Regional Economic Outlook for sub-Saharan Africa African Department - - PowerPoint PPT Presentation

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Regional Economic Outlook for sub-Saharan Africa African Department - - PowerPoint PPT Presentation

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Regional Economic Outlook for sub-Saharan Africa African Department International Monetary Fund November 30, 2017 Outline 1. Sharp slowdown after two decades of strong growth 2. A partial and tentative policy response 3. Near-term

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African Department International Monetary Fund November 30, 2017

Regional Economic Outlook for sub-Saharan Africa

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Outline

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  • 1. Sharp slowdown after two decades of strong

growth

  • 2. A partial and tentative policy response
  • 3. Near-term macroeconomic challenge
  • Addressing debt vulnerabilities
  • Emphasis on revenue mobilization
  • Fostering economic diversification
  • 4. Medium-term prospects remain strong
  • Demographic dividend
  • Technology facilitating stronger catch-up growth
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Since the mid‐1990s, most sub‐Saharan African countries have been registering high growth rates

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1.4

  • 2
  • 1

1 2 3 4 5 6 7 8 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Percent

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Important progress in human development

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Developments in sub-Saharan Africa

200 400 600 800 1,000 1,200 Maternal mortality Per 100,000 live births 1990 2016 20 40 60 80 100 120 Infant mortality Per 1,000 births

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Three broad factors have facilitated the strong growth

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Better policies and institutions High Commodity Prices Capital Inflows

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But in 2016 growth slumped sharply and

  • nly a modest recovery is expected

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Developments in sub-Saharan Africa

1 2 3 4 5 6 7 8 2013 2014 2015 2016 2017 proj. 2018 proj. 2019 proj. Real GDP growth, percent Sub-Saharan Africa Sub-Saharan Africa excluding Nigeria and South Africa

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The recovery is not sufficient to raise per capita growth in many countries

Developments in sub-Saharan Africa

12 43% 33 57%

Number of countries Percent of population Negative real GDP Positive real GDP per capita growth per capita growth

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Oil exporting economies have been hit the most

Developments in sub-Saharan Africa

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2013 2014 2015 2016 2017 proj. 2018 proj. 2019 proj.

  • 6
  • 4
  • 2

2 4 6 8 Median real GDP growth, percent Oil exporters (8 countries) Other resource-intensive countries (15 countries) Non-resource-intensive countries (22 countries)

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Outline

9

  • 1. Sharp slowdown after two decades of strong

growth

  • 2. A partial and tentative policy response
  • 3. Near-term macroeconomic challenge
  • Addressing debt vulnerabilities
  • Emphasis on revenue mobilization
  • Fostering economic diversification
  • 4. Medium-term prospects remain strong
  • Demographic dividend
  • Technology facilitating stronger catch-up growth
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Easier financing conditions have brought frontier economies back to the market

Developments in sub-Saharan Africa

1 2 3 4 5 6 7 8 2011 2013 2015 2017:Q2 International sovereign bond issuances, bllions of US dollars Sub-Saharan African non-oil exporters Sub-Saharan African oil exporters

200 300 400 500 600 700 800 900 1,000 1,100 Jan-11 Sep-12 May-14 Jan-16 Sep-17 Sub-Saharan African frontier market international bond spreads, basis points

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Exchange rate pressures have eased in many countries—the case of Nigeria

Developments in sub-Saharan Africa

150 200 250 300 350 400 450 500 550 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Nigerian exchange rates, Naira per US dollar Interbank market Parallel rate Official Rate

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Fiscal deficits are stabilizing

Developments in sub-Saharan Africa

Oil exporters Non-resource- intensive countries Other resource- intensive countries

  • 8
  • 7
  • 6
  • 5
  • 4
  • 3
  • 2
  • 1

1 2 2011 2013 2015 2017 Overall fiscal balance, percent of GDP

Interquartile range Median

  • 8
  • 7
  • 6
  • 5
  • 4
  • 3
  • 2
  • 1

1 2 2011 2013 2015 2017

Interquartile range Median

  • 8
  • 7
  • 6
  • 5
  • 4
  • 3
  • 2
  • 1

1 2 2011 2013 2015 2017

Interquartile range Median

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Outline

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  • 1. Sharp slowdown after two decades of strong

growth

  • 2. A partial and tentative policy response
  • 3. Near-term macroeconomic challenge
  • Addressing debt vulnerabilities
  • Emphasis on revenue mobilization
  • Fostering economic diversification
  • 4. Medium-term prospects remain strong
  • Demographic dividend
  • Technology facilitating stronger catch-up growth
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Debt stocks have risen throughout the region

Addressing debt vulnerabilities

Emphasis on revenue mobilization Fostering economic diversification

Oil exporters Non-resource- intensive countries Other resource- intensive countries 10 20 30 40 50 60 70 2011 2013 2015 2017 Public debt, percent of GDP Interquartile range Median 10 20 30 40 50 60 70 2011 2013 2015 2017 Interquartile range Median 10 20 30 40 50 60 70 2011 2013 2015 2017 Interquartile range Median

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Driven by large fiscal deficits and depreciation

Addressing debt vulnerabilities

Emphasis on revenue mobilization Fostering economic diversification

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Debt service costs have increased

Addressing debt vulnerabilities

Emphasis on revenue mobilization Fostering economic diversification

5 10 15 20 25 30 2010 2011 2012 2013 2014 2015 2016 2017 proj. Total debt service, percent of revenue Interquartile range Sub-Saharan Africa median Oil exporters median

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Fiscal consolidation plans need to be implemented

Addressing debt vulnerabilities

Emphasis on revenue mobilization Fostering economic diversification

Oil exporters Non-resource- intensive countries Other resource- intensive countries

10 20 30 40 50 60 70 80 90 100 2011 2014 2017 2020 Median public debt, percent of GDP Baseline 10 20 30 40 50 60 70 80 90 100 2011 2014 2017 2020 Baseline 10 20 30 40 50 60 70 80 90 100 2011 2014 2017 2020 Baseline

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Fiscal consolidation plans need to be implemented

Addressing debt vulnerabilities

Emphasis on revenue mobilization Fostering economic diversification

Oil exporters Non-resource- intensive countries Other resource- intensive countries

10 20 30 40 50 60 70 80 90 100 2011 2014 2017 2020 Median public debt, percent of GDP Baseline 10 20 30 40 50 60 70 80 90 100 2011 2014 2017 2020 Baseline 10 20 30 40 50 60 70 80 90 100 2011 2014 2017 2020 Baseline

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Fiscal consolidation plans need to be implemented

Addressing debt vulnerabilities

Emphasis on revenue mobilization Fostering economic diversification

Oil exporters Non-resource- intensive countries Other resource- intensive countries

10 20 30 40 50 60 70 80 90 100 2011 2014 2017 2020 Median public debt, percent of GDP No adjustment Baseline 10 20 30 40 50 60 70 80 90 100 2011 2014 2017 2020 No adjustment Baseline 10 20 30 40 50 60 70 80 90 100 2011 2014 2017 2020 No adjustment Baseline

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Fiscal multipliers are lower in SSA

Investment-to-GDP ratio Consumption-to-GDP ratio Revenue-to-GDP ratio

Addressing debt vulnerabilities

Emphasis on revenue mobilization

Fostering economic diversification

Impact on GDP growth of a 1 pp increase in … 0.7 –0.6 –0.4 –0.2 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1 2 3 4 5 Real GDP growth, percent Years 0.5 –0.6 –0.4 –0.2 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1 2 3 4 5 Years –0.2 –0.6 –0.4 –0.2 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1 2 3 4 5 Years

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Significant potential for raising tax revenues

Addressing debt vulnerabilities

Emphasis on revenue mobilization

Fostering economic diversification

5 10 15 20 25 Oil exporter Resource- intensive countries Non-resource intensive countries Tax ratio, percent of GDP Actual tax Tax potential

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Diversification offers a path to growth

Addressing debt vulnerabilities Emphasis on revenue mobilization

Fostering economic diversification

GNQ BWA UGA

  • 5

5 10 15 1 2 3 4 5 6 7 GDP per capita growth, 1962–2014 percent Average export diversification, 1962–2014 (Higher values = less diversification) SSA oil exporters SSA other resource-intensive SSA non-resource-intensive Other countries

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Usual factors important for diversification…

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  • 4
  • 2

2

  • 40
  • 20

20 40 Residual of export diversification Residual of access to electricity, percent SSA Non-SSA

  • 4
  • 2

2

  • 0.1

0.1 0.2 Residual of export diversification Residual of Gini SSA Non-SSA

Income Inequality (Gini) Access to Electricity

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Usual factors…. (cont)

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  • 4
  • 2

2

  • 50
  • 25

25 50 75 100 Residual of export diversification Residual of credit to private sector, percent SSA

Credit to private sector

  • 3
  • 2
  • 1

1 2

  • 1
  • 0.5

0.5 1 1.5 Residual of export diversification Residual of ease of doing business SSA

Ease of doing business

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Botswana: Expanding along the value chain

  • Built on an existing position in the

diamond industry

  • Helped to create positive spillovers

to supporting sectors

  • Strong record of good governance
  • Prudent economic management

Uganda: Moving into manufacturing

  • Expanded from agro-commodities to

agro-processing

  • Industrial clusters supported exports
  • f light manufacturing
  • Sustained macroeconomic stability
  • Expanding regional trade supported

export growth

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Getting the policy mix right and playing to your strengths

Addressing debt vulnerabilities Emphasis on revenue mobilization

Fostering economic diversification

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Outline

26

  • 1. Sharp slowdown after two decades of strong

growth

  • 2. A partial and tentative policy response
  • 3. Near-term macroeconomic challenge
  • Addressing debt vulnerabilities
  • Emphasis on revenue mobilization
  • Fostering economic diversification
  • 4. Medium-term prospects remain strong
  • Demographic dividend
  • Technology facilitating stronger catch-up growth
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Globally, working age population is projected to decline sharply in coming years

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  • 1.0
  • 0.5

0.0 0.5 1.0 1.5 2.0 2.5 3.0 1950 1965 1980 1995 2010 2025 2040 2055 2070 2085 2100 Percent World World excluding Sub-Saharan Africa

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By around 2030, half the increase in global work force will come from sub‐Saharan Africa

Change in 15-64 Year Old Population

  • 100
  • 50

50 100 150 200 250 300 350 1950 1965 1980 1995 2010 2025 2040 2055 2070 2085 2100 Millions of persons China Rest of world Sub-Saharan Africa

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FinTech for financial inclusion

In some countries, mobile account growth outpaced bank account

10 20 30 40 50 60 70 Mobile account Bank account

Source: Global Findex, World Bank

Countries with more mobile accounts than bank accounts

(% age 15+) in Sub-Saharan Africa, 2014 2,000 4,000 6,000 8,000 10,000 12,000 Dec-12 Dec-13 Dec-14 Central Africa Southern Africa Western Africa Eastern Africa Source: GSMA Mobile Money

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0.7 0.9 1.4 1.5 1.8 2.0 2.0 2.3 3.1 3.8 3.9 4.4 4.5 6.2 6.6 9.2 10.4 11.6 12.1 13.0 14.4 18.1 20.8 21.6 24.3 32.4 35.1 58.4

10 20 30 40 50 60

Burundi Mauritius Togo Guinea Cameroon Congo, Rep. Benin Nigeria Burkina Faso Malawi Niger Madagascar Sierra Leone Senegal Gabon Congo, Dem. Rep. Namibia Mali Zambia Ghana South Africa Rwanda Botswana Zimbabwe Cote d'Ivoire Tanzania Uganda Kenya

Source: Global Findex, World Bank

Mobile account (% age 15+) in Sub-Saharan Africa, 2014

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Thank you!

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The online edition of the Regional Economic Outlook for sub-Saharan Africa is now available online at www.imf.org