AFRICA'S MACROECONOMIC PERFORMANCE AND PROSPECTS - African Development Bank
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
AFRICA’S
MACROECONOMIC
PERFORMANCE
1
AND PROSPECTS
KEY MESSAGES
• Africa’s economic growth continues to strengthen, reaching an estimated 3.5 percent
in 2018. This is about the same rate achieved in 2017 and up 1.4 percentage points from the
2.1 percent in 2016. In the medium term, growth is projected to accelerate to 4 percent in 2019 and
4.1 percent in 2020. And though lower than China’s and India’s growth, Africa’s growth is projected
to be higher than that of other emerging and developing countries.
• Improved economic growth across Africa has been broad, with variation across economies
and regions. Non-resource-rich countries—supported by higher agricultural production, increasing
consumer demand, and rising public investment—are growing fastest (Senegal, 7 percent; Rwanda,
7.2 percent; Côte d’Ivoire, 7.4 percent). Major commodity-exporting countries saw a mild uptick or a
decline (Angola, –0.7 percent), while Nigeria and South Africa, the two largest countries, are pulling
down Africa’s average growth.
• The positive growth outlook is clouded by downside risks. Externally, risks from uncertainty
in escalating global trade tensions, normalization of interest rates in advanced economies, and
uncertainty in global commodity prices could dampen growth. Domestically, risks from increasing
vulnerability to debt distress in some countries, security and migration concerns, and uncertainties
associated with elections and political transition could weigh on growth.
• Growth remains insufficient to address the structural challenges of persistent current
and fiscal deficits and debt vulnerability. One way to accelerate growth in the medium to long
term and overcome the structural challenges is to shift imports to intermediate and capital goods
and away from nondurable consumption goods. For African countries, a 10 percentage point
increase in the share of capital goods in total imports could, five years later, reduce the share of
primary goods by 4 percentage points, amplifying the effectiveness of diversification rooted in
transferring technology and accumulating capital.
• Vigorous public finance policy interventions are needed in tax mobilization, tax reform,
and expenditure consolidation to ensure debt sustainability. Policymakers need to adopt
countercyclical policy measures to stabilize inflation and reduce growth volatility. Macroprudential
policies should be used to reduce vulnerability to capital flow reversal and shift inflows toward
more-productive sectors. For a sample of African countries, a 1 percent increase in public savings
(by reducing the budget deficit) is correlated with a 0.7 percent improvement in the current account
balance.
• For countries in a monetary union, well-functioning, cross-country fiscal institutions
and rules are needed to help members respond to asymmetric shocks. Debt and deficit
policies should be consistent across the union and carefully monitored by a credible central
authority. And the financial and banking sector should be under careful supervision by a unionwide
independent institution.
1A fter tepid real GDP growth of only 2.1 percent
in 2016, Africa’s economy recovered with
3.6 percent growth in 2017 and 3.5 percent
GROWTH PERFORMANCE
AND OUTLOOK
growth in 2018. Growth is projected to accelerate Economic recovery continues
to 4 percent in 2019 and 4.1 percent in 2020, After peaking at 4.7 percent in 2010–14, Africa’s
higher than in other emerging and developing real GDP growth slowed to 3.5 percent in 2015
economies as a whole but lower than in China and and 2.1 percent in 2016 (2.2 percent excluding
India. In 2019, 40 percent of African countries are Libya), due partly to the drastic drop in oil prices
projected to see growth of at least 5 percent. The and other regional shocks such as drought in East
challenge is to achieve a higher growth path that is Africa and Southern Africa (figure 1.1 and table 1.1;
inclusive and pro-employment. see also table A1.1 in annex 1.1). A gradual recov-
Economic fundamentals in most African ery followed, with growth picking up to 3.6 percent
countries have improved, and inflationary pres- in 2017 (3.0 percent excluding Libya) and an esti-
sures are low or have subsided in countries with mated 3.5 percent in 2018.1 Growth is projected
stable exchange rates. But where exchange to accelerate to 4 percent in 2019 and 4.1 percent
rates have depreciated, inflationary pressures in 2020. About 40 percent of African countries are
Economic
remain high, and central banks have tightened projected to see growth of at least 5 percent in
fundamentals monetary policy. Many countries have pursued 2019, while about 25 percent are projected to see
in most African fiscal consolidation to contain deficits, but there growth of less than 3 percent.
have been slippages in some, threatening debt While the recovery from the 2016 trough is good
countries have
sustainability and aggravating current account news for Africa, the projected medium-term growth
improved, and deficits. The average current account deficit is of 4 percent is insufficient to make a dent in unem-
inflationary projected to decline from 5.4 percent in 2016 to ployment and poverty. Population growth of more
pressures are low 3 percent in 2020, and the average fiscal deficit than 2 percent implies that GDP per capita will
is projected to decline from 7 percent to 3.7 per- increase less than 2 percent,2 leaving convergence
or have subsided in cent. Attention has to be paid to the quality of with middle- and high-income economies slow to
countries with stable fiscal consolidation to mitigate the impact on materialize. And the growth path is insufficient to
exchange rates long-term growth. create enough jobs for the growing labor force. The
The long-term trend in the structure and com- working-age population is projected to increase an
position of current account balances suggests that average of 2.75 percent a year between 2016 and
countries that tended to allocate a higher share of 2030.3 Assuming average employment-to-GDP
their export earnings to import intermediate and elasticity of 0.4,4 economic growth of 6.9 percent
capital goods grew faster, sustained better exter- a year is required just to absorb new entrants to
nal trade balances, and mobilized domestic sav- the labor force, far above the highest growth rate
ings. This organic link among exports, productive attained in this decade. Even with employment-to-
imports, and growth provides an important path- GDP elasticity of 0.6, growth would need to exceed
way for structural change to accelerate growth. 4.6 percent a year to stabilize the unemployment
This chapter is organized as follows. The first rate (figure 1.2). The challenge is thus twofold: to
section describes African economies’ growth per- raise the current growth path and to increase the
formance and prospects and identifies growth efficiency of growth in generating employment.
drivers. The second section assesses progress Africa’s low elasticity of employment with
and challenges for macroeconomic stability. And respect to growth reflects an economic struc-
the final section discusses external imbalances ture that depends heavily on primary commodi-
and trade deficits, emphasizing a long-term per- ties and the extractive sector, with little progress
spective taking into account present external in labor-intensive manufacturing. This is a major
deficits, the composition of exports and imports, concern given the substantial positive effect
and the direction of domestic investment in the of manufacturing- d riven growth acceleration
assessment of the long-term sustainability of cur- on employment’s responsiveness to economic
rent account deficits. growth (see chapter 2).
2 A frica’ s macroeconomic performance and prospectsFIGURE 1.1 Real GDP growth in Africa, 2010–20
Percent
10
India
8
China
6
Emerging and developing countries (excluding Africa)
Africa
4
2
0
While the recovery
–2
2010–14 2015 2016 2017 2018 2019 2020 from the 2016
(estimated) (projected) (projected)
trough is good
Source: African Development Bank statistics and International Monetary Fund.
news for Africa,
the projected
medium-term
TABLE 1.1 Real GDP growth in Africa, 2010–20
growth of 4 percent
2010– 2018 2019 2020 is insufficient to
Indicator and country group 14 2015 2016 2017 (estimated) (projected) (projected)
Central Africa 5.0 3.3 0.2 1.1 2.2 3.6 3.5
make a dent in
East Africa 5.9 6.5 5.1 5.9 5.7 5.9 6.1 unemployment
North Africa 3.7 3.7 3.2 4.9 4.3 4.4 4.3 and poverty
Including Sudan 3.6 3.7 3.2 4.8 4.3 4.4 4.3
Southern Africa 3.8 1.6 0.7 1.6 1.2 2.2 2.8
West Africa 6.2 3.2 0.5 2.7 3.3 3.6 3.6
Africa 4.7 3.5 2.1 3.6 3.5 4.0 4.1
Excluding Libya 4.4 3.6 2.2 3.0 3.5 3.9 4.1
Sub-Saharan Africa 5.2 3.4 1.5 2.9 3.1 3.7 3.9
Excluding South Africa 5.9 3.9 1.8 3.3 3.6 4.2 4.3
Oil-exporting countries 4.7 3.3 1.5 3.2 3.4 3.8 3.7
Oil-importing countries 4.6 3.7 3.1 4.2 3.8 4.3 4.5
Source: African Development Bank statistics and staff calculations.
The recent commodity price has risen about 177 percent (from a 10-year low
rebound supported the recovery of of $27.45 in February 2016 to $74.34 in Octo-
commodity-exporting countries ber 2018). This has helped oil exporters (notably
The recovery in growth since 2016 among Afri- Algeria, Angola, Chad, Congo, Gabon, Libya,
ca’s commodity exporters has been driven by and Nigeria) recover but also pushed up inflation
the rebound in commodity prices (box 1.1). Over in oil-importing countries. Both supply factors
the past two years the price of Brent crude oil (the agreed production restrictions between the
A frica’ s macroeconomic performance and prospects 3FIGURE 1.2 Real GDP growth in Africa and GDP growth needed to absorb the growing
labor force, 2010–20
Percent
8
Employment-stabilizing growth with employment-to-GDP elasticity of 0.4
6
Employment-stabilizing growth with employment-to-GDP elasticity of 0.6
4
2
0
2010–14 2015 2016 2017 2018 2019 2020
(estimated) (projected) (projected)
Source: African Development Bank statistics.
BOX 1.1 Commodity price fluctuations and GDP uncertainty in Africa
A global vector autoregression model is used to quantify the BOX FIGURE 1. Proportion of GDP instability in Africa
short-, medium-, and long-term sensitivity of Africa’s GDP to explained by commodity price fluctuations in the short,
a one standard deviation shock in commodity prices, which medium, and long term
is roughly equivalent to a $30 increase in the price of crude
oil (that is, from the current $50 to about $80). In the short Percent
40
term, commodity price fluctuations explain 7–21 percent of
GDP instability (box figure 1). The impact of commodity price
volatility on GDP is smallest in non-resource-intensive coun-
30
tries, 8 percent, and largest in mineral- and metal-exporting
economies, 22 percent. In the medium to long term, commod-
ity price fluctuations explain a larger share of GDP instability,
up to 28 percent in oil-exporting countries and 37 percent in 20
mineral- and metal-exporting countries.
These results point to the vulnerability and high exposure
of many African countries to fluctuations in global commod- 10
ity prices. Although commodity price fluctuations explain a
smaller proportion of GDP instability in the short term, which
could be the result of countercyclical monetary and fiscal pol- 0
icies applied to stabilize the economy, in the medium term, Short term (1–2 years) Medium term (3–5 years) Long term (7–10 years)
commodity prices have a stronger influence on fluctuations in Oil exporters Other resource-intensive exporters
Non-resource-intensive exporters
GDP.
Source: African Development Bank staff calculations.
4 A frica’ s macroeconomic performance and prospectsOrganization of the Petroleum Exporting Coun- few (including South Africa, Zambia, Mozambique,
tries and Russia, the reimposition of sanctions and Ghana) increased them (figure 1.4). Subsidy
on Iran, and the sociopolitical crisis in Venezuela) reforms must be geared toward more-efficient
and robust global demand are driving the current and better targeted social safety nets for the most
price rebound. The outlook for oil prices remains vulnerable. This could improve public finance
unclear, given the uncertainty of global geopoliti- management, create more fiscal space for much-
cal risks, coordinated production restrictions, and needed public investments in infrastructure, and
industrial demand changes. Growth projections improve the debt situation.
for 2019 and 2020 assume that oil prices stabilize
at $70. Because oil prices are so volatile, oil-ex- North Africa leads the growth
porting economies are better off building reserves recovery, but East Africa remains the
and sovereign wealth funds during periods of most dynamic region
recovery to ensure sufficient buffers against future Of Africa’s projected 4 percent growth in 2019,
shocks and maintain fiscal sustainability. North Africa is expected to account for 1.6 per-
Energy subsidies in many African countries centage points, or 40 percent (figure 1.5). But
constitute a considerable fiscal burden. Despite average GDP growth in North Africa is erratic
Subsidy reforms
the drop in global oil prices, energy subsidies as a because of Libya’s unstable development. After
share of GDP have remained mostly unchanged.5 declining for three years, Libya’s GDP increased in must be geared
Among oil-exporting economies, Angola, Camer- 2017 and 2018 because of higher oil production. toward more-
oon, and Nigeria had a similar share in the pre- Despite this, the country’s GDP remains roughly
efficient and better
peak period (2013 and 2014) and the post-peak 15 percent below its pre-revolution level. But the
period (2015–17), but in Libya, Algeria, and Congo, political and humanitarian crisis continues, and targeted social
the share increased (figure 1.3). Most oil import- the highly uncertain outlook depends on achieving safety nets for the
ers saw small changes, though some countries political stability. Tunisia’s economy is gradually most vulnerable
(including Egypt, Tunisia, Morocco, Benin, and recovering after near stagnation in 2015 and 2016
Togo) reduced subsidies as a share of GDP, and a because of security problems and social conflicts.
FIGURE 1.3 Energy subsidies as a share of nominal GDP, African oil exporters, 2013–14
and 2015–17
Percent 2013–14 2015–17
40
30
20
10
0
Libya Algeria Congo Angola Cameroon Nigeria Gabon Equatorial Guinea
Source: International Monetary Fund.
A frica’ s macroeconomic performance and prospects 5FIGURE 1.4 Energy subsidies as a share of GDP, African oil importers, 2013–14 and 2015–17
Percent 2013–14 2015–17
25
20
15
10
5
0
p.
e
t
a
ia
e
a
a
ire
Mo ia
co
Eth l
bo ia
Ta e
ia
n
nin
De awi
a
go
o
so
da a
ar
li
Ma ana
nia
Rw i
da
i
ga
ut
nd
yp
Ma
bw
ric
iqu
isi
an
rd
ny
Bu soth
Ma and
da
mb
b
iop
an
Re
sc
Fa
roc
To
ibo
an
vo
Eg
mi
ne
ita
Be
ru
Ve
n
l
Ke
Af
tsw
Gh
Su
ng Ma
ba
nz
mb
ga
Tu
d’I
Za
Ug
m.
Bu
na
ur
Na
Se
Dj
Le
uth
Zim
Bo
za
rki
te
Ca
So
Mo
Cô
o,
Co
Source: International Monetary Fund.
Growth is driven by improved tourism and manu-
FIGURE 1.5 Contribution to GDP growth in Africa, by region, facturing production and a more expansive fiscal
2016–20 policy. Unlike other main commodity exporters,
Algeria weathered the commodity price shock in
Percentage points 2015 and 2016 through expansionary fiscal poli-
5 cies; growth is expected to weaken in 2019 and
2020. Morocco’s growth has been boosted by
4 agricultural production and extractive industries
and supported by accommodative monetary
policy, as inflation remains low. Egypt’s growth
3
remains positive, and its stabilization program is
now paying off. Growth is driven by the return of
2
investor confidence, private consumption, and
higher exports, which have benefited from adjust-
ments in the real exchange rate.
1
East Africa, the fastest growing region, is pro-
jected to achieve growth of 5.9 percent in 2019
0 and 6.1 percent in 2020 (table 1.2). Between 2010
2016 2017 2018 2019 2020 and 2018, growth averaged almost 6 percent, with
(estimated) (projected) (projected)
Djibouti, Ethiopia, Rwanda, and Tanzania record-
Central Africa East Africa North Africa
Southern Africa West Africa
ing above-average rates. But in several countries,
notably Burundi and Comoros, growth remains
Source: African Development Bank staff calculations. weak due to political uncertainty. In South Sudan,
Note: Calculated as average growth rate of regions weighted by the regions’ GDP continues to fall due to political and military
share of Africa’s total GDP. conflicts and because the 2015 peace agreement
has not been implemented.
6 A frica’ s macroeconomic performance and prospectsWest Africa saw high growth until 2014, but an
economic slowdown followed due to the sharp TABLE 1.2 Real GDP growth in Africa, by region, 2010–20
drop in commodity prices and the Ebola crisis.
Nigeria, Africa’s largest economy and largest oil Percent
exporter, fell into recession in 2016. Its gradual 2010– 2018 2019 2020
recovery in 2017 and 2018, helped by the rebound Region 14 2015 2016 2017 (estimated) (projected) (projected)
of oil prices, is restoring growth in the region. Central Africa 5.0 3.3 0.2 1.1 2.2 3.6 3.5
Other countries—including Benin, Burkina Faso, East Africa 5.9 6.5 5.1 5.9 5.7 5.9 6.1
Côte d’Ivoire, Ghana, Guinea, and Senegal—have North Africa 3.7 3.7 3.2 4.9 4.3 4.4 4.3
seen growth of at least 5 percent in the past two Southern Africa 3.8 1.6 0.7 1.6 1.2 2.2 2.8
years and are projected to maintain it in 2019 and West Africa 6.2 3.2 0.5 2.7 3.3 3.6 3.6
2020. Oil-exporting
Growth in Central Africa is gradually recover- countries 4.7 3.3 1.5 3.2 3.4 3.8 3.7
ing but remains below the average for Africa as Oil-importing
countries 4.6 3.7 3.1 4.2 3.8 4.3 4.5
a whole. It is supported by recovering commod-
Africa 4.7 3.5 2.1 3.6 3.5 4.0 4.1
ity prices and higher agricultural output. Several
Excluding Libya 4.4 3.6 2.2 3.0 3.5 3.9 4.1
countries have reduced public spending, includ-
ing on investment, to restore debt sustainability. GDP per capita 2.1 0.9 –0.4 1.1 1.1 1.5 1.6
After rapid growth, Equatorial Guinea’s economy Source: African Development Bank statistics.
has been shrinking since 2013 as oil production
declines and the nonoil sector has been too weak
to compensate. In 2018, its real GDP was about a The drivers of economic growth are
third below its level six years ago. gradually rebalancing
Growth in Southern Africa is expected to Consumption has historically been the main
remain moderate in 2019 and 2020 after a modest source of demand in Africa, hovering around
recovery in 2017 and 2018. Southern Africa’s sub- 80 percent of GDP, while investment, the second
dued growth is due mainly to South Africa’s weak largest contributor, has remained around or below
performance, which affects neighboring coun- 25 percent of GDP since the early 2000s. How-
tries. Low public and private investment and risks ever, consumption as a share of GDP has declined
of lower sovereign credit ratings are weighing on since 2016 while investment and net exports have
growth in the region. In Botswana, growth accel- picked up (figures 1.8–1.10). Though fiscal con-
erated due to improved diamond trade, services solidation measures to reduce deficits have con-
and investment, the recovery of agriculture after strained public consumption and investment in
the drought, and the expansionary fiscal policy some countries, Benin, Botswana, Burkina Faso,
and accommodative monetary policy resulting Côte d`Ivoire, Djibouti, Ethiopia, Senegal, Tanza-
from moderate inflation. Mauritius also continues nia, and Uganda have all increased public invest-
its steady growth, driven mainly by strong con- ment. On the other hand, conditions for the private
sumption and higher exports, including tourism. sector have improved in Egypt, Ethiopia, and Sey-
At the country level, slow growth in Nigeria chelles, subsequently increasing FDI.
and South Africa is dampening Africa’s average The drivers of Africa’s economic growth have
growth. They account for a large share of Afri- been gradually rebalancing in recent years. Con-
ca’s GDP but only 0.2–0.4 percentage point of sumption’s contribution to real GDP growth declined
Africa’s GDP growth (figures 1.6 and 1.7). Ethio- from 55 percent in 2015 to 48 percent in 2018, while
pia, continuing on a high growth path, accounts investment’s contribution increased from 14 percent
for about 0.2 percentage point more than South to 48 percent. Net exports, historically a drag on
Africa, despite accounting for a smaller share of economic growth, have had a positive contribution
Africa’s GDP. Egypt, the third largest African econ- since 2014 (figure 1.11). But despite the rebalancing
omy, accounts for more than 1 percentage point trend, most of the top-growing countries still rely pri-
of Africa’s growth. marily on consumption as an engine of growth.
A frica’ s macroeconomic performance and prospects 7FIGURE 1.6 Real GDP growth, by country, 2018
Equatorial Guinea
South Sudan
Angola
eSwatini
Namibia
South Africa
Lesotho
Burundi
Nigeria
Gabon
Congo
Algeria
Tunisia
Comoros
Chad
Somalia
Morocco
Liberia
Mauritania
Zimbabwe
Sierra Leone
Mozambique
Seychelles
Malawi
Cameroon
Cabo Verde
Zambia
Congo, Dem. Rep.
Sudan
São Tomé & Príncipe
Mauritius
Eritrea
Botswana
Central African Rep.
Togo
Mali
Madagascar
Niger
Uganda
Egypt
Guinea-Bissau
Gambia
Djibouti
Kenya
Guinea
Benin
Ghana
Tanzania
Burkina Faso
Senegal
Rwanda
Côte d’Ivoire
Ethiopia
Libya
–10 –5 0 5 10 15
Percent
Source: African Development Bank statistics.
8 A frica’ s macroeconomic performance and prospectsFIGURE 1.7 Contribution to GDP growth in Africa, by country, 2010–20
Percentage points Algeria Egypt Nigeria South Africa Ethiopia Rest of Africa
5
4
3
2
1
0
–1
2010–14 2015 2016 2017 2018 2019 2020
(estimated) (projected) (projected)
Source: African Development Bank statistics and staff calculations.
Note: Calculated as the average growth rate of countries weighted by the countries’ share of Africa’s total GDP.
FIGURE 1.8 Consumption as proportion of GDP in Africa, emerging and developing Asia,
and Latin America and the Caribbean, 2001–18
Percent
100
Africa
Latin America and the Caribbean
75
Emerging and developing Asia
50
25
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: African Development Bank statistics and International Monetary Fund.
A frica’ s macroeconomic performance and prospects 9FIGURE 1.9 Investment as a proportion of GDP in Africa, emerging and developing Asia,
and Latin America and the Caribbean, 2001–18
Percent
50
Emerging and developing Asia
40
30
Africa
20
Latin America and the Caribbean
10
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: African Development Bank statistics and International Monetary Fund.
FIGURE 1.10 Net exports as a proportion of GDP in Africa, emerging and developing Asia,
and Latin America and the Caribbean, 2001–18
Percent
10
Africa
5
Emerging and developing Asia
0
Latin America and the Caribbean
–5
–10
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: African Development Bank statistics and International Monetary Fund.
10 A frica’ s macroeconomic performance and prospectsFIGURE 1.11 Contributions of demand components to GDP growth in Africa, 2005–18
Percentage points Net exports Consumption Investment
10
5
0
Countries that
–5
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 have improved
(projected)
their fiscal and
Source: African Development Bank statistics.
external positions
and that have low
Risks to the outlook buffer are unprepared for significant downside or moderate debt
The macroeconomic forecast for Africa described risks. will probably be
above is clouded by several risks. First, a further
escalation of trade tensions between the United
resilient to new
States and its main trading partners would reduce MACROECONOMIC STABILITY: external shocks
world economic growth, with repercussions for SOME PROGRESS, BUT
Africa (box 1.2). These tensions, together with the CHALLENGES REMAIN
strengthening of the US dollar, have increased the
volatility of some commodity prices and pressured Inflationary pressures have eased
the currencies of emerging countries. If global Africa’s average inflation fell from 12.6 percent in
demand slows, commodity prices could drop, 2017 to 10.9 percent in 2018 and is projected to
reducing GDP growth and adversely affecting further decline to 8.1 percent in 2020. Double-
trade and fiscal balances for Africa’s commodity digit inflation occurs mostly in conflict-affected
exporters. countries and countries that are not members of
Second, costs of external financing could fur- a currency union (figure 1.12). Inflation is highest in
ther increase if interest rates in advanced coun- South Sudan, at 188 percent, due to the lingering
tries rise faster than assumed. Third, if African economic crisis. Inflation is lowest, at 2 percent or
countries are again affected by extreme weather less, in members of the Central African Economic
conditions due to climate change, as they have and Monetary Community and the West African
been in recent years, agricultural production Economic and Monetary Union and particularly in
and GDP growth could be lower than projected. members of the CFA zone because of its link to
Finally, political instability and security problems in the euro.
some areas could weaken economies. Where inflationary pressures have abated
Countries that have improved their fiscal and and exchange rates have stabilized — G hana,
external positions and that have low or moder- Morocco, South Africa, Tanzania, and Uganda
ate debt will probably be resilient to new external — c entral banks have gradually eased mone-
shocks. But those that have not rebuilt their fiscal tary policy. But in several countries—Egypt and
A frica’ s macroeconomic performance and prospects 11BOX 1.2 Potential impacts of escalating trade tensions: Modest contraction but opportunities for deeper
intraregional integration in Africa
As the trade tensions between the United States and its BOX FIGURE 1 Potential impacts of increasing trade
major trading partners escalate, the World Trade Organi- tensions on GDP in Africa, by economic classification
zation estimates that growth in global trade volume could and time horizon
decline from 4.4 percent to 3.9 percent in 2018 and to Oil exporters Other resource-intensive exporters
Percent Non-resource-intensive exporters
3.7 percent in 2019.1
10
Impulse response multipliers from an orthogonalized
1 percentage point (contraction) shock in global trade
volume in a parsimoniously specified global vector autore-
5
gression model help provide estimates of how these ten-
sions could affect African countries, depending on the
nature and intensity of their main exports.
In the short term (within one year), the impact of the 0
trade tensions on Africa’s GDP is about ±0.07 percent of
GDP (box figure 1). In the medium term (within three years),
the negative impact of the contraction in global trade vol- –5
umes grows larger. It is strongest for other resource-inten-
sive exporters, at –2.5 percent, followed by oil exporters,
at –1.9 percent, and weakest for non-resource-exporting –10
economies, at –1.1 percent (box figure 2). Short term Medium term Longer term
(within 1 year) (within 3 years) (within 7 years)
There are several possible explanations for this pattern.
African countries’ size, openness to, and trade intensity Source: African Development Bank staff calculations.
with the United States and China are significant—more
than 60 percent of Africa’s exports go to the United States,
China, and Europe, and more than 70 percent of Afri- BOX FIGURE 2 Trajectories of GDP response to contraction
ca’s imports originate from these countries. So a decline in global trade
in demand for Africa’s exports due to a slowdown in the
Percent
global economy prompted by tariffs is an important chan-
5
nel that could affect Africa.
But despite the modest negative effects, Africa could—
Non-resource-intensive exporters
with the right policy responses—turn the increasing trade United States
0
tensions into an opportunity to improve competitiveness China
and deepen intraregional integration. One way is to take
Other resource exporters
advantage of the dislocation and trade diversion caused by Oil exporters
European Union
–5
the tensions to become the new supplier of goods previ-
ously supplied, for example, by China to the United States.
Capturing even a small portion of the dislocation from
–10
increasing trade protectionism could benefit Africa.
Note
1. WTO 2018. –15
Short term Medium term Medium term Long term Longer term
(within 1 year) (within 3 years) (within 5 years) (within 7 years) (about 10 years)
Source: African Development Bank staff calculations.
12 A frica’ s macroeconomic performance and prospectsFIGURE 1.12 Consumer price inflation, by country, 2017 and 2018
Percent 2018 2017
187.9
104.1
50
40
30
Average, 2017
20 Average, 2018
Median, 2018
10
0
–10
An ep.
b p.
n
m. an
Sie E ola
Le t
L e
Eth ibya
Bu pia
Ni ndi
Lib ria
Ma ria
Gh wi
Gu na
Ma Er a
ga a
Za car
é & Tun ia
Pr isia
Ga ipe
Alg bia
eS eria
ur i
So om us
Af ia
Ta rica
Le nia
Mo K tho
m a
yc ue
Na lles
Af N ia
an er
tsw e
U ana
ur da
Ga ia
ine C n
a- had
Co issau
Mo oros
co
Be li
Bu C nin
na go
Se aso
Ca er al
bo oon
Rw rde
tor jib a
Cô l Gu uti
d’I a
ire
go
Ma atin
rra gyp
Ma
on
ine
da itre
za eny
Bo abw
ua D and
te ine
da
bo
mb
uth al
b
n
Ca neg
Zim Re
ric ig
la
iti
roc
De Sud
a
Se biq
Ma gan
rki on
ia o
To
ge
e
vo
g
io
ínc
m
a
mi
ita
R
ru
s
so
Ve
he
F
Su
w
nz
m
B
m
S
uth
So
o,
Gu
om
al
ng
ntr
Eq
oT
Co
Ce
Sã
Source: African Development Bank statistics.
Tunisia—m onetary policy remains tight or has procyclical behavior. The fiscal behavior during
become more restrictive to contain inflation. this recent boom-bust confirms previous findings
that African countries have heterogeneous policy
Fiscal positions are gradually responses to external shocks,6 a more nuanced
improving finding than what recent studies have reported.7
Some countries weathered the sharp drop in com- Africa’s average fiscal deficit declined from
modity prices in 2014 better than others. Mauri- 7 percent in 2015 and 2016 to an estimated
tania, Mozambique, and Democratic Republic of 4.5 percent in 2018 and is projected to further
Congo were moderately affected and moved from decline to 4 percent in 2019 and 3.7 percent
a stable growth path to a vulnerable or slower one. in 2020 (figure 1.14). In oil-exporting countries,
By contrast, Algeria and Nigeria, among the larg- the rebound of oil prices and fiscal consolida-
est economies in Africa, saw weakening macro- tion measures reduced the average fiscal deficit
economic stability amid slow growth, making from 8.7 percent of GDP in 2016 to an estimated
macroeconomic policy levers compete between 4.5 percent in 2018 and, assuming oil prices
growth and stabilization objectives. Côte d’Ivoire, remain stable, should push it further down to
Ethiopia, Rwanda, Tanzania, and Uganda main- 3.8 percent in 2019 and 3.5 percent in 2020. In
tained their stable growth path, suggesting that oil-importing countries, the average fiscal deficit
other drivers of growth, such as public invest- has remained lower than in oil-exporting countries
ment, helped maintain growth momentum (figure and is projected to decline slightly, from an esti-
1.13). Oil- and mineral-exporting countries such as mated 4.5 percent in 2018 to 4 percent in 2019
Congo, Equatorial Guinea, Liberia, Sierra Leone, and 2020. Despite these improvements, fiscal buf-
and South Sudan had the largest fiscal deficits fers remain limited in many countries. Fiscal defi-
and the lowest real GDP growth. In response to cits are expected to remain at 10 percent of GDP
narrower fiscal space, these commodity export- or higher in Burundi, Djibouti, Eritrea, and Zim-
ers reduced expenditures to improve their fiscal babwe and at 5–10 percent in Comoros, Egypt,
balances, despite lower growth rates, suggesting Mozambique, eSwatini, and Zambia.
A frica’ s macroeconomic performance and prospects 13FIGURE 1.13 Real GDP growth and primary fiscal balances, by country, 2014–16 and 2017–18
2014–16
Real GDP growth (percent) Oil importers Oil exporters
10
Côte d’Ivoire
Ethiopia
HIGH GROWTH
Tanzania
Mali Congo, Dem. Rep.
Comoros Mozambique
5
Median,
Algeria Egypt 3.86
Angola Gabon
Congo Mauritania
Nigeria
South Africa Chad
0
Liberia
LOW GROWTH
Sierra Leone
South Sudan
–5
Equatorial Guinea
Several countries Median, 0.66
–10
achieved fiscal 0.0 0.2 0.4 0.6 0.8 1.0
consolidation by VULNERABLE Fiscal balance score STABLE
increasing tax 2017–18
revenue and, at Real GDP growth (percent) Oil importers Oil exporters
10
times, lowering Côte d’Ivoire
Ethiopia
expenditures
HIGH GROWTH
Sierra Leone Tanzania
Congo, Dem. Rep.
Mali
5 Mozambique
Egypt Algeria Median,
Liberia Comoros 4.12
Angola Mauritania
Nigeria
Gabon Chad
South Africa
0
Congo
LOW GROWTH
South Sudan
–5
Equatorial Guinea
Median, 0.62
–10
0.0 0.2 0.4 0.6 0.8 1.0
VULNERABLE Fiscal balance score STABLE
Source: Staff calculations and African Development Bank statistics.
Note: The fiscal balance score is the normalized value and lies between 0 and 1.
Between 2016 and 2018, several countries that will take effect in 2019. And several countries
achieved fiscal consolidation by increasing tax (Botswana, Kenya, Mauritania, Morocco, Rwanda,
revenue and, at times, lowering expenditures. and Zambia) introduced an online platform to
Revenue increases were due partly to higher pay taxes. Domestic resource mobilization has
commodity prices and increased growth, but improved but falls short of the continent’s devel-
several countries also implemented tax reforms. opmental needs. The average ratio was about
For example, Algeria and Egypt increased their 17 percent in 2017, below the 25 percent needed
value added tax, while Angola introduced one to finance development objectives such as the
14 A frica’ s macroeconomic performance and prospectsFIGURE 1.14 Average fiscal balance, by country group, 2010–20
Percent of GDP Africa Oil-exporting countries Oil-importing countries
2
0
–2
–4
–6
–8
But limiting
–10
2010–14 2015 2016 2017 2018 2019 2020 government
(estimated) (projected) (projected)
spending should not
Source: African Development Bank statistics.
affect growth-
enhancing spending
Sustainable Development Goals. But there is wide total external financial inflows to Africa increased
variation across countries, from 2.8 percent in from $170.8 billion in 2016 to $193.7 billion in
Nigeria to 31 percent in Seychelles and 36 per- 2017, which represents a 0.7 percentage point
cent in Lesotho. increase in net financial inflows as a ratio of GDP
On the expenditure side, lower oil revenue and (from 7.8 percent in 2016 to 8.5 percent in 2017;
nonoil tax revenue have led African governments figure 1.17).
to greatly reduce current and capital expenditures Remittances continue to gain momentum and
to contain public deficits. Capital expenditure fell dominate the other components of capital flows,
from 9.4 percent of GDP in 2014 to 7.6 percent in at $69 billion in 2017, almost double the size of
2018 (figure 1.15). Since 2015, consolidation has portfolio investments. Meanwhile, FDI inflows
been more pronounced for current expenditure shrank from the 2008 peak of $58.1 billion to a
(figure 1.16). To contain rising debt, further fiscal 10-year low of $41.8 billion in 2017. Underlying
consolidation will be necessary, particularly reduc- factors include the global financial crisis and the
ing recurrent expenditure. But limiting government recent rebalancing of portfolios due to rising inter-
spending should not affect growth-enhancing est rates among advanced economies.
spending. Given the importance of public invest- A closer look reveals marked differences in
ment in catalyzing private investment, particularly FDI inflows across African regions and coun-
in core infrastructure (such as energy and trans- tries between 2005–10 and 2011–17. North
port), public expenditure should be well targeted Africa, which attracted the most FDI among
to ensure that poverty-reducing social sectors African regions in 2005–10, was the only region
and key infrastructure investments are adequately where FDI decreased between the two peri-
protected. ods (figure 1.18). This was due mainly to polit-
ical uncertainties and transitions. Egypt and
Financial flows reflect changing Libya recorded a large decline, though Egypt
global and country conditions recovered. West Africa attracted the most FDI
Although current account deficits have been among African regions in 2011–17 (FDI increased
deteriorating (see the last section of this chapter), substantially in Ghana and to a lesser extent in
A frica’ s macroeconomic performance and prospects 15FIGURE 1.15 Current and capital expenditures in Africa, 2010–18
Percent of GDP in current prices
25
20
Current expenditure
15
10
Capital expenditure
5
Remittances
0
increased from 2010 2013 2014 2015 2016 2017 2018
$62 billion in Source: International Monetary Fund International Financial Statistics database.
2016 to almost
$70 billion in 2017,
with Nigeria having
FIGURE 1.16 Ratio of capital expenditure to current expenditure, 2010–18
the largest inflow
Percent
50
40
30
20
10
0
2010 2013 2014 2015 2016 2017 2018
Source: Staff calculations and International Monetary Fund International Financial Statistics database.
several other countries but declined in Nigeria). Remittances increased from $62 billion in
East Africa benefited from the largest FDI growth 2016 to almost $70 billion in 2017. Nigeria has
among African regions during 2011–17 (with Ethi- the largest inflow of remittances. Among smaller
opia accounting for 60 percent of the increase countries, remittances are particularly large in
after Chinese and Turkish firms announced addi- Senegal, Tunisia, and Uganda. In Senegal remit-
tional FDI in manufacturing). tances amounted to about 10 percent of GDP in
16 A frica’ s macroeconomic performance and prospectsFIGURE 1.17 Sources of external financing in Africa, 2005–17
Current $ billion Percent
250 12
Share of GDP
200 10
150 8
100 6
50 4
0 2
0 Official development
–50
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 assistance
Foreign direct investment inflows Official development assistance Portfolio investments Remittances
(ODA) to Africa
Source: African Development Bank statistics.
peaked in 2013 at
$52 billion and has
since declined to
FIGURE 1.18 Average annual foreign direct investment inflows to Africa, by region, 2005–10
$45 billion in 2017,
and 2011–17
with fragile states
Percent 2005–10 2011–17
20
receiving more ODA
as a percentage
of GDP than
15
nonfragile states
10
5
0
Central Africa East Africa North Africa Southern Africa West Africa
Source: African Development Bank statistics and staff calculations.
2017 and were roughly half as large as total tax receiving more ODA as a percentage of GDP than
revenue. nonfragile states (figure 1.19). All regions saw ODA
Official development assistance (ODA) to increase between 2005–10 and 2011–16; East
Africa peaked in 2013 at $52 billion and has since Africa and West Africa remain the highest recipi-
declined to $45 billion in 2017, with fragile states ents (figure 1.20).
A frica’ s macroeconomic performance and prospects 17FIGURE 1.19 Net official development assistance to Africa from all donors, by country
group, 2005–16
Percent of GDP
60
50
Low-income Africa
40
Fragile
30
Africa
20
Nonfragile
10
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: African Development Bank statistics.
countries with data, 16 (including Algeria, Botswana,
FIGURE 1.20 Average annual official development assistance to Burkina Faso, and Mali) have a debt-to-GDP ratio
Africa, by region, 2005–10 and 2011–16 below 40 percent, and 6 (Cabo Verde, Congo,
Egypt, Eritrea, Mozambique, and Sudan) have a
Current $ billion 2005–10 2011–16
ratio above 100 percent. The International Mone-
20
tary Fund Debt Sustainability Approach classifies
16 countries as being at high risk of debt distress
or in debt distress. While debt vulnerabilities have
15
increased in some countries, the continent as a
whole does not face the systemic risk of debt crisis.
The drivers of the recent rise in debt differ by
10 country, but the 2014 commodity price decline
is a leading source of deteriorating fiscal posi-
tions, especially among oil exporters. The average
5 debt-to-GDP ratio among oil exporters increased
from 19 percent to 43 percent between 2013 and
2017, compared with an increase from 52 per-
0 cent to 62 percent among oil importers. Public
Central Africa North Africa Southern Africa West Africa East Africa investment has also risen, to build the necessary
Source: African Development Bank statistics and staff calculations. infrastructure in the transition to middle-income
status, leading to large foreign and domestic bor-
rowing. The continent’s infrastructure needs are
Debt levels are rising, but there is no $130–$170 billion a year, with a financing gap of
systemic risk of debt crisis $68–$108 billion.8 For some countries, the recent
In 2017, Africa’s gross government debt–to-GDP surge in terror-related security threats has also
ratio reached 53 percent, with considerable het- prompted a need to prop up security spending,
erogeneity across countries (figure 1.21). Of 52 pushing debt levels higher.
18 A frica’ s macroeconomic performance and prospectsFIGURE 1.21 Gross government debt–to-GDP ratio in Africa, 2008–17
Percent Average (weighted) Maximum Median Minimum
200
Liberia
Guinea-Bissau
150
Eritrea
Eritrea Eritrea Eritrea Eritrea Eritrea
Eritrea Eritrea
100
50
Equatorial Equatorial Equatorial Equatorial
Equatorial Guinea South Algeria Algeria
Guinea Guinea Guinea
Guinea Sudan Botswana Botswana
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: International Monetary Fund.
Note: Data are not available for Libya and Somalia.
The composition of debt in Africa has shifted economies and generates growth that pays for
away from official and concessional foreign debt itself in the longer run.
toward commercial debt, which has greater ser- The recent rising debt levels across many
vice costs. External debt service as a propor- countries in Africa and the concern it has raised
tion of exports increased from 5 percent in 2013 indicate an opportune time to explore the role of
to 10 percent in 2016 (the most recent year with debt accumulation in financing productive invest-
data). The move toward international capital mar- ments, in particular through intermediate and cap-
kets was encouraged by the speed of access to ital goods imports. The next section examines the
financing, keen interest from institutional inves- dynamics of the trade balance and explores the
tors for frontier markets, and the signaling value conditions under which debt can be sustained in
of access to commercial Eurobond borrowing. In the future if the composition of imports tilts toward
2017, bond issues from Côte d’Ivoire, Egypt, Nige- investment goods.
ria, Senegal, South Africa, and Tunisia amounted
to $19.3 billion, bringing the cumulative total since
2010 to $69.5 billion. Africa’s credit landscape has EXTERNAL IMBALANCES AND
also seen a shift from traditional bilateral lenders, IMPLICATIONS FOR LONG-
in Europe and the United States, toward emerging TERM GROWTH
creditors. For example, new loans from China to
Africa increased from $2 billion in 2003 to $17 bil- Africa’s external imbalances have worsened, mea-
lion in 2013, before stabilizing around $13 billion sured by both the current account and the trade
in 2015. balance. The weighted average current account
Debt accumulation in Africa reflects debt’s deficit was 4 percent of GDP at the end of 2017
function in financing crucial infrastructure for (the median was 6.7 percent) and, despite recent
development and export capacity and in buffering improvement, has been deteriorating since the
against short-term macroeconomic fluctuations. end of the 2000s. This could threaten external
Efficiently investing funds mobilized through debt sustainability and require sharp adjustments in the
boosts the productive capacity of capital-scarce future.
A frica’ s macroeconomic performance and prospects 19This section summarizes recent trends in the investment, emphasizing the role of decreased
current account, identifies the components of public revenue and rising public and private capi-
the current account imbalance, and investigates tal formation in expanding the savings–investment
the recent evolution of domestic savings and gap in many African economies.9
BOX 1.3 What defines external sustainability?
The traditional analyses of current account sustainability focus on aggregate dynamics of the cur-
rent account to determine whether a country is more or less likely to meet its external solvency
constraints in the medium and long term or whether it will require external adjustment (through
default on external liabilities, import contraction, or exchange rate devaluation).1 This has led to an
emphasis on monitoring private and public external borrowing, the real exchange rate, the varia-
tion in public deficits, and aggregate capital formation, as well as short-run liquidity. In traditional
definitions, a country is said to be externally solvent if the present discounted value of future trade
surpluses is equal to current external indebtedness.2 When this is not the case, a country is more
The average current
likely to require a future “hard landing” in the form of a sharp adjustment of monetary, exchange
account deficit has rate, fiscal, and capital account policies, often brought forward by agent anticipations of such
been deteriorating constraints in the future. However, a country can run very large current account deficits for an
extended period and still meet the solvency condition as long as there are sufficient surpluses
since the end of the
at some point, so the intertemporal external constraint imposes only mild restrictions on current
2000s and could account imbalances over time.3
threaten external Most traditional analyses of current account sustainability have focused on modeling aggregate
sustainability and dynamics of external imbalances, looking at the current account or trade balance as a whole. They
relate their current level to a recommended “optimal” level of the current account (such as the
require sharp one derived from a theoretical model of intertemporal consumption smoothing), or a “predicted”
adjustments in level drawing on fundamental economic drivers. These include external balance assessments4
the future performed by international institutions such as the International Monetary Fund, which traditionally
focus on the appropriate level of the real exchange rate required to bring the current account back
to equilibrium, modeled on the basis of fundamental drivers, such as demographics, savings rates,
fiscal constraints, natural resources wealth, and dependency ratios.
This chapter offers evidence that, among African countries, disaggregating the dynamics of
the trade balance to focus on the role of imports of consumption, capital, and intermediate goods
provides additional information about the degree of current account sustainability. Among African
economies, many of which exhibit large current account deficits that have fostered worries among
international investors and donors about external sustainability, current account deficits driven by
capital and intermediate goods imports are more likely to lead to future industrialization and the
generation of export capacity and trade surpluses, compared with current account deficits pro-
duced by large imports of consumption goods. Moreover, such capital and intermediate goods
imports constitute a crucial link in structural transformation by allowing economies to rely less on
volatile commodity and raw material exports, further improving the sustainability of the export mix
and external solvency.
Notes
1. For an early reference, see Milesi-Ferretti and Razin (1996).
2. Milesi-Ferretti 1996, chapter 1.
3. Roubini and Wachtel 1998.
4. See, for example, Phillips et al. (2013).
20 A frica’ s macroeconomic performance and prospectsThe organizing framework relies on an inter- by large capital income outflows, and trade bal-
temporal view of the current account, focusing ances remained positive until recently, dropping
on net exports of goods as a key indicator of after 2010 when export prices of raw materials
future sustainability to study the link between the plummeted (figure 1.22).
composition of imports, the potential growth of Since the Great Recession, significant cur-
export-generating industries, and the structural rent transfer inflows (including aid) have reduced
transformation of African economies (box 1.3). the size of external imbalances in Africa, but the
Based on the balance-of-payments constraint main reason for the recent accumulation of exter-
theory (that external financing gaps must turn into nal debt and rising current account deficits is the
surpluses in the long run to avoid external default sharp deterioration of the net exports balance.
or sharp consumption adjustments10), Africa’s cur- Net income payments to foreign factors (in partic-
rent external deficits may be justified if they sow ular, investment income accruing to foreign cor-
the seeds for future surpluses. This will be the porations operating in the natural resources and
case as long as higher imports are consistently manufacturing sectors) have also contributed to
associated with rising capital formation, followed rising external deficits, representing a net aggre-
by an increased share of manufacturing and trad- gate outflow of nearly $40 billion a year for the
Africa’s current
able industries in value added, an improved posi- continent.
tion in global value chains, and a gradual repay- While most African countries ran a current external deficits may
ment of external liabilities. account deficit in 2017, with the largest in Djibouti, be justified if they
Guinea, and Liberia, a few countries had a sur-
sow the seeds for
Recent current account dynamics plus. The reason and qualitative interpretation
Despite rapid and generalized economic prog- behind the surpluses vary: they can be driven by future surpluses
ress, Africa has been plagued with widespread diversification in exports, as in the success stories
external imbalances for the past 15 years. Part of of Botswana and eSwatini,11 but they are more
the initial decline in the current account was driven often the result of a substantial drop in GDP and
FIGURE 1.22 Current account balance in Africa, 1990–2017, and decomposition of the current account balance in
Africa, 2000–16
Percent of GDP Current account balance Decomposition of the current account balance
15 15
10 10
Current account
5 5
0 0
–5 –5
–10 –10
–15 –15
1990 1995 2000 2005 2010 2017 2000 2002 2004 2006 2008 2010 2012 2014 2016
Net income Current transfers Trade balance
Source: African Development Bank statistics and International Monetary Fund World Economic Outlook and Balance of Payment Statistics
database.
A frica’ s macroeconomic performance and prospects 21subsequent import contraction following reduced commodity prices collapsed, leading to lower
domestic consumption, as in Libya and Nigeria, export earnings while imports decline at a slower
and thus represent a sharp external adjustment pace. As a result, the trade deficit has widened,
after years of imbalances. implying rapid accumulation of foreign liabilities
Oil exporters and Central Africa have seen that are likely to weigh on the current account for
large declines in current account balances, several years.
though since 2016, the external imbalances are Heterogeneity in export and import dynam-
gradually being addressed and external financing ics across African regions is key to understand-
gaps have begun to close in several oil-producing ing recent trends at the aggregate level. In par-
countries. Raw material exporters have typically ticular, declining tourism revenue in North Africa
seen better current account balances than other (following rising security challenges) and falling
countries throughout the 2000s, but they have raw material prices affecting Central Africa and
also faced much more volatility and were hit par- West Africa are crucial to understanding the
ticularly hard by the drop in commodity prices in recent export dynamics across regions. In Cen-
2013–16. While all regions have seen a decline in tral Africa, exports as a share of GDP declined by
external balances since 2014, Central Africa and close to 15 percentage points from 2011 to 2016,
The rapid
North Africa were most severely hit (figure 1.23). following negative terms of trade shocks and lim-
accumulation of This is consistent with the role of oil and other ited real exchange rate depreciation due to high
foreign liabilities is commodities in Central Africa and the increasing domestic inflation (figure 1.25). Exports as a share
security challenges posed by terror threats in both of GDP declined markedly after 2010 in most
likely to weigh on
Central Africa and North Africa. regions, though not as much in Southern Africa
the current account From 1990 to 2000, imports kept pace with (where South Africa plays a prominent role and
for several years exports in Africa, leading to a period of narrow has less exposure to commodity price changes,
trade deficits (figure 1.24). The commodity price thanks to a more diversified export mix). Imports
supercycle that came into effect in early 2000 as a share of GDP decreased in East Africa but
enabled exports to outpace imports, leading to remained high in Central Africa and North Africa,
a trade surplus at the continent level for much increasing divergence and the need for large
of the decade. This trend recently reversed as external funding inflows.
FIGURE 1.23 Current account balances in Africa by exporter type, region, and country
Percent of GDP Exporter type Region
25 15
Oil West Africa
20
10
North Africa
15
5
10
5 0
Southern
0 Africa
–5
–5
Metal Central Africa East Africa
Food and raw materials Other exports –10
–10
–15 –15
1990 1995 2000 2005 2010 2017 2000 2005 2010 2015 2017
(continued)
22 A frica’ s macroeconomic performance and prospectsFIGURE 1.23 Current account balances in Africa by exporter type, region, and country
(continued)
Countries, average over 2007–17
Mozambique
Sierra Leone
São Tomé & Príncipe
Liberia
Djibouti
Seychelles
Niger
Mauritania
Guinea
Burundi
Gambia
Congo
Cabo Verde
Malawi
Zimbabwe
Senegal
Ghana
Exports as a share
Rwanda of GDP declined
Togo
Benin markedly after 2010
Tanzania
Madagascar in most regions,
Central African Rep.
Mauritius
though not as much
Burkina Faso in Southern Africa
Tunisia
Mali
Kenya
Uganda
Ethiopia
Sudan
Chad
Morocco
Comoros
Somalia
Equatorial Guinea
Namibia
South Africa
Congo, Dem. Rep.
Guinea-Bissau
Cameroon
Egypt
South Sudan
Lesotho
Eritrea
Zambia
Côte d´Ivoire
Algeria
Libya
Angola
Nigeria
Botswana
eSwatini
Gabon
–30 –20 –10 0 10
Percent
Source: African Development Bank statistics and International Monetary Fund World Economic Outlook and
Balance of Payment Statistics database.
A frica’ s macroeconomic performance and prospects 23You can also read
