Private Flows
- 3.2. Cross-Border Bank-Related Flows to Sub-Saharan African Countries
- 3.3. Sub-Saharan African Frontier Markets: Real Exchange and International Reserves Performance
- 3.4. Determinants of Gross Portfolio Investment Flows
- 3.5 Determinants of Equity and Bond Flows in Sub-Saharan Africa
- 1.1. World Economic Forecast Revisions
- 1.2. International Commodity Prices
- 1.3. Sub-Saharan Africa: Growth Forecast Revisions Relative to April 2013
- 1.4. Sub-Saharan Africa: Real GDP Growth and Percentile in the World Distribution of Growth
- 1.5. Sub-Saharan Africa: Food and Nonfood Inflation
- 1.6. Sub-Saharan Africa: Bond Flows to Emerging Market and Frontier Economies
- 1.7. Sub-Saharan Africa: Equity Flows to Emerging Market and Frontier Economies
- 1.8. Sub-Saharan Africa: Real Exchange Rate Developments by Traditional Country Groups, 2001–13 (June)
- 1.9. Sub-Saharan Africa: Distribution of External Current Account Balance-to-GDP Ratio (Center Quintiles), 2000–13
- 1.10. Sub-Saharan Africa: Ratio of External Current Account Balance to GDP, 2000–13
- 1.11. Sub-Saharan Africa: Current Account Developments, by Country Groupings: 2001–13
- 1.12. Sub-Saharan Africa: Balance of Payments, 2009–12 Average
- 1.13. Sub-Saharan Africa: Current Account Financing 2009–12 Average
- 1.14. Sub-Saharan Africa: External Current Account Balance-to-GDP Ratio, 2012–18
- 1.15. Sub-Saharan Africa: Distribution of External Debt-to-GDP Ratio (Center Quintiles) 2000–13
- 1.16. Sub-Saharan Africa: External Debt-to-GDP Ratio, 2000–13
- 1.17. Sub-Saharan Africa: Commodity Price Scenarios
- 1.18 Statistical Capacity Indicator
- 2.1. Selected Regions: Real GDP Index
- 2.2. Sub-Saharan Africa: Real GDP Index
- 2.3. Sub-Saharan Africa Sample Countries: Real GDP Index
- 2.4. Sub-Saharan Africa Sample Countries: Contributions of Sectors to Real GDP Growth, Average 1995–2010
- 2.5. Sub-Saharan Africa Sample Countries: The Virtuous Circle, Average 1995–2010
- 2.6. Sub-Saharan Africa: Worldwide Governance Indicators
- 2.7. Sub-Saharan Africa Sample Countries: Expenditure on Education
- 2.8. Sub-Saharan Africa Sample Countries: Credit to the Private Sector
- 2.9. Sub-Saharan Africa Sample Countries: Adults with an Account at a Formal Financial Institution, 2011
- 2.10. Sub-Saharan Africa Sample Countries: Donor Financing, Average 1995–2010
- 2.11. Sub-Saharan Africa: Misalignment with Equilibrium Exchange Rate
- 2.12. Sub-Saharan Africa Sample Countries: Saving and Investment, 1995–2010
- 2.13. Sub-Saharan Africa Sample Countries: Public Capital Expenditure, 1995–2010
- 2.14. Uganda: Private Investment, 1996–2010
- 2.15. Sub-Saharan African Sample Countries: Infrastructure Indicators
- 2.16. Sub-Saharan Africa Sample Countries: Share of Agriculture in GDP
- 2.17. Sub-Saharan Africa Sample Countries: Contributions of Sectors to Services Growth, Average 2000–11
- 2.18. Selected Countries: Contributions to Real GDP per Capita Growth, 2000–11
- 3.1. Selected Regions: Capital Inflows: 2000–12
- 3.2. Selected Regions: Private Investment
- 3.3. Sub-Saharan African Frontier Markets: External Loans from and Deposits at BIS-Reporting Banks
- 3.4. Sub-Saharan Africa: Trends and Fluctuations in Equity and Bond Flows
- 3.5. Sub-Saharan Africa: Frontier Markets: Exchange Rate Depreciation, 2013
- 3.6. Sub-Saharan Africa: Exchange Rate Volatility, 2013
- 3.7. Sub-Saharan Africa: Government Bond Yield to Maturity Spreads to 10-year U.S. Bonds, 2013
- 3.8. Sub-Saharan Africa Frontier Markets: Twin Deficits
- 3.9. Sub-Saharan Africa Frontier Markets: Portfolio Flows
- 3.10. Sub-Saharan Africa Frontier Markets: Net Portfolio Flows and Gross International Reserves
Table 1.4 in the online versions of this publication differs from the print product in that Ghana’s bond issuance amount and yield rate were revised, as well as the Total amount issued.
Table 2.4 in the online versions of this publication differs from the print product in that the Group weighted averages were revised.
accelerated data program
African Development Bank
IMF Regional Technical Assistance Centers in Africa
Bank for International Settlements
Bank of Ghana
balance of payments
Bank of Tanzania
Central Bank of Nigeria
Economic and Monetary Community of Central Africa
currency zone of CEMAC and WAEMU
capital flow management
Center for Global Development
crop intensification program
consumer price index
emerging markets bond index
emerging market index
Emerging Portfolio Fund Research
fixed asset investment
foreign direct investment
Financial Sector Assessment Program
gross domestic product
General Data Dissemination System
generalized method of moments
Heavily Indebted Poor Countries
international comparison program
International Household Survey Network
Monetary and Capital Markets
Millennium Development Goals
Multilateral Debt Relief Initiative
medium-term expenditure framework
emerging markets indices
National Agriculture Extension Intervention Program
open data platform
public financial management
Regional Economic Outlook
Special Data Dissemination Standard
sub-Saharan Africa frontier market
total factor productivity
United Nations Economic Commission for Africa
Chicago Board Options Exchange Market Volatility Index
West African Economic and Monetary Union
World Economic Outlook
Worldwide Governance Indicators
This October 2013 issue of the Regional Economic Outlook: Sub-Saharan Africa (REO) was prepared by a team led by Alfredo Cuevas under the direction of Anne-Marie Gulde-Wolf, and David Robinson.
The team included Isabell Adenauer, Javier Arze del Granado, Trevor Alleyne, Jorge Iván Canales-Kriljenko, Rodrigo Garcia-Verdu, Cleary Haines, Juan Sebastian Corrales, Cheikh Anta Gueye, Mumtaz Hussain, Kareem Ismail, Byung Kyoon Jang, Mauro Mecagni, Montfort Mlachila, Marco Pani, Seok Gil Park, Jens Reinke, George Rooney, Alun Thomas, Juan Treviño, Sebastian Weber, and Masafumi Yabara.
Specific contributions were made by Dalmacio Benicio, Paulo Drummond, Estelle Xue Liu, Borislava Mircheva, and John Wakeman-Linn; and editorial assistance was provided by Jenny Kletzin DiBiase. Natasha Minges was responsible for document production, with assistance from Anne O’Donoghue and typesetting assistance from Charlotte Vazquez. The editing and production were overseen by Joanne Johnson of the Communications Department with assistance from Martha Bonilla and Mary Fisk.
The following conventions are used in this publication:
- In tables, a blank cell indicates “not applicable,” ellipsis points (…) indicate “not available,” and 0 or 0.0 indicates “zero” or “negligible.” Minor discrepancies between sums of constituent figures and totals are due to rounding.
- An en dash (–) between years or months (for example, 2009–10 or January–June) indicates the years or months covered, including the beginning and ending years or months; a slash or virgule (/) between years or months (for example, 2005/06) indicates a fiscal or financial year, as does the abbreviation FY (for example, FY2006).
- “Billion” means a thousand million; “trillion” means a thousand billion.
- “Basis points” refer to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼ of 1 percentage point).
Chapter 1: Keeping the Pace
Global headwinds have moderately lowered sub-Saharan Africa’s growth in 2013, but the pace is expected to pick up in 2014. Strong investment demand continues to support growth in most of the region. Output is projected to expand by 5 percent in 2013 and 6 percent in 2014. The softer outlook for 2013 reflects both a more adverse external environment—characterized by rising financing costs, less dynamic emerging markets, and less favorable commodity prices—and diverse domestic factors, including slower investment and weakening consumer confidence in some cases, and adverse supply developments in others. Inflation is expected to maintain its downward trend for a third consecutive year, toward less than 6 percent by end-2014, with benign prospects for food prices throughout the region and the continuation of prudent monetary policies.
Most of the major risks to the outlook for the region stem from external factors. Further weakening in emerging market economies—including some of sub-Saharan Africa’s new economic partners—or in advanced economies could affect sub-Saharan Africa’s prospects for growth, including through commodity price declines. The chapter presents two alternative scenarios where large but plausible temporary international commodity price shocks are considered. A downside scenario would not derail growth at the regional level; but growth and current account balances could be significantly affected in some resource-intensive countries. Domestic risks, such as those related to weather and other supply-side shocks or political events, pose important risks to individual countries and perhaps their immediate surroundings, but are less of a threat at the regional level.
Widening current account deficits in sub-Saharan Africa since 2008 do not seem to pose immediate concerns, except in a few countries. In the aftermath of the global crisis, current account deficits in sub-Saharan Africa widened significantly, in most cases reflecting increased investment in export-oriented activities and infrastructure (particularly for development of energy supply and natural-resource extraction), and lower saving in some countries. These current account deficits have been largely financed with foreign direct investment, and, except in a few cases, have not resulted in higher external indebtedness. In the medium term, as investments mature and export capacity increases, current account deficits are expected to narrow; however, in some cases, measures to increase domestic saving would be warranted also. External debt—reduced significantly among low-income countries by debt forgiveness—remains low by historical standards in most countries.
Policy prescriptions made in previous issues of this publication remain broadly valid. Revenue mobilization remains a priority in most countries to help fund priority social and capital spending, and in some cases also to help strengthen buffers. (Most countries in the region are not constrained from financing by high debt levels, but some could find it difficult to raise financing in a downturn.) Efforts to keep inflation under control should continue in several countries. Countries facing balance of payments pressures arising from declining commodity prices and capital flow reversals should let their currencies adjust where feasible, with foreign exchange intervention limited to preventing disorderly market conditions. All countries should step up efforts to further improve the domestic business climate by streamlining regulations and reducing red tape, and work to improve their economic statistics.
Chapter 2: Drivers of Growth in Nonresource-Rich Sub-Saharan African Countries
It is often argued that high global commodity prices have allowed sub-Saharan Africa to grow on the basis of high commodity revenue and related investment. Although this is true for many countries, several nonresource-rich low-income countries have also been able to sustain high growth rates over a relatively long period. This chapter focuses on this less well-known story by looking at a group of six countries that managed to grow fast although they were not resource intensive during the period examined: Burkina-Faso, Ethiopia, Mozambique, Rwanda, Tanzania, and Uganda.
This chapter identifies several key characteristics common to these countries—improved macroeconomic management, stronger institutions, increased aid, and higher investment in human and physical capital. Their experience demonstrates that improvements in macroeconomic policy, combined with structural reforms and reliable external financing, can foster productive investment and stimulate growth. Despite the robust growth achieved so far in these countries, they still face low productivity and capital stocks, significant infrastructure gaps, and limited structural transformation. Addressing these challenges will require sustained policy efforts and continued growth.
Chapter 3: Managing Volatile Capital Flows: Experiences and Lessons for Sub-Saharan African Frontier Markets
This chapter examines the evolution of portfolio and cross-border bank flows in sub-Saharan African frontier markets since 2010 and discusses the various policies these countries have designed and implemented to reduce risks stemming from the inherent volatility of these flows. The analysis finds that in the past three years, foreign portfolio flows to sub-Saharan Africa’s frontier economies have grown considerably, and the current bout of global financial market turbulence has so far left most of these countries relatively unscathed. This muted impact reflects, in part, strong fundamentals and prospects in these economies, but it may also reflect their relatively small and illiquid financial markets. As frontier economies in the region become more integrated with global financial markets, they will also become increasingly vulnerable to global financial shocks. If the global turmoil persists, risks of contagion and possible reversals may increase.
The chapter recommends that frontier markets in the region strengthen policy frameworks to ensure that access to capital markets is beneficial, with the appropriate combination of policies depending on country-specific circumstances. Among the key policy recommendations are the following: (i) enhance monitoring by improving data; (ii) enhance macroeconomic and financial policies to provide policy room in case of capital flow surges or reversals; (iii) improve capacity to effectively use macroprudential policies to prevent systemic financial sector risks that may arise from volatile capital flows; and (iv) reinforce the toolkit of capital flow management measures.