World Economic and Financial Surveys

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World Economic and Financial Surveys

Regional Economic Outlook

Sub-Saharan Africa Multispeed Growth

OCT 16


©2016 International Monetary Fund

Cataloging-in-Publication Data

Regional economic outlook. Sub-Saharan Africa. — Washington, D.C.: International Monetary Fund, 2003–

v. ; cm. — (World economic and financial surveys, 0258-7440)

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.

HC800.R4 2016

ISBN: 978-1-51359-597-9 (paper)

ISBN: 978-1-47553-834-2 (Web PDF)

The Regional Economic Outlook: Sub-Saharan Africa is published twice a year, in the spring and fall, to review developments in sub-Saharan Africa. Both projections and policy considerations are those of the IMF staff and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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

E-mail : publications@imf.org




  • Abbreviations

  • Acknowledgments

  • Executive Summary

  • 1. Multispeed Growth

    • Still an Overall Difficult Environment

    • A Tale of Two Africas

    • In Search of Financing

    • Delayed Policy Adjustment

    • Protracted Lower Growth, Rising Risks

  • 2. Exchange Rate Regimes in Sub-Saharan Africa: Experiences and Lessons

    • Evolution of Exchange Rate Regimes in Sub-Saharan Africa

    • Macroeconomic Performance Under Alternative Regimes

    • Exchange Rate Regimes and Fiscal Discipline

    • Policy Considerations and Concluding Remarks

  • 3. Enhancing Resilience to Natural Disasters in Sub-Saharan Africa

    • Natural Disasters in Sub-Saharan Africa

    • Structural Factors Affecting the Impact of Natural Disasters

    • The Economic and Social Impacts of Natural Disasters

    • The Challenges Posed by Climate Change

    • Policy Responses to Natural Disasters and Climate Change

    • Conclusions

  • Statistical Appendix

  • Publications of the IMF African Department, 2009–16

  • Boxes

  • 1.1. Reaping the Benefits from Export Diversification

  • 1.2. Sub-Saharan African Spreads: Changing Sentiments?

  • 1.3. Migration and Remittance Flows in Sub-Saharan Africa

  • 2.1. Achieving Sustained Growth in Pegged Regimes: Lessons from across the Globe

  • 2.2. The Evolution of Nigeria’s Foreign Exchange Arrangements, 2006–16

  • 3.1. Epidemics: Ebola—A Case Study in National Vulnerabilities, Global Costs

  • 3.2. Droughts: Case Study of the El Niño-induced Drought in Southern Africa

  • 3.3. Natural Disasters and Adaptation in Madagascar

  • 3.4. Contrasting Experiences in Enhancing Resilience to Droughts

  • 3.5. Revenue Potential from Carbon Taxation

  • Tables

  • 1.1. Sub-Saharan Africa: Real GDP Growth

  • 1.2. Sub-Saharan Africa: Other Macroeconomic Indicators

  • 2.1. Sub-Saharan Africa: Distribution of de Jure and de Facto Exchange Rate Regime Classifications, 1980–2014

  • 3.1. Selected Groups: Econometric Estimates, Average Impact of Selected Disasters on Income per Capita Growth in the Short Term, 1990–2014

  • 3.2. Sub-Saharan Africa: Econometric Estimates, Average Impact of Selected Disasters on Real GDP Growth

  • 3.3. Impact of Weather on Real GDP Growth

  • 3.4. IMF Postdisaster Assistance to Sub-Saharan African Countries, 2014–16

  • Figures

  • Chapter 1

  • 1.1. Sub-Saharan Africa: Real GDP Growth during Current and Past Economic Slowdowns

  • 1.2. Sub-Saharan Africa: Real GDP Growth

  • 1.3. Sub-Saharan African Resource-Intensive Countries: Cumulative Change in Commodity Terms of Trade since 2011

  • 1.4. Selected Commodity Prices, Change since 2013

  • 1.5. Sub-Saharan Africa: Annual Growth of Exports to China, 2010–13 versus 2015

  • 1.6. Sub-Saharan Africa: Rate of Growth, Average 2010–14 and 2016

  • 1.7. Sub-Saharan Africa: Contribution to Growth by Sources of Demand, Average 2010–14 and 2015–16

  • 1.8. Sub-Saharan Africa: Change in Commodity Terms of Trade and Real GDP Growth, 2016 versus 2013

  • 1.9. Sub-Saharan Africa: Sectoral Contributions to Real GDP Growth, 2010–16

  • 1.10. Selected Sub-Saharan African Countries: Inflation

  • 1.11. Sub-Saharan Africa: Growth of Real Credit to the Private Sector

  • 1.12. Sub-Saharan Africa: Real GDP per Capita Growth

  • 1.13. Sub-Saharan Africa: Sectoral Shares of Real GDP, Average 2005–14

  • 1.14. Sub-Saharan Africa: Current Account Deficit and Sources of Financing, 2011–16

  • 1.15. Sub-Saharan African Frontier Market Economies: International Sovereign Bond Issuances

  • 1.16. Sub-Saharan African and Comparator Countries: Level of Bond Yields, 2014–16

  • 1.17. Chinese Loans to Sub-Saharan Africa, 2000–15

  • 1.18. Sub-Saharan African Oil Exporters: Illustrative Oil Price That Would Return the 2016 Fiscal Position to the 2011–13 Average

  • 1.19. Sub-Saharan African Oil Exporters and Comparators: Change in Overall Fiscal Balance, 2016 versus 2013

  • 1.20. Sub-Saharan African Other Resource-Intensive Countries and Comparators: Change in Overall Fiscal Balance, 2016 versus 2013

  • 1.21. Sub-Saharan Africa: Fiscal Balance, 2010–16

  • 1.22. Sub-Saharan Africa: Public Sector Debt, 2010–16

  • 1.23. Sub-Saharan African Frontier Market Economies and Comparators: Real GDP Growth and Public Debt

  • 1.24. Selected Sub-Saharan African Resource-Intensive Countries and Comparators: Change in Commodity Terms of Trade and Nominal Effective Exchange Rate, 2016 versus 2013

  • 1.25. Sub-Saharan Africa: Monetary Policy Rate Change and Real Monetary Policy Rate since October 2014

  • 1.26. Sub-Saharan Africa: Real GDP Growth

  • Chapter 2

  • 2.1. Sub-Saharan Africa: de Jure and de Facto Exchange Rate Regime Classifications, 1980–2014

  • 2.2. Emerging Market and Developing Economies: de Jure and de Facto Exchange Rate Regime Classifications, 1980–2014

  • 2.3. Selected Samples: Inflation Performance

  • 2.4. Selected Samples: Estimated Inflation Differential Compared with Floats Based on Baseline Inflation Regressions

  • 2.5. Selected Samples: Per Capita GDP Growth Performance

  • 2.6. Sub-Saharan Africa: Indirect Channels of Transmission of Exchange Rate Regime to Growth

  • 2.7. Selected Samples: Estimated Per Capita Growth Differential Compared with Floats Based on Baseline Output Growth Regressions

  • 2.8. Selected Samples: Real per Capita Output Growth Volatility

  • 2.9. Selected Samples: Estimated Output Volatility Differential Compared with Floats Based on Baseline Volatility Regressions

  • 2.10. Various Samples: Fiscal Performance

  • 2.11. Exchange Rate Regimes and Fiscal Performance

  • Chapter 3

  • 3.1. Sub-Saharan Africa: Share in Selected Indicators, 2014

  • 3.2. Sub-Saharan Africa: Vulnerability to Natural Disasters

  • 3.3. World and Sub-Saharan Africa: Frequency of Disasters, 1990–2014

  • 3.4. Sub-Saharan Africa: Frequency and Human Cost of Droughts and Epidemics, 1990–2014

  • 3.5. Sub-Saharan Africa: Floods and Epidemics by Country, 1990–2014

  • 3.6. Sub-Saharan Africa: Share of Agriculture and GDP per Capita, 2014

  • 3.7. Selected Regions: Percent of Rain-fed Farmed Area, Average 2005–13

  • 3.8. Selected Regions: Poverty Headcount Ratios, 2012

  • 3.9. Selected Regions: Agricultural Insurance Premium, 2011

  • 3.10. Sub-Saharan Africa: Average Economic Cost of Selected Disasters, 1990–2014

  • 3.11. Average Human Cost of Selected Disasters, 1990–2014

  • 3.12. Sub-Saharan Africa: Event Analysis, Impact of Selected Disasters on Real GDP Growth, 1990–2014

  • 3.13. Sub-Saharan Africa: Event Analysis, Impact of Selected Disasters on Trade Balance, 1990–2014

  • 3.14. Sub-Saharan Africa: Econometric Estimates, Impact of Selected Disasters on Current Account Balance

  • 3.15. Sub-Saharan Africa: Event Analysis, Impact of Selected Disasters on the Fiscal Balance Excluding Grants, 1990–2014

  • 3.16. Selected Groups: Event Analysis, Impact of Natural Disasters on Nonperforming Loans

  • 3.17. Sub-Saharan Africa: Econometric Estimates, Impact of Natural Disasters on Nonperforming Loans

  • 3.18. Sub-Saharan Africa: Event Analysis, Food Security Index, 2011–14

  • 3.19. Selected Groups: Event Analysis, Poverty, and Inequality, 2011–13

  • 3.20. Sub-Saharan Africa: Econometric Estimates, Impact of Natural Disasters on Poverty, 2011–13

  • 3.21. Sub-Saharan Africa: Temperature, 1980–2012

  • 3.22. Sub-Saharan Africa: Rainfall, 1980–2012

  • 3.23. Considerations in Determining the Size of Buffers



Africa Risk Capacity


Annual Report on Exchange Arrangements and Exchange Restrictions


Bureau de Change


World Bank’s catastrophe deferred drawdown option


The Central Bank of Nigeria


Catastrophe Containment and Relief Trust


Economic and Monetary Community of Central Africa


currency zone of CEMAC and WAEMU


Wholesale Dutch Auction System


developing countries


Extended Credit Facility


emerging market economies


early warning systems


Food and Agriculture Organization of the United Nations


Forum on China Africa Cooperation


foreign exchange


Global Facility for Disaster Reduction and Recovery


gross domestic product


General Resources Account


International Country Risk Guide


Interbank foreign exchange market


International Monetary Fund


Livelihoods Early Assessment Protection


low-income countries


nonperforming loans


ordinary least squares


Post-Catastrophe Debt Relief


purchasing-power parity


Productive Safety Net Program


Rapid Credit Facility


real effective exchange rate


Regional Economic Outlook (IMF)


Rapid Finance Instrument


Sustainable Development Goals


Sub-Saharan Africa


West African Economic and Monetary Union


World Health Organization


World Economic Outlook (IMF)


This October 2016 issue of the Regional Economic Outlook: Sub-Saharan Africa (REO) was prepared by a team led by Céline Allard under the direction of Abebe Aemro Selassie.

The team included Francisco Arizala, Mounir Bari, Marlon Francisco, Jesus Gonzalez-Garcia, Cleary Haines, Dalia Hakura, Ermal Hitaj, Mumtaz Hussain, Marshall Mills, Monique Newiak, Tobias Rasmussen, Vimal Thakoor, Charalambos Tsangarides, Arina Viseth, Tim Willems, Mustafa Yenice, and Jiayi Zhang.

Specific contributions were made by Luisa Charry, Kerstin Gerling, Farayi Gwenhamo, Samir Jahjah, Romina Kazandjian, Lisa Kolovich, Yun Liu, Montfort Mlachila, Ian Parry, Mika Saito, Jing Wang, and Fan Yang.

Natasha Minges was responsible for document production, with production assistance from Charlotte Vazquez. The editing and production were overseen by Linda Long of the Communications Department.

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).

Executive Summary

Multispeed Growth

Growth in sub-Saharan Africa looks set to slow to its lowest level in more than 20 years. With lower commodity prices and a generally less supportive global economic environment, average growth in the region is foreseen to decelerate sharply to 1½ percent this year—well below population growth, and in sharp contrast to the high growth rates of the past 15 years. While the projection is for a modest recovery for next year (to nearly 3 percent), this is predicated on prompt action to address the large macroeconomic imbalances and policy uncertainty in some of the region’s largest economies.

This aggregate picture, however, belies considerable heterogeneity in economic paths across the region.

  • Most of the non–resource-intensive countries—half of the countries in the region—continue to perform well, as they benefit from lower oil import prices, an improved business environment, and continuous strong infrastructure investment. Countries such as Côte d’Ivoire, Ethiopia, Kenya, and Senegal are foreseen to continue to grow at more than 6 percent.

  • In contrast, commodity exporters are under severe economic strains, including the region’s three largest countries, Angola, Nigeria, and South Africa. The near-term prospects of oil exporters in particular have worsened, notwithstanding the modest uptick in oil prices, as the slowdown is becoming entrenched—activity among these countries is expected to contract by 1¼ percent this year. Among other resource-intensive countries, growth in the Democratic Republic of Congo, Ghana, South Africa, Zambia, and Zimbabwe is decelerating sharply or stuck in low gear.

Policy adjustment among hard-hit countries needs to be enacted promptly to allow for a rebound in growth.

  • Worryingly, in the face of strong financial and economic pressures, the policy response in many of the hardest-hit countries has been slow and piecemeal, often accompanied by stopgap measures such as central bank financing and the accumulation of arrears, and leading to rapidly rising public debt. In oil-exporting countries with flexible regimes, exchange rates have been allowed to adjust only with reluctance, resulting in strong pressures on deposits and foreign exchange reserves. As a result, the delayed adjustment and ensuing policy uncertainty have been deterring investment and stifling new sources of growth—making a return to strong growth rates more difficult.

  • Instead, a sustained adjustment effort is needed, based on a comprehensive and internally consistent set of policies. This implies fully allowing the exchange rate to absorb external pressures for countries outside monetary unions, reestablishing macroeconomic stability—including by tightening monetary policy where needed to tackle sharp increases in inflation—and focusing as much as possible on growth-friendly elements of fiscal consolidation. With limited buffers, the scope to ease the adjustment path will depend critically on the availability of new financing, ideally on concessional terms.

Countries that are still growing rapidly should rebuild buffers in comparatively favorable times to stem the increase in public debt. In an environment of tighter and more volatile financial markets, striking the right balance between much-needed developmental spending and hard-won debt sustainability remains the main challenge. While policy action is not as urgent as for the hardest-hit countries, debt has nonetheless been on an upward trend in many of these countries despite robust growth, and, going forward, some fiscal consolidation appears warranted.

Exchange Rate Regimes in Sub-Saharan Africa: Experiences and Lessons

The second chapter documents the evolution of exchange rate regimes in the region since 1980 and considers the bearing they have had on macroeconomic performance, including inflation, output growth, output volatility, and fiscal outcomes, relative to other emerging markets and developing countries.

As in other regions, there is considerable variation in regimes across sub-Saharan Africa, although the region distinguishes itself for its high prevalence of pegs, with nearly 60 percent of its countries operating under a peg in 2014. Over time, and as in other emerging markets and developing countries, some countries with more flexible regimes have tended to move toward less flexible arrangements, particularly after the 2008 global financial crisis. For sub-Saharan African countries, this appears to reflect the fact that many commodity exporters leaned against nominal appreciations in the face of significant foreign exchange inflows when commodity prices were high.

Consistent with the monetary discipline and policy credibility that pegs provide, sub-Saharan countries with fixed exchange rate regimes have enjoyed lower inflation outcomes than countries with more flexible regimes. Moreover, the pegged regimes have provided a disciplining device for fiscal policy. But their growth rates have also been 1 to 2 percentage points lower more recently relative to countries with more flexible regimes. Accompanying policies are therefore needed to maximize benefits for each regime. Those include structural reforms to strengthen growth and competitiveness in countries with pegged regimes, as well as growth-friendly fiscal adjustment in a number of countries with pegged regimes where, at this juncture, low commodity prices have sharply reduced export earnings and fiscal revenues. For the countries with more flexible regimes, putting in place monetary policy frameworks with a strong mandate on price stability can support the flexible regimes, along with appropriately tight fiscal and monetary policies to contain inflationary pressures associated with exchange rate depreciations.

Enhancing Resilience to Natural Disasters in Sub-Saharan Africa

The third chapter finds that sub-Saharan Africa is highly vulnerable to natural disasters—as evidenced by the severe drought that has recently affected most of eastern and southern Africa. Structural factors—such as a high reliance on rain-fed agriculture, capacity constraints for preparedness as well as post-disaster response, and limited access to insurance—contribute significantly to these vulnerabilities. In particular, natural disasters exert long-term economic damage to the region’s economies, due to their adverse effects on human capital and infrastructure. With 40 percent of the world’s poor living in sub-Saharan Africa, natural disasters also have a substantial social impact through increases in food insecurity, poverty, and inequality.

Going forward, climate change will increase these vulnerabilities as rising temperatures and rainfall volatility are expected to increase the impact of droughts and floods, particularly by impairing agricultural productivity, exacerbating water shortages, and disrupting hydropower generation. Rising sea levels will contribute to coastal flooding and generate significant relocation costs.

In that context, the chapter discusses a range of risk management policies that can help enhance resilience to natural disasters in the region, including implementing early warning systems, making the agricultural sector more resilient to droughts and climate change, promoting economic diversification, adapting physical infrastructure, and increasing access to cost-effective insurance. Where the scope for risk reduction and risk transfer is limited, countries may have to rely on buffers, social safety nets, and external assistance to cushion the impact of natural disasters. The international community can help by strengthening the coordination of disaster relief efforts to make them more rapid and better targeted. The IMF has been increasingly adapting its lending and advice to help respond to natural disasters.