This year looks set to be another encouraging one for most sub-Saharan African economies. Reflecting mainly strong domestic demand but also elevated commodity prices, the region’s economy is set to expand by 5¼ percent in 2011. For 2012, our baseline projection is for growth to be higher at 5¾ percent, owing to one-off boosts to production in a number of countries.
During the past decade, sub-Saharan African countries have increasingly started exploiting new markets, marking what seems to be a historic reorientation of their trade and investment toward new partners, including those within the region (as defined in Appendix I). Very importantly, this reorientation has largely occurred through trade creation rather than trade diversion, as engagement with traditional partners has continued to grow in recent years, though at a slower pace than that with new partners. The broad aims of this chapter are to shed light on the extent of this reorientation, what it implies for sub-Saharan African countries, and the opportunities and challenges it poses.
Growth performance in sub-Saharan Africa (SSA) remains buoyant in a wide range of countries despite a continued worsening of the terms of trade of the oil importers.1 Against a background of an easing of demand for imports in advanced countries, average real GDP growth is now expected to decline slightly in 2005 from its strong performance in 2004. The slowdown in 2005, however, is attributable primarily to lower growth in most of the oil-producing countries following the exceptional increases in oil-production capacity established during 2003 and 2004, especially in Nigeria; non-oil-producing countries are expecting average growth of about 4.5 percent, similar to that observed in 2004. Nonetheless, the number of countries anticipated to achieve growth in excess of 5 percent is expected to increase, while the number growing by less than 2 percent is expected to decline. Real GDP growth in SSA is projected to rebound to 5.3 percent in 2006. Growth in SSA, however, remains below the levels observed in other developing country regions and is still insufficient for most countries to achieve the income-poverty Millennium Development Goal (MDG).
An easing of output growth among some oil producers is expected to lower real GDP growth in SSA during 2005 from the eight-year high in 2004 (Table 2.1). After exceptionally strong increases in oil production in Chad and Equatorial Guinea during 2004, output growth rates in these countries have eased this year; output in Nigeria is expected to grow by only 3.9 percent in 2005, down from the 6.0 percent it registered in 2004. Nonetheless, performance continues to be encouraging across a broad range of SSA countries, with real GDP growth in non-oil-producing countries expected to remain at 4.5 percent in 2005. Excluding South Africa and Nigeria, average output is expected to increase by 5.0 percent in 2005, and average per capita real GDP in the region to rise by 2.6 percent.1 Real growth in SSA, however, does not yet match the levels witnessed in other developing country regions. Moreover, growth in five countries (Central African Republic, Comoros, Côte d’Ivoire, Gabon, and Zimbabwe) has remained below 3 percent in each of the past four years, and GDP per capita is continuing to decline.
The average growth rate for SSA as a whole is projected to rebound to 5.3 percent in 2006 primarily because of rising petroleum output in oil-producing countries and some pickup in import growth in advanced countries. Output growth in oil-producing countries is forecast to increase significantly from 4.7 percent to 8.1 percent. This reflects stronger growth in Angola and Nigeria. In the latter, growth is expected to pick up to about 4.9 percent as a major offshore oil field comes onstream. Growth is also expected to be particularly strong in Chad.
Mr. Mauro Mecagni, Daniela Marchettini, and Mr. Rodolfo Maino
Banking in SSA has undergone very significant changes over the last two decades. Financial liberalization and related reforms, upgrades in institutional and more recently the expansion of cross-border banking activities and the rapid development of Pan-African banking groups are signaling greater financial integration and significant changes in the African banking and financial landscape. Nonetheless, excess liquidity in many countries reflects limited lending opportunities and, despite improvements, asset quality and provisioning remain comparatively low. Dollarization has also been a persistent characteristic in several natural resource-dependent economies. This paper discusses key stylized facts and trends of banking development in SSA, looking at a variety of dimensions such as size, depth, soundness, and efficiency. It also assess the rapid expansion of pan-African banking groups, which have overtaken the role of the European and U.S. banks that had traditionally dominated banking activities in SSA, creating significant cross-border networks and becoming the largest participants in new syndicates and large bilateral loans to finance infrastructure development.
Sub-Saharan Africa is contending with an unprecedented health and economic crisis—one that, in just a few months, has jeopardized years of hard-won development gains and upended the lives and livelihoods of millions.
This study discusses the role of domestic debt markets in sub-Saharan Africa (SSA) based on a new data set covering 27 SSA countries during the 20-year period 1980–2000. The study finds that domestic debt markets in these countries are generally small, highly short term, and often have a narrow investor base. Domestic interest payments present a significant burden to the budget, despite much smaller domestic than foreign indebtedness. The use of domestic debt is also found to have significantly crowded out private sector lending. Finally, the study identifies significant differences among the size, cost, and maturity structure of domestic debt markets in heavily indebted poor countries (HIPCs) and non-HIPCs.