## Executive Summary

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### Restoring the Conditions for Strong and Sustainable Growth
- 2016 growth slowed in about two-thirds of the countries in the region—accounting for 83 percent of regional GDP—and is estimated to have reached just 1½ percent.
- The modest rebound to 2½ percent expected in 2017 will be largely driven by one-off factors in the three largest countries: a recovery in oil production in Nigeria, higher public spending ahead of elections in Angola, and the fading of drought effects in South Africa, combined with modest improvements in their terms of trade.
- Heterogeneity: some of the largest western and eastern African countries still expected to grow at 5 percent to 7½ percent.
- At the projected pace, sub-Saharan African growth will continue to fall well short of past trends and barely exceed population growth.

Findings on policy and vulnerabilities:
- Resource-intensive countries hit hardest by low oil prices (Angola, Nigeria, and CEMAC) are struggling with budgetary revenue losses and balance of payments pressures; delayed and limited policy adjustments are allowing spillovers to non-oil sectors.
- Other commodity exporters, such as Ghana, Zambia, and Zimbabwe, face larger fiscal deficits.
- In nonresource-intensive countries (Côte d’Ivoire, Kenya, Senegal), fiscal deficits have remained high as governments address social and infrastructure gaps; despite robust growth, vulnerabilities are emerging: public debt is rising, borrowing costs have increased, arrears are emerging, and nonperforming loans in the banking sector are increasing.
- Drought, pests, and security issues have contributed to about half of sub-Saharan African countries reporting food insecurity; the 2016 southern African drought impact is fading, but a new drought affects parts of eastern Africa, pest infestations impact agriculture in several southern African countries, famine has been declared in South Sudan, and famine is looming in northeastern Nigeria due to conflicts.
- External environment: recent improvements in commodity prices are insufficient to address imbalances in resource-intensive countries; the prospect of U.S. monetary policy normalization could tighten external financing conditions.

Policy recommendations:
- For hardest-hit resource-intensive countries: fiscal consolidation is urgently needed to halt reserve declines and offset permanent revenue losses; in CEMAC, fiscal measures should support binding limits on central bank financing to governments and help contain external pressures.
- In countries where the exchange rate tool is available (Angola, Nigeria): greater exchange rate flexibility and elimination of exchange restrictions should be part of a coherent policy package.
- For other countries with emerging vulnerabilities: shift the fiscal stance toward gradual fiscal consolidation while preserving momentum where growth remains relatively strong.

### Restarting Sub-Saharan Africa’s Growth Engine
- The chapter examines growth turning points (growth accelerations and decelerations) and sustained growth episodes since 1950.
- Growth turning points are common in sub-Saharan Africa, with substantial variation over time; relatively fewer down-breaks have occurred since 2000.
- Growth spells have become more frequent over the last 15 years but, compared to other regions, tend to be shorter, exhibit larger swings, and more often end in “hard landings.”

Determinants of sustained growth:
- Sustained growth is fostered by sound domestic policies:
  - Fiscal policy that prevents excessive public debt accumulation.
  - Monetary policy geared toward low inflation.
  - Outward-oriented trade policies.
  - Structural policies that reduce market distortions.

Policy implication:
- Given a less supportive external environment, a strong domestic policy response is necessary to revive growth where it has faltered and to sustain growth where it remains relatively strong.

### The Informal Economy in Sub-Saharan Africa
- The informal economy contributes between 25 and 65 percent of GDP and between 30 and 90 percent of total nonagricultural employment in the region.
- International experience suggests the informal economy is likely to remain large for many years, presenting both opportunities and challenges.

Roles and characteristics:
- Positive role: informal activity acts as a safety net, providing employment and income to a large and growing working-age population that might otherwise be unemployed.
- Productivity gap: productivity of informal firms is only one-fifth to one-quarter that of formal firms.

Policy directions:
- Adopt a balanced approach to formalization: increase productivity within the informal sector while supporting expansion of formal firms.
- Policies that support growth of the formal sector also raise informal sector productivity and facilitate transition of resources from informal to formal sectors.
- Improving access to finance is a key contributor to expanding the formal sector.
- Fostering product-market efficiency—particularly through legal system improvements and trade liberalization—and improving access to electricity are important for raising productivity and facilitating formalization.

*Source: Regional Economic Outlook: Sub-Saharan Africa, April 2017 — Executive Summary*

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_Source: https://www.imf.org/-/media/files/publications/reo/afr/2017/may/pdf/sreo0517-exec.pdf_