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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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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
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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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 3
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
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40Years after takeoff
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40Years after takeoff
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40Years after takeoff
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40Years after takeoff
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.
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 4
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.
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... 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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 5
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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 6
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Commodity price increaseCommodity 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 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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 8
2 2 2 2 2 2 2 2 2 2 2 2
Sources: Bank for International Settlement Quarterly Review; Haver Analytics.
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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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 9
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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 10
Source: IMF, World Economic Outlook database.
in
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… 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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 11
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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 12
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.
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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 13
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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 14
Average 2000–08
2009 Average 2010–14
2015 2016
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Commodity prices are likely to be low for longCommodity 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 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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 16
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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,
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 17
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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 18
Deterioration
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… and public debt is rising, notably in frontier economies
Public Debt, 2004–15
p g y
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 19
Source: IMF, World Economic Outlook database.
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 20
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Medium-term Challenge 1: There is still potential to increase revenue mobilization in Sub-Saharan Africa
Selected Countries: Tax Ratio and Potential, 2014
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 21
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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 22
Source: IMF, Regional Economic Outlook for sub-Saharan Africa, Spring 2015
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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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 23
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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 24
Source: World Bank, World Development Indicators; and IMF staff estimates
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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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 25
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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 26
Formal Informal Excluded
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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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 2727
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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 28
Source: IMF, Regional Economic Outlook for sub-Saharan Africa, Spring 2015
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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
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 29
Source: IMF, Regional Economic Outlook for sub-Saharan Africa, Spring 2015
Thank you!
The online edition of the Regional Economic Outlook
for sub-Saharan Africais now available online at
www.imf.org
International Monetary Fund, Challenges and Opportunities for Sub-Saharan Africa, June 2016 30