- International Monetary Fund
- Published Date:
- October 2014
©2014 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: 978-1-49838-645-6 (paper)
ISBN-13: 978-1-48439-230-0 (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.
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- Executive Summary
- 1. Staying the Course
- 2. Building Resilience in Fragile States in Sub-Saharan Africa
- 3. Addressing the Infrastructure Deficit in Sub-Saharan Africa
- Statistical Appendix
- Publications of the IMF African Department, 2009–14
- 1.1. Comparing the Cost of Sovereign Bond Issuance in Domestic and Foreign Currencies
- 1.2. More Diversification than Previously Thought? Examples from Recent National Account Rebasing
- 2.1. Gauging Fragility in Sub-Saharan Africa
- 2.2. Logit Framework
- 3.1. Regional Infrastructure
- 3.2. Financial Contracts to Facilitate Infrastructure Investments
- 3.3. Role of Multidonor Budget Support and Donors in Leveraging Private Capital
- 3.4. New Infrastructure Financing Initiatives
- 1.1. Sub-Saharan Africa: Real GDP Growth
- 1.2. Sub-Saharan Africa: Other Macroeconomic Indicators
- 2.1. Average Change in CPIA Scores by Country Groups
- 2.2. Sub-Saharan Africa: Social Indicators
- 3.1. Strengths and Weaknesses of Infrastructure Financing Modalities
- Chapter 1
- 1.1. World GDP Growth and Sub-Saharan Africa Export Growth
- 1.2. Sub-Saharan Africa: Exports by Partner
- 1.3. World Export Interconnectedness, 2000 and 2013
- 1.4. Current Account Balances and Investment, 2010–13
- 1.5. Selected Economies: Change in Sovereign Spreads since May 2013 and Fiscal Balance over 2013–14
- 1.6. Sub-Saharan Africa: Outstanding International Sovereign Bonds for Markets Access Economies
- 1.7. Sub-Saharan Africa: GDP Growth Synchronization: 1990–2013
- 1.8. Sub-Saharan Africa: Transmission of Shocks from Advanced and Emerging Economies
- 1.9. Sub-Saharan Africa: Gross External Financing, Average 2012–13
- 1.10. Sub-Saharan African Selected Countries: Currency Depreciation and Inflation Between end-April 2013 and end-July 2014
- 1.11. Sub-Saharan Africa: Public Sector Debt, 2004–13
- 1.12. Sub-Saharan Africa: Contribution to Public Sector Debt Accumulation, 2011–13
- 1.13. Sub-Saharan Africa: Overall Fiscal Balance, 2004–13
- 1.14. Market Access Countries: Overall Fiscal Balance, 2011 versus 2013
- 1.15. Selected Sub-Saharan African Countries: Largest Negative Fiscal Balance Deviation from Projection, 2013
- 1.16. Sub-Saharan Africa: Change in Primary Fiscal Balance and Capital Expenditure, 2013
- 1.17. Sub-Saharan Africa: Average Grant Element, 2001–12
- 1.18. Sub-Saharan Africa: Impact on GDP Level from External Shocks
- Chapter 2
- 2.1. Building Resilience in Sub-Saharan Africa
- 2.2. Macroeconomic Indicators
- 2.3. Average Growth Volatility in Real GDP per Capita: 1990s versus 2000s
- 2.4. Sub-Saharan Africa: Real GDP per Capita Growth Acceleration and Deceleration, 1990–2011
- 2.5. Sub-Saharan Africa: Fiscal Institutions and Policy Space
- 2.6. Sub-Saharan African Fragile States: Fiscal Space Indicators
- 2.7. Sub-Saharan African Fragile States: Social Indicators
- 2.8. Overall CPIA Scores
- 2.9 Factors in Building Resilience
- 2.10. Political Stability, 1996–2011
- 2.11. CPIA Public Sector Management and Institutions Cluster, 2005–13
- 2.12. Government Revenue, 1990–2013
- 2.13. Control of Corruption, 1998–2012
- 2.14. Rule of Law, 1998–2012
- 2.15. Real GDP per Capita
- Chapter 3
- 3.1. Sub-Saharan Africa: Levels of Infrastructure Development, 2000 and 2010
- 3.2. Sub-Saharan Africa: Sectoral Infrastructure Developments
- 3.3. Emerging and Developing Economies: Purchasing Power Parity GDP per Capita versus Quality of Infrastructure, 2013
- 3.4. Sub-Saharan Africa: Rank of Deviations of World Economic Forum Scores, 2013
- 3.5. Sub-Saharan Africa: Public Infrastructure and External Financing Sources, 2007 and 2012
- 3.6. Sub-Saharan Africa: Private Participation in Infrastructure Investment by Country, 1995–2012
- 3.7. Sub-Saharan Africa: New Syndicated and Large Bilateral Loans for Infrastucture by Lender Nationality, 2006–13
- 3.8. Sub-Saharan Africa: Tenor of New Syndicated and Large Bilateral Loans
- 3.9. Sub-Saharan Africa: Average Public Investment versus Change in Quality of Infrastructure Scores, 2006–13
- 3.10. Sub-Saharan Africa: Low-Income Countries: Median General Government Revenue, 1990–2013
(October 20, 2014)
Figure 2.6 on page 29 has been replaced; the new version includes panel titles that were inadvertently omitted from the original version.
Austrian Development Agency
Asian Development Bank
African Development Bank
Infrastructure Development Index
Country Policy and Institutional Assessment
Development Assistance Committee
United Kingdom Department for International Development
Dutch Ministry of Foreign Affairs
Economic Commission for Africa
European Investment Bank
foreign direct investment
gross domestic product
Group of Seven
Heavily Indebted Poor Countries
information communications technology
International Development Association
International Finance Corporation
International Monetary Fund
Kreditanstalt für Wideraufbau
Millennium Development Goals
multilateral development institution
Multilateral Debt Relief Initiative
Multilateral Guarantee Investment Agency
medium-term expenditure framework
New Partnership for Africa’s Development
net present value
Organisation for Economic Co-operation and Development
Priority Action Plan
partial credit guarantee
public financial management
Programme for Infrastructure Development in Africa
Private Investment Development Group
purchasing power parity
private participation in infrastructure
public private partnerships
Poverty Reduction Strategy Papers
public sector comparator
policy support instrument
Regional Economic Outlook
Swiss State Secretariat for Economic Affairs
Swedish International Development Cooperation Agency
World Economic Outlook
This October 2014 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 Isabell Adenauer, Abdelrahmi Bessaha, Jorge Iván Canales Kriljenko, Juan Sebastian Corrales, Corinne Delechat, Ejona Fuli, Rodrigo Garcia-Verdu, Enrique Gelbard, Jesus Gonzalez-Garcia, Cheikh Anta Gueye, Farayi Gwenhamo, Cleary Haines, Mumtaz Hussain, Ulrich Jacoby, Emmanouil Kitsios, Rodolfo Maino, Daniela Marchettini, Mauro Mecagni, Bhaswar Mukhopadhyay, Dafina Mulaj, Marco Pani, Natalie Pouakam, Gustavo Ramirez, Francisco Roch, George Rooney, Juan Treviño, Rui Xu, and Etienne B. Yehoue.
Specific contribution was made by Moataz El Said. Natasha Minges was responsible for document production, with typesetting assistance from Charlotte Vazquez. The editing and production were overseen by Joanne Johnson of the Communications Department with assistance from Martha Bonilla.
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).
Staying the Course
Growth in sub-Saharan Africa is expected to remain strong, at about 5 percent in 2014 and 5¾ percent in 2015. Solid growth will continue in the lion’s share of the region’s countries, driven by sustained infrastructure investment, buoyant services sectors, and strong agricultural production, even as oil-related activities provide less support. This overall positive outlook is, however, overshadowed by the dire situation in Guinea, Liberia, and Sierra Leone, where the Ebola outbreak is exacting a heavy human and economic toll. In a few countries, activity is facing headwinds from domestic policies, including in South Africa, where growth is held back by electricity bottlenecks, difficult labor relations, and low business confidence; and in Ghana and, until recently, Zambia, where large macroeconomic imbalances have led to pressures on the exchange rate and inflation.
This baseline scenario of solid growth is nonetheless predicated on a number of increasingly potent downside risks being lifted.
- Ebola outbreak. The Ebola outbreak could have much larger regional spillovers, especially if it is more protracted or spreads to other countries—with trade, tourism, and investment confidence severely affected. In addition, the security situation continues to be difficult in Central African Republic and South Sudan, and remains precarious in Northern Mali, Northern Nigeria, and the coast of Kenya.
- Homegrown fiscal vulnerabilities in a few countries. Fiscal policy remains on an expansionary footing. In many countries, this reflects a time-bound increase to finance infrastructure and other development spending, at appropriately concessional terms. But in a few cases, particularly some frontier economies, wide fiscal deficits have been driven by rising recurrent expenditures. The risk is that the fiscal vulnerabilities that have emerged will eventually push these countries into a sharp and disorderly adjustment.
- External risks. A marked slowdown in emerging markets would weaken demand for commodity exports from the region, with immediate negative effects on external and fiscal positions. The ensuing decline in activity prospects may lead to reduced appetite for investment, with more long-term implications on the growth momentum. Relatedly, a faster-than-expected tightening of global financial conditions could trigger a new bout of volatility. Risk aversion from foreign investors may lead to a reversal of sentiment toward the region and capital outflows, putting pressure on countries with large external financing needs, and forcing abrupt macroeconomic adjustments.
Against this backdrop, the overriding policy objective remains sustaining high growth, but fiscal imbalances also need to be addressed in a few countries. As policymakers pursue development objectives to facilitate employment creation and inclusive growth, it will be important to pay heed to macroeconomic constraints. Increasingly, this will require striking the right balance between scaling up public investment in human capital and physical infrastructure and maintaining debt sustainability. Meanwhile, monetary policies should continue to focus on consolidating the reduction in inflation achieved in recent years, including by tightening in countries where there is rapid growth and persistent high inflation. In the few countries with acute macroeconomic imbalances, fiscal consolidation is necessary, but should avoid overly adverse consequences on the poor and vulnerable groups. In Ebola-affected countries, fiscal accounts are likely to deteriorate, and, where public debt is manageable, fiscal deficits should be allowed to widen temporarily.
Building Resilience in Fragile States in Sub-Saharan Africa
The second chapter in this report focuses on the complex process of transition out of state fragility. About a billion people, a third of them in Africa, live in fragile states—countries in which the government is impaired to deliver basic public services to the population and promote security and development. These countries have high poverty rates and often find themselves in a vicious circle of political instability or conflict, underdevelopment, and low capacity. Yet countries can, and indeed have, escaped from these conditions and built resilience, although the process was neither linear nor short.
The chapter distills lessons from recent transition experiences in selected sub-Saharan African countries. Focusing on data for 26 countries and four case studies, it finds that some countries deemed fragile in the 1990s have made progress, while others have faced more severe difficulties or even regressed. Overcoming fragility requires a focus on a set of well-prioritized actions, namely a political settlement and improvements in economic conditions sufficient to prevent instability, strong leadership, and reforms centered on increased governance and transparency. International stakeholders should be prepared to engage with fragile countries on a long-term basis, both to provide aid and to support capacity building as needed. Finally, resource-rich countries face the urgent need to use commodity-based revenue to improve the delivery of basic services, invest wisely in infrastructure, set up an effective system of checks and balances, and promote an inclusive pattern of growth.
Addressing the Infrastructure Deficit in Sub-Saharan Africa
The third chapter seeks to identify policy options to close the significant infrastructure deficit in the region. Continued infrastructure development is critical to raise potential growth, accelerate economic diversification, and foster structural transformation. Unreliable electricity supply, in particular, is hampering the transition to higher productivity activities. While many countries have managed to sustain infrastructure investment levels, financed by a mix of domestic resources and external financing, outcomes have not always improved accordingly, suggesting limited investment efficiency. Regulatory and capacity constraints in project development and implementation are also important obstacles to boosting the quality of infrastructure investment and outcomes.
Going forward, the policy challenge is to take advantage of the growing menu of financing modalities while controlling fiscal risks and maintaining debt sustainability. All three broad modalities for infrastructure financing—public investment, public-private partnerships, and purely private investment—come with advantages and pitfalls. As policymakers complement public investment efforts financed by taxation and debt instruments with support for more private participation in infrastructure, the potential resource envelope increases, but so does the institutional capacity requirement to mitigate potential fiscal risks. Overall, countries should seek to upgrade their investment planning and execution capacity, and overhaul regulatory agencies and policies.