Is Africa Still Rising?
Challenges
h ll
and
d Opportunities for
f Sub-Saharan
b h
Africa
f
International Monetary Fund
African Department
IMF-JICA Public Seminar
June 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 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
g Real GDP Growth,, 1980–2014
7
58
5.8
6
5.2
Percent
5
4
3
2.7
24
2.4
2
1
0
1980–89
1990–99
2000–08
2009–14
Source: IMF, World Economic Outlook database.
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
Real
DP
(Index, Takeo
Real
G
DPper
per
capita
a(Index,
Takeo
off
100)
(Index,
off
GD
RealGD
GDP
G
percapita
capita
a(Index,
Takeo
off===100)
100)
450
450
450
450
450
India
India
400
400
400
400
400
Vietnam
Vietnam
Vietnam
Vietnam
3
ASEAN-5
ASEAN-5
350
350
350
350
Mozambique
Mozambique
Mozambique
300
300
300
300
300
250
250
250
250
250
200
200
200
200
200
Rwanda
Rwanda
Rwanda
Uganda
Uganda
Tanzania
150
150
150
150
150
100
100
100
100
100
50
50
50
50
50
10 12
12 14
14 16
16 18
18 20
20 22
22 24
24 26
26 28
28 30
30 32
32 34
34 36
36 38
38 40
40
10
10
12
12
14
14
16
16
18
18
20
20
22
22
24
24
26
26
28
28
30
30
32
32
34
34
36
36
38
38
0000 2222 4444 6666 8888 10
40
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40
Yearsafter
aftertakeoff
takeoff
Years
Years
after
after
takeoff
takeoff
Years
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.
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
4
... and p
povertyy has declined in most countries
Sub Saharan Africa: Changes in Poverty and GDP per Capita
Sub-Saharan
(26 country sample)
4%
23%
GDP per capita increase and
increase in poverty
GDP per capita increase and
reduction in poverty
GDP per capita decrease and
reduction in poverty
73%
Source: IMF, Regional Economic Outlook for sub-Saharan Africa, Spring 2014
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
5
Three key factors have underpinned the solid
performance of the last decade
Better policies
and
institutions
Capital
Inflows
High
Commodity
Pi
Prices
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
6
Commodity price increase
S&P GSCI global commodity price index has increased sharply since
1990s and peaked at 2008
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
7
Capital
p
inflows
Sub-Saharan Africa: Cumulative Euro Bond Issuances
28
Angola
Rwanda
Zambia
Nigeria
Ghana
Republic of Congo
C t d'Ivoire
Cote
d'I i
18
13
Cameroon
Tanzania
Namibia
Senegal
Gabon
Seychelles
8
3
22015:Q1
22014:Q1
22013:Q1
22012:Q1
22011:Q1
22010:Q1
22009:Q1
22008:Q1
22007:Q1
22006:Q1
22005:Q1
-2
22004:Q1
Billions of U.S. dollars
B
23
Sources: Bank for International Settlement Quarterly Review; Haver Analytics.
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
8
Good economic policies have resulted in
deeper financial sectors …
Sub-Saharan Africa Sample Countries: Credit to the Private Sector
35
2000
30
2015
Perceent of GDP
25
20
15
10
5
Other nonresoourceintensive LICS and
fragile countries
Ugganda
Tannzania
Rw
wanda
Mozam
mbique
Etthiopia
Burkinaa Faso
0
Sources: IMF, African Department database; and IMF, World Economic Outlook database.
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
9
… broader tax bases …
25
Sub-Saharan Africa Sample Countries: Tax Revenue, 1995 and 2015
1995
2015
Perccent of GDP
20
15
10
5
Other
nonresourceeinntensive LICS
S and
fragile countrries
Ugaanda
Rwaanda
Mozambbique
Tanzzania
Ethiiopia
Burkina F
Faso
0
Source: IMF, World Economic Outlook database.
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
10
… and risingg investment
Sub-Saharan Africa Sample Countries: Saving and Investment, 1995–2015
35
Investment
30
Percent off GDP
25
National savings
20
15
Other non-resource-intensive
LICs and fragile countries
i
investment
t
t
10
5
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
0
Source: IMF, World Economic Outlook database.
Note: Sample countries include Burkina Faso, Ethiopia, Mozambique, Rwanda, Tanzania, and Uganda
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
11
Political and institutional reforms have also helped
p
0.00
Control of Corruption
0.00
-0.20
-0.20
-0.40
-0.40
-0.60
-0.60
-0.80
0 80
-0.80
0 80
-1.00
-1.00
-1.20
-1.20
1996 2000 2003 2005 2007 2009 2011 2013
1996 2000 2003 2005 2007 2009 2011 2013
0.00
Government Effectiveness
Political Stability
0.00
-0.20
-0.20
-0.40
-0.40
-0.60
-0.60
-0.80
-0.80
-1.00
-1.00
-1.20
R l t
Regulatory
Quality
Q lit
-1.20
1996 2000 2003 2005 2007 2009 2011 2013
1996 2000 2003 2005 2007 2009 2011 2013
Source: IMF staff estimates based on World Bank,
Bank Worldwide Governance Indicators.
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.
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
12
Outline
• The Growth Take-Off in Sub-Saharan Africa
• The 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
13
But now growth in sub-Saharan Africa
has weakened markedly
Real GDP Growth, 2004
2004–16
16
7
6
Percent
5
4
3
2
1
0
Average
2000–08
2009
Average
2010–14
2015
2016
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
14
Commodity prices are likely to be low for long
Selected Average Commodity Price Changes from 2013
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
15
Sub-Saharan Africa’s trade balance with China has
turned
d into a deficit
d f
S bS h
Sub-Saharan
African:
Af i
Trade
T d Balance
B l
with
ith China,
Chi 2005–15
2005 15
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
16
At the same time, external financing costs have
i
increased
d sharply
h l for
f the
h region’s
i ’ frontier
f
i markets
k
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.
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
17
Fiscal and external balances have weakened…
Deterioration
Sub-Saharan Africa: Current Account Balance and Fiscal Balance, 2008―16
Deterioration
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
18
… and p
public debt is rising,
g notablyy in frontier economies
Public Debt, 2004–15
Source: IMF, World Economic Outlook database.
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
19
Outline
• The Growth Take-Off in Sub-Saharan Africa
• The 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
20
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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
21
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
Source: IMF, Regional Economic Outlook for sub-Saharan Africa, Spring 2015
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
22
Medium-term Challenge 2: Strengthen Competitiveness
Africa lags in electricity generation
Electricity Production
3500
East Asia & Pacific
3000
kWh per caapita
2500
2000
Latin America & Caribbean
Middle East & North Africa
South Asia
Sub-Saharan Africa
1500
1000
500
0
1975 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.
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
23
Medium-term Challenge 2: Strengthen Competitiveness
Af i suffers
Africa
ff ffrom hi
high
h ttransportation
t ti costt
Sub-Saharan Africa: Fees to export a container (US$), 2014
7000
Simple Average
5000
4000
3000
2000
1000
0
Centtral African Rep.
Zambia
Niger
Zimbabwe
Coongo, Dem. Rep.
Botswana
Mali
Burkina Faso
South Africa
Namibia
Liberia
Sierra Leone
Tanzania
Guinea
Ghana
Chad
South Sudan
Congo, Rep. of
Gabon
Angola
Nigeria
Eqquatorial Guinea
Cameroon
Rwanda
Burundi
Uganda
Ethiopia
Malawi
Swaziland
Lesotho
Kenya
Eritrea
Guinea-Bissau
Cote d'Ivoire
Comoros
Senegal
Madagascar
Cabo Verde
Mozambique
Benin
Gambia, The
Togo
Seychelles
Sao T
Tome & Principe
Mauritius
Bangladesh
Chile
China
Vietnam
US ddollars per containeer
6000
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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
24
Medium-term Challenge 3: Make Growth More inclusive
The fruits of growth are not distributed equally
Per Capita GDP Growth and Consumption Growth of the Poorest Quartile
7
6
5
Percent
4
3
2
1
0
GDP Growth per Capita
Per Capita Consumption Growth of the Poorest quartile
Per capita consumption growth of all households
-1
-2
Cameroon
Ghana
Mozambique
Rwanda
Tanzania
Uganda
Zambia
Source: International Monetary Fund, Regional Economic Outlook for Sub-Saharan Africa, October 2011
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
25
Medium-term Challenge 3: Make Growth More inclusive
Improve financial access
Percent of adult populaation using
finnancial servicees
Sub-Saharan Africa: Financial Inclusion
South Africa 2015
Namibia 2011
Zi b b 2014
Zimbabwe
Kenya 2013
Lesotho 2011
Botswana 2014
Uganda 2013
Swaziland 2014
Nigeria
g
2014
Ghana 2010
Malawi 2014
Zambia 2015
Mozambique 2014
Tanzania 2013
83
70
69
67
61
68
3
8
8
20
8
31
9
54
64
48
12
41
40
44
15
34
38
15
51
21
24
41
16
60
57
0
20
Formal
3
14
27
23
25
19
24
15
27
16
40
60
Informal
27
80
100
Excluded
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
26
Medium-term Challenge 3: Make Growth More inclusive
Reducing inequality can also be growth enhancing
Sub Saharan Africa: Growth Differential with ASEAN countries,
Sub-Saharan
countries percentage points
Initial income (catching up)
Dependent population
Infrastructure
Investment (percent of GDP)
Schooling (years)
High inflation
Change in terms of trade
Institutional quality (index)
Income inequality
Female legal equity
Gender inequality
Other country effects
-1.5
-0.5
0.5
1.5
2.5
Average growth differential, 2005–14
Source: IMF, Regional Economic Outlook for sub-Saharan Africa, Fall 2015
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa,
27June 2016
27
Medium-term Challenge 4: Seize the Demographic Dividend
Challenge or Opportunity?
Ch
Change
in
i Global
Gl b l W
Working
ki Age
A P
Population:
l ti Sub-Saharan
S bS h
Africa
Af i and
d the
th Rest
R t off the
th World
W ld
350
Millions oof persons agees 15–64
300
S bS h
Sub-Saharan
Africa
Af i
250
Rest of world
200
150
100
50
0
50
-50
2100
2085
2070
2055
2040
2025
2010
1995
1980
1965
1950
-100
Source: IMF, Regional Economic Outlook for sub-Saharan Africa, Spring 2015
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
28
Medium-term Challenge 4: Seize the Demographic Dividend
Potential magnitude of demographic dividend
GDP per capita under three scenarios
Dividend from improved policies
140
2010
5 000
5,000
4,000
120
2050
2100
2100
2050
100
Percent of G
GDP
GDP per capita, 2005 U.S. dollars
6,000
3,000
2,000
69
80
60
40
1,000
20
0
0
Rising
unemployment
More jobs
30
48
24
More jobs
More jobs,
better policies,
faster transition
More jobs, better
policies, faster transition
Source: IMF, Regional Economic Outlook for sub-Saharan Africa, Spring 2015
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
29
Thank you!
The online edition of the
Regional Economic Outlook
for sub-Saharan Africa
is now available online at
www.imf.org
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016
30