Is Africa Still Rising?Af i ff f hi h t t ti t Sub-Saharan Africa: Fees to export a container (US$),...

Is Africa Still Rising?h ll d f b h fChallenges and Opportunities for Sub-Saharan Africa

International Monetary FundAfrican Department

IMF-JICA Public SeminarJune 22, 2016

International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016

Outline

• The Growth Take-Off in Sub-Saharan Africa

• The Economic Outlook for SSA in 2016The Economic Outlook for SSA in 2016

• Medium-term Challenges: Is Africa still Rising?

International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 2

Sub-Saharan Africa: Average Real GDP Growth, 1980–2014g ,

5 86

7

5.8

5.2

5

6

2.72 4

3

4

Perc

ent

2.4

1

2

0

1

1980–89 1990–99 2000–08 2009–14


Source: IMF, World Economic Outlook database.

350

400

450

off =

100

)

Vietnam

350

400

450

off =

100

)

Vietnam400

450

off =

100

)

Vietnam400

450

off =

100

) India

Vietnam

350

400

450

off =

100

) IndiaASEAN-5

Vietnam

350

400

450

off =

100

) IndiaASEAN-5

Vietnam400

450

off =

100

) IndiaASEAN-5

Vietnam

250

300

350

a(In

dex,

Tak

eo

250

300

350

a(In

dex,

Tak

eo

Mozambique

250

300

350

a(In

dex,

Tak

eo

Mozambique

250

300

350

(Inde

x, T

akeo

Mozambique

250

300

350

a(In

dex,

Tak

eo

Mozambique

250

300

350

a(In

dex,

Tak

eo

Mozambique

250

300

350

(Ind

ex, T

akeo

Mozambique

150

200

250

GD

P pe

r cap

ita

150

200

250

DP

per c

apita

150

200

250

DP

per c

apita

Rwanda

150

200

250

DP

per c

apita

Rwanda

150

200

250

DP

per c

apita

Rwanda

150

200

250

DP

per c

apita

UgandaRwanda

150

200

250

DP

per c

apita

UgandaRwandaTanzania

50

100Rea

l G

50

100Rea

l G

50

100

150

Rea

l GD

50

100

150

Rea

l GD

50

100

150

Rea

l G

50

100Rea

l G

50

100

150

Rea

l GD

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40Years after takeoff






500 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40

Years after takeoff

Source: IMF, World Economic Outlook databse.


Note: Excludes China for presentation purposes, as China's growth is much higher than that of the other countries. ASEAN 5 = Indonesia, Malaysia, the Philippines, Singapore and Thailand.

... and poverty has declined in most countriesp y

Sub Saharan Africa: Changes in Poverty and GDP per CapitaSub-Saharan Africa: Changes in Poverty and GDP per Capita(26 country sample)

23%4%

GDP per capita increase and GDP per capita increase and increase in poverty

GDP per capita increase and reduction in poverty

73%

GDP per capita decrease and reduction in poverty


Source: IMF, Regional Economic Outlook for sub-Saharan Africa, Spring 2014

Three key factors have underpinned the solid performance of the last decade

Better policies and

institutions

High Commodity

P i

Capital Inflows

Prices


Commodity price increaseCommodity price increase

S&P GSCI global commodity price index has increased sharply since 1990s and peaked at 2008


Capital inflowsp

Sub-Saharan Africa: Cumulative Euro Bond Issuances

23

28

Angola CameroonRwanda Tanzania

18

. dol

lars

Rwanda TanzaniaZambia NamibiaNigeria SenegalGhana GabonRepublic of Congo SeychellesC t d'I i

8

13

Billio

ns o

f U.S Cote d'Ivoire

3

B

-2

2004

:Q1

2005

:Q1

2006

:Q1

2007

:Q1

2008

:Q1

2009

:Q1

2010

:Q1

2011

:Q1

2012

:Q1

2013

:Q1

2014

:Q1

2015

:Q1


2 2 2 2 2 2 2 2 2 2 2 2

Sources: Bank for International Settlement Quarterly Review; Haver Analytics.

Good economic policies have resulted indeeper financial sectorsdeeper financial sectors …

Sub-Saharan Africa Sample Countries: Credit to the Private Sector

30

35

2000 2015

20

25

ent o

f GD

P

5

10

15

Perc

e

0

5

a Fa

so

thio

pia

mbi

que

wan

da

nzan

ia

gand

a

ourc

e-S

and

tries

Burk

ina Et

Moz

am Rw

Tan Ug

Oth

er n

onre

soin

tens

ive

LIC

fragi

le c

oun


Sources: IMF, African Department database; and IMF, World Economic Outlook database.

… broader tax bases …

Sub-Saharan Africa Sample Countries: Tax Revenue, 1995 and 2015

20

25

1995 2015

15

cent

of G

DP

5

10Perc

0

Faso

iopi

a

zani

a

biqu

e

anda

anda

e- S an

d rie

s

Burk

ina

F

Ethi

Tanz

Moz

amb

Rw

a

Uga

Oth

er

nonr

esou

rce

nten

sive

LIC

Sfra

gile

cou

ntr



in

… and rising investment g

Sub-Saharan Africa Sample Countries: Saving and Investment, 1995–2015

30

35Investment

20

25

f GD

P National savings

15

Perc

ent o

f

Other non-resource-intensive LICs and fragile countries i t t

5

10 investment

0

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015


Source: IMF, World Economic Outlook database.Note: Sample countries include Burkina Faso, Ethiopia, Mozambique, Rwanda, Tanzania, and Uganda

Political and institutional reforms have also helpedp

0.00Control of Corruption

0.00Government Effectiveness

0 80

-0.60

-0.40

-0.20

0 80

-0.60

-0.40

-0.20

-1.20

-1.00

-0.80

1996 2000 2003 2005 2007 2009 2011 2013-1.20

-1.00

-0.80

1996 2000 2003 2005 2007 2009 2011 2013R l t Q lit

-0.40

-0.20

0.00Political Stability

-0.40

-0.20

0.00Regulatory Quality

-1.00

-0.80

-0.60

-1.00

-0.80

-0.60

Source: IMF staff estimates based on World Bank Worldwide Governance Indicators

-1.201996 2000 2003 2005 2007 2009 2011 2013

-1.201996 2000 2003 2005 2007 2009 2011 2013


Source: IMF staff estimates based on World Bank, Worldwide Governance Indicators.Note: LIC signifies low-income country. The composite measures of governance of the Worldwide Governance Indicators are expressed in units of a standard normal distribution, with mean zero, standard deviation of one, and running from approximately -2.5 to 2.5, with higher values corresponding to better governance.

Outline





But now growth in sub-Saharan Africa

Real GDP Growth, 2004–16

has weakened markedly

Real GDP Growth, 2004 16

6

7

5

6

3

4

Perc

ent

1

2

0

1

Average 2009 Average 2015 2016


Average 2000–08

2009 Average 2010–14

2015 2016

Commodity prices are likely to be low for longCommodity prices are likely to be low for long

Selected Average Commodity Price Changes from 2013


Sub-Saharan Africa’s trade balance with China has d d fturned into a deficit

S b S h Af i T d B l ith Chi 2005 15 Sub-Saharan African: Trade Balance with China, 2005–15


At the same time, external financing costs have i d h l f h i ’ f i kincreased sharply for the region’s frontier markets

Sovereign Bond Spreads(EMBIG spreads)

Note: Data as of June 1, 2016. 1The emerging market average includes the Emerging Market Bond Index Global (EMBIG) spreads of Argentina, Brazil, Bulgaria, Chile, Colombia, Hungary, Malaysia,


Mexico, Peru, Philippines, Poland, Russia, South Africa, Turkey, and Ukraine. ²The frontier markets spread includes the spreads of Côte d'Ivoire, Gabon, Ghana, Kenya, Nigeria, Senegal, Tanzania, and Zambia.

Fiscal and external balances have weakened…

Sub-Saharan Africa: Current Account Balance and Fiscal Balance, 2008―16

iora

tion

Det

er

Deterioration


Deterioration

… and public debt is rising, notably in frontier economies

Public Debt, 2004–15

p g y



Outline





Medium-term Challenge 1: There is still potential to increase revenue mobilization in Sub-Saharan Africa

Selected Countries: Tax Ratio and Potential, 2014


Source: IMF, Regional Economic Outlook for sub-Saharan Africa, Fall 2015

Medium-term Challenge 2: Strengthen Competitiveness Integrate into global value chains

Depth of Integration in Global Value Chains and Real GDP per Capita, Average 1991-95 and 2008-12



Medium-term Challenge 2: Strengthen CompetitivenessAfrica lags in electricity generationAfrica lags in electricity generation

Electricity Production

3000

3500

East Asia & Pacific

Electricity Production

2500

3000

apita

Latin America & Caribbean

Middle East & North Africa

South Asia

1500

2000

kWh

per c

a South Asia

Sub-Saharan Africa

500

1000

01975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011


Source: World Development Indicators and IMF staff estimates.

Medium-term Challenge 2: Strengthen Competitiveness Af i ff f hi h t t ti t

Sub-Saharan Africa: Fees to export a container (US$), 2014

Africa suffers from high transportation cost

5000

6000

7000

er

Simple Average

3000

4000

dolla

rs p

er c

onta

ine

0

1000

2000US

d

0

tral A

frica

n R

ep.

Zam

bia

Nig

erZi

mba

bwe

ongo

, Dem

. Rep

.Bo

tsw

ana

Mal

iBu

rkin

a Fa

soSo

uth

Afric

aN

amib

iaLi

beria

Sier

ra L

eone

Tanz

ania

Gui

nea

Gha

naC

had

Sout

h Su

dan

Con

go, R

ep. o

fG

abon

Ango

laN

iger

iaqu

ator

ial G

uine

aC

amer

oon

Rw

anda

Buru

ndi

Uga

nda

Ethi

opia

Mal

awi

Swaz

iland

Leso

tho

Keny

aEr

itrea

Gui

nea-

Biss

auC

ote

d'Iv

oire

Com

oros

Sene

gal

Mad

agas

car

Cab

o Ve

rde

Moz

ambi

que

Beni

nG

ambi

a, T

heTo

goSe

yche

lles

Tom

e &

Prin

cipe

Mau

ritiu

sBa

ngla

desh

Chi

leC

hina

Viet

nam

Cen

t

Co Eq

Sao

T

Resource-intensive non-oil countries Oil Exporters Nonresource-intensive landlocked countries

Nonresource-intensive coastal countries Comparator Countries


Source: World Bank, World Development Indicators; and IMF staff estimates

Medium-term Challenge 3: Make Growth More inclusiveThe fruits of growth are not distributed equallyThe fruits of growth are not distributed equally

Per Capita GDP Growth and Consumption Growth of the Poorest QuartilePer Capita GDP Growth and Consumption Growth of the Poorest Quartile

6

7

3

4

5

1

2

3

Perc

ent

-1

0

1

GDP Growth per CapitaPer Capita Consumption Growth of the Poorest quartile

-2Cameroon Ghana Mozambique Rwanda Tanzania Uganda Zambia

Per Capita Consumption Growth of the Poorest quartilePer capita consumption growth of all households


Source: International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, October 2011

Medium-term Challenge 3: Make Growth More inclusiveImprove financial accessImprove financial access

Sub-Saharan Africa: Financial Inclusion

69

70

83

8

3

3

23

27

14

Zi b b 2014

Namibia 2011

South Africa 2015

Sub-Saharan Africa: Financial Inclusion

68

61

67

69

8

20

8

8

24

19

25

23

Botswana 2014

Lesotho 2011

Kenya 2013

Zimbabwe 2014

atio

n us

ing

es

48

64

54

68

12

9

31

8

40

27

15

24

Nigeria 2014

Swaziland 2014

Uganda 2013

Botswana 2014

f adu

lt po

pula

nanc

ial s

ervi

ce

38

34

41

21

15

15

41

51

44

Zambia 2015

Malawi 2014

Ghana 2010

g

Perc

ent o fin

57

24

16

16

27

60

0 20 40 60 80 100

Tanzania 2013

Mozambique 2014


Formal Informal Excluded

Medium-term Challenge 3: Make Growth More inclusive Reducing inequality can also be growth enhancing

Sub Saharan Africa: Growth Differential with ASEAN countries percentage pointsSub-Saharan Africa: Growth Differential with ASEAN countries, percentage points

Dependent populationInitial income (catching up)

Schooling (years)Investment (percent of GDP)

InfrastructureDependent population

Institutional quality (index)Change in terms of trade

High inflation Schooling (years)

Other country effectsGender inequality

Female legal equityIncome inequality

-1.5 -0.5 0.5 1.5 2.5

Other country effects

Average growth differential, 2005–14


Source: IMF, Regional Economic Outlook for sub-Saharan Africa, Fall 2015

Medium-term Challenge 4: Seize the Demographic Dividend Challenge or Opportunity?Challenge or Opportunity?

Ch i Gl b l W ki A P l ti S b S h Af i d th R t f th W ldChange in Global Working Age Population: Sub-Saharan Africa and the Rest of the World

300

350

S b S h Af i

200

250

es 1

5–64

Sub-Saharan Africa

Rest of world

100

150

of p

erso

ns a

ge

50

0

50

Milli

ons

o

-100

-50

1950

1965

1980

1995

2010

2025

2040

2055

2070

2085

2100



Medium-term Challenge 4: Seize the Demographic Dividend Potential magnitude of demographic dividendPotential magnitude of demographic dividend

GDP per capita under three scenarios Dividend from improved policiesGDP per capita under three scenarios Dividend from improved policies

120

140

21005 000

6,000

llars 2010

6980

100

120

GD

P

2050

4,000

5,000

2005

U.S

. do 2050

2100

69

60

80

Perc

ent o

f G

2,000

3,000

P pe

r cap

ita,

24

48

30

20

40

1,000

2,000

GD

0More jobs More jobs, better

policies, faster transition

0Rising

unemploymentMore jobs More jobs,

better policies, faster transition



Thank you!

The online edition of the Regional Economic Outlook

for sub-Saharan Africais now available online at

www.imf.org


Is Africa Still Rising?Af i ff f hi h t t ti t Sub-Saharan Africa: Fees to export a container (US$),...

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