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World Economic and Financial Surveys

Regional Economic Outlook:
Sub-Saharan Africa

April 2008

Ordering Information

The region's prospects continue to be promising, but global developments pose increased risks to the outlook. Growth in sub-Saharan Africa should again average about 6˝ percent in 2008 with oil exporters leading the way; meanwhile, growth in oil importers is expected to taper off, though only modestly. With food and energy prices still rising, inflation is projected to average about 8˝ percent this year for countries in the region, setting aside Zimbabwe. Risks in 2008 are tilted to the downside, but the region is better placed today to withstand a worsening of the global environment.

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Contents

Abbreviations
Executive Summary
 
I. Overview
  Main Developments in 2007
  Macroeconomic Policies
  Outlook for 2008 and Risks
  Medium-Term Challenges: Unleashing the Private Sector and Reducing the Cost of Doing Business
  Appendix 1.1
 
II. Monetary and Exchange Rate Policies in Sub-Saharan Africa
  The Monetary and Exchange Rate Landscape
  Policy Challenges of Implementing Monetary and Exchange Rate Regimes in Sub-Saharan Africa
  Conclusions
 
III. Private Capital Flows to Sub-Saharan Africa: Financial Globalization's Final Frontier?
  Recent Trends in Capital Flows to Sub-Saharan African Countries
  Factors Influencing Capital Flows in Sub-Saharan Africa
  Evidence from Country Case Studies
  Lessons and Policy Agenda for Sub-Saharan Africa
  Appendix 3.1
 
IV. Africa's Power Supply Crisis: Unraveling the Paradoxes
  Africa's Power Sector in International Perspective
  Africa's Acute Power Problems
  The Way Forward
 
Statistical Appendix
  Sub-Saharan Africa: Country Groupings
  Data and Conventions
  List of Tables
References
 
Publications of the IMF African Department, 2004-08
 
Boxes
1.1. Sub-Saharan Africa and the Global Slowdown
1.2. Economic Crisis in Zimbabwe
1.3. The Changing Nature of Public Debt in Sub-Saharan Africa
1.4. The Impact of High Oil Prices on Sub-Saharan Africa
1.5. Conflicts and Political Instability in Sub-Saharan Africa: Growth and Spillover Effects
1.6. Creditor Rights in Sub-Saharan Africa
2.1. Inflation Objectives for Sub-Saharan African Low-Income Countries
2.2. The Monetary Transmission Mechanism in Sub-Saharan Africa
2.3. Assessing Reserve Money Targeting in Sub-Saharan Africa
2.4. The Role of Money
2.5. Mozambique and Uganda: Adding Flexibility to Monetary Policy
2.6. Inflation Targeting in Ghana
2.7. Inflation Targeting: A Benchmark for Monetary Policy in Managed Floats
2.8. Analytic Frameworks for Monetary Policy in Low-Income Countries
3.1. Transition to Emerging Market Status: Where Does Africa Stand?
3.2. Domestic Determinants of Private Capital Inflows to Sub-Saharan African Countries
3.3. Are Capital Flows Good for Growth?
3.4. Recent Cross-Border Banking Investments
3.5. The Foreign Private Capital Capacity-Building Program
4.1. Introducing the Africa Infrastructure Country Diagnostic
4.2. Regional and Economic Effects of South Africa's Power Supply Crisis
 
Tables
1.1. Sub-Saharan Africa: Selected Indicators, 2003-08
A1.1. Categorization of Sub-Saharan African Countries
A1.2. Non-Oil Primary Fiscal Deficits, 2002-07
2.1. De Jure Monetary Policy Frameworks in Sub-Saharan Africa
3.1. Private Capital Flows' Volatility, 2000-07
3.2. Private FDI and Portfolio Inflows and Capital Market Development
A3.1. Controls on Portfolio Investments and FDI in Selected African Countries
A3.2. Capital Account Liberalization Process in Case-Study Countries
A3.3. Case Study Countries: Challenges and Policy Responses
4.1. Emergency Power Generation in Sub-Saharan Africa
4.2. Private Participation Power Sector Transactions in Sub-Saharan Africa
4.3. Power Sector Expenditure
4.4. Annualized Power Sector Expenditure Requirements to 2015
 
Figures
1.1. A Comparison of Growth
1.2. Growth in Sub-Saharan Africa
1.3. Regional Dynamics of Growth
1.4. Contribution to GDP Growth
1.5. Growth Volatility
1.6. Real Per Capita GDP Growth
1.7. Sub-Saharan Africa: Oil Exporters
1.8. Sub-Saharan Africa: Trading Gains (Losses)
1.9. Inflation in Sub-Saharan Africa
1.10. Sub-Saharan Africa: External Current Account Balance
1.11. Commodity Prices in Sub-Saharan Africa
1.12. Three-Month Interbank Risks in Selected Emerging Market
1.13. Monetary Developments
1.14. Real Effective Exchange Rates in Sub-Saharan Africa
1.15. Real Effective Exchange Rates in the CEMAC and the WAEMU
1.16. Sub-Saharan Africa: Reserve Coverage
1.17. Credit to the Private Sector in Sub-Saharan Africa
1.18. Real Effective Exchange Rates in Sub-Saharan African Countries with a Floating Regime
1.19. CSub-Saharan Africa: 2007 Exchange Rate Adjustments and Current Account Balances
1.20. Central Government Revenues in Sub-Saharan Africa
1.21. CCentral Government Primary Expenditures in Sub-Saharan Africa
1.22. Central Government Social Spending in Sub-Saharan Africa
1.23. Low-Income Sub-Saharan Africa: Government Financing of Fiscal Deficits
1.24. Total Government Debt in Sub-Saharan Africa
1.25. Oil Prices and GDP Growth in Sub-Saharan Africa
1.26. Exports and Growth in Sub-Saharan Africas
1.27. Sub-Saharan Africa: Growth and Commodity Prices
1.28. Growth Prospects in Sub-Saharan Africa
1.29. Sub-Saharan Africa: Reserve Coverage for Terms of Trade Shocks, 2007
1.30. Sub-Saharan Africa: Doing Business, 2007
1.31. Sub-Saharan Africa: Global Competitiveness Index, 2007
1.32. Sub-Saharan Africa: Governance Ranking, 2000-06
2.1. Sub-Saharan Africa: Exchange Rate Distribution, 2005-07
3.1. Sub-Saharan Africa: Capital Inflows, 2000-07
3.2. Sub-Saharan Africa: Capital Inflows, 2000-07 (Annual Averages)
3.3. Sub-Saharan Africa: Total Private Capital Inflows, 2000-07
3.4. Sub-Saharan Africa: Capital Inflows, Current Account, and Reserves, 2000-07
3.5. Sequencing of Capital Account Liberalization
3.6. Selected Sub-Saharan African Countries: Composition of Capital Flows
4.1. Evolution of Power Infrastructure in Sub-Saharan Africa Relative to Other Regions
4.2. Electricity Prices and Consumption in Sub-Saharan Africa Relative to Other Regions
4.3. Countries Affected by Acute Power Sector Crises in 2007
4.4. Drivers of Operating Costs for Sub-Saharan African Power Systems
4.5. Electricity Costs and Revenues by Type of Power System (US$/kwh)
4.6. Average Power Sector Revenue and Various Cost Benchmarks
4.7. Electricity Service Coverage in Sub-Saharan Africa
4.8. Electricity Service Expenditure in Sub-Saharan Africa
4.9. Evaluation of Power Sector Reform
4.10. State-Owned Enterprise Governance Characteristics
4.11. Frequency Distribution of Power Sector Efficiency Indicators
4.12. Hidden Costs of Power Sector Inefficiency
4.13. Long-Term Trends in External Finance for the Sub-Saharan African Power Secto