## Executive Summary ## Source details **Canonical URL:** [Executive Summary](https://www.imf.org/-/media/files/publications/reo/afr/2019/april/english/tocandexecsum.pdf) ## Other formats - [Markdown version](/-/media/files/publications/reo/afr/2019/april/english/tocandexecsum.pdf.md) - [Structured JSON version](/-/media/files/publications/reo/afr/2019/april/english/tocandexecsum.pdf.json) --- ### Core structure and themes - Three main chapters: - 1. Two-Track Recovery Amid Elevated Uncertainty - Macroeconomic Developments and Prospects - Risks to the Outlook - Policies - 2. The Economic Consequences of Conflicts - Prevalence and Intensity of Conflicts - Conflict and Economic Growth - Spatial Impact of Conflict - Fiscal Implications of Conflict - 3. Is the African Continental Free Trade Area a Game Changer for the Continent? - Regional Trade Integration in Africa: Key Patterns - How Can the AfCFTA Support Regional Trade Integration in Africa? - Implications of the AfCFTA for African Countries: Welfare, Income Distribution, and Fiscal Revenue - Summary and Policy Implications - Document components referenced in the Executive Summary (selected): - Boxes: 1.1; 1.2; 1.3; 2.1. - Table: 2.1. - Figures: Chapter 1 (1.1 through 1.29); Chapter 2 (2.1 through 2.26); Chapter 3 (3.1 through 3.22). - Statistical Appendix and Background Paper and Expanded Statistical Appendix noted as Online. - Abbreviations and conventions (selected): - AfCFTA, AfDB, AMU, ASEAN, CEMAC, CBR, CGE, COMESA, CPI, EPU, HIPC, ICRG, IFRS 9, IMF, LAIA, MDRI, MENA, NAFTA, NEER, NPLs, PAFTA, PRGT, RECs, REO, SACU, SADC, SOEs, SSA, UN, UNCTAD, US, VAT, WAEMU, WEO. - Conventions: blank cell = “not applicable”; ellipsis points (. . .) = “not available”; 0 or 0.0 = “zero” or “negligible”. - En dash (–) between years/months indicates inclusive coverage; slash (/) indicates fiscal or financial year; “Billion” = a thousand million; “trillion” = a thousand billion; “Basis points” = hundredths of 1 percentage point. ### TWO-TRACK RECOVERY AMID ELEVATED UNCERTAINTY - Aggregate growth prospects: - Aggregate growth is set to pick up from 3 percent in 2018 to 3.5 percent in 2019 and stabilize at slightly below 4 percent over the medium term—or about 5 percent, excluding the two major economies, Nigeria and South Africa. - About half of the region’s countries, mostly non-resource-intensive, are expected to grow at 5 percent or more, and see a faster rise in income per capita than the rest of the world on average over the medium term. - The remaining countries, comprising mostly resource-intensive countries, are expected to fall behind. - Nigeria and South Africa, together with other slower-growing countries, are home to more than two-thirds of the region’s total population. - External and domestic headwinds: - Global expansion is losing momentum, including in key trading partners such as China and the euro area. - Trade tensions remain elevated. - Global financial conditions are volatile and have tightened somewhat relative to October 2018. - Commodity prices are expected to remain low. - Climate shocks are likely to impact agricultural output in southern Africa. - Policy uncertainty is weighing on growth prospects in several countries. - Financial and fiscal vulnerabilities: - Debt vulnerabilities remain elevated in some countries. - Reserve buffers are below levels typically considered adequate in more than half of the countries in the region. - High nonperforming loans continue to strain financial systems. - Weaknesses in public financial management systems are manifesting in large domestic arrears with potential effects on growth and domestic financial systems. - Policy priorities to build fiscal space, resilience, and inclusive growth: - Stepping up revenue mobilization. - Ensuring efficient public investment. - Strengthening public financial management. - Containing fiscal risks from state-owned enterprises. - Improving debt management and resolution frameworks. - Enhancing debt transparency. - Enhancing exchange rate flexibility in countries that are outside monetary unions. - Strengthening monetary policy and financial systems. - Raising productivity and private investment while ensuring more equitable sharing of benefits of increased prosperity. - Enhancing contestability of markets and fostering a dynamic private sector, including addressing constraints to business operations and deeper trade integration (notably through the African Continental Free Trade Area, AfCFTA). - Improving access to and the provision of financial services and basic services (including health and education). - Policy approach: - Accelerate reforms and calibrate the size and pace of policy adjustments to ensure consistency with credible medium-term macroeconomic objectives, available financing, and debt sustainability. - Recognize that downside risks to growth (for example, if global growth is even weaker than envisioned in the current baseline) would make meeting investment and inclusion challenges more difficult. ### THE ECONOMIC CONSEQUENCES OF CONFLICT - Conflict prevalence and nature: - The intensity of conflicts in recent years is lower than that observed in the 1990s, but the region remains prone to conflicts, with around 30 percent of the countries affected in 2017. - The nature of conflicts has changed, with traditional civil wars being replaced by non-state-based conflicts, including the targeting of civilians through terrorist attacks. - Economic impacts of conflict: - Conflicts are associated with a large and persistent decline in per capita GDP. - Conflicts have significant spillover effects on nearby regions and countries. - Conflicts pose significant strains on public finances by lowering revenue, raising military spending, and shifting resources away from development and social spending, further aggravating economic and social costs. - Policy implications for conflict-affected countries: - Prevent conflicts by promoting inclusive economic development, building institutional capacity, and social cohesion. - For countries in conflict, focus on limiting the loss of human and physical capital by protecting social and development spending. - Use well-targeted and coordinated humanitarian aid and concessional financial assistance to provide relief, recognizing fiscal pressures. ### IS THE AFRICAN CONTINENTAL FREE TRADE AREA A GAME CHANGER FOR THE CONTINENT? - AfCFTA objectives and scope: - The AfCFTA agreement envisions elimination of tariffs on most goods, liberalization of trade of key services, addressing nontariff obstacles that hamper intraregional trade, and eventually creating a continental single market with free movement of labor and capital. - Potential macroeconomic and distributional effects: - The AfCFTA can significantly boost intra-African trade, particularly if countries tackle nontariff bottlenecks to trade, including physical infrastructure, logistical costs, and other trade facilitation hurdles. - More diversified economies and those with better logistics and infrastructure will benefit relatively more from trade integration. - Fiscal revenue losses from tariff reductions are likely to be limited on average, with a few exceptions. - Deeper trade integration is associated with a temporary increase in income inequality. - Policy recommendations to maximize benefits and manage costs: - Complement tariff reductions with reforms to address country-specific nontariff bottlenecks. - For less developed and agriculture-based economies, combine trade policies with structural reforms to improve agricultural productivity and competitiveness. - Facilitate reallocation of labor and capital across sectors through active-labor market programs such as training and job-search assistance, and measures that enhance competitiveness and productivity. - Bolster safety nets (income support and social insurance programs) to alleviate the temporary adverse effects on the most vulnerable. *Executive Summary (tocandexecsum - Executive Summary), Regional Economic Outlook: Sub‑Saharan Africa* ### Executive Summary ..................................................................................................... ### Executive Summary ### Core structure and themes - 1. Two-Track Recovery Amid Elevated Uncertainty - Macroeconomic Developments and Prospects - Risks to the Outlook - Policies - 2. The Economic Consequences of Conflicts - Prevalence and Intensity of Conflicts - Conflict and Economic Growth - Spatial Impact of Conflict - Fiscal Implications of Conflict - 3. Is the African Continental Free Trade Area a Game Changer for the Continent? - Regional Trade Integration in Africa: Key Patterns - How Can the AfCFTA Support Regional Trade Integration in Africa? - Implications of the AfCFTA for African Countries: Welfare, Income Distribution, and Fiscal Revenue - Summary and Policy Implications ### Document components referenced in the Executive Summary - Boxes called out: - 1.1. Transitioning to International Financial Reporting Standard 9 - 1.2. Financial Development and Mobile Money Growth in Sub-Saharan Africa - 1.3. Sub-Saharan African Demographic Trend and Gender Gaps in Education - 2.1. The Impact of Conflict on Women and Children - Table: - 2.1. Sub-Saharan Africa: Share of Countries in Conflict by Geographic Region and Economic Classification - Figures (selected highlights listed in the Executive Summary contents): - Chapter 1: 1.1 through 1.29 covering topics such as Real GDP per Capita (1990–23), Global Growth Projections (current versus October 2018), Real Commodity Price Indices, CPI Inflation, Savings-Investment Balance (2014–19), Reserve Buffers, Overall Fiscal Balance (2018–19), Public Debt to GDP (2011–23), Nonperforming Loan Ratio, Impact of Droughts on GDP, Cumulative Impact of Intense Conflicts on GDP, Interest Payments, Public Investment Incremental Capital Output Ratio and Public Debt, Exchange Market Pressure (2017–18), Real GDP Growth Decomposition, Labor Productivity and Earnings Relative to Government Sector. - Chapter 2: 2.1 through 2.26 covering Share of Countries in Conflict by Region, Number of Countries in Conflict (1989–2017), Total Conflict-Related Deaths (1989–2017), Countries in High-Intensity Conflict (1989–2017), Sahel region conflict deaths and distribution, Nature of Conflict, Conflict Exit Probabilities, Refugee flows and Persons of Concern (1980–2017), Growth impacts and fiscal effects of conflict episodes, Impact on Debt-to-GDP ratio during conflict episodes. - Chapter 3: 3.1 through 3.22 covering Trade Openness (1990–2017), Intra-African and partners’ trade shares (1990–2017), Intraregional trade measures, Export sophistication, Average Tariff Rates by REC (2010–17), Trade integration and gaps, Elasticities of intraregional trade to tariffs and nontariff trade costs, Infrastructure and trade logistics gaps, GDP impacts under structural reform scenarios, Changes in Gini coefficients and income shares, Customs revenue (2010–15), Estimated static and dynamic revenue losses from tariff reductions. - Statistical Appendix and Background Paper and Expanded Statistical Appendix noted as Online. ### Abbreviations and conventions (selected) - Abbreviations present in the Executive Summary include AfCFTA, AfDB, AMU, ASEAN, CEMAC, CBR (correspondent banking relationship), CGE, COMESA, CPI, EPU, HIPC, ICRG, IFRS 9, IMF, LAIA, MDRI, MENA, NAFTA, NEER, NPLs, PAFTA, PRGT, RECs, REO, SACU, SADC, SOEs, SSA, UN, UNCTAD, US, VAT, WAEMU, WEO, WTO. - Conventions used in the publication: - In tables, a blank cell indicates “not applicable,” ellipsis points (. . .) indicate “not available,” and 0 or 0.0 indicates “zero” or “negligible.” - An en dash (–) between years or months indicates the years or months covered, including the beginning and ending years or months; a slash or virgule (/) between years or months indicates a fiscal or financial year, as does the abbreviation FY. - “Billion” means a thousand million; “trillion” means a thousand billion. - “Basis points” refer to hundredths of 1 percentage point. *April 2019 issue of the Regional Economic Outlook: Sub-Saharan Africa — Executive Summary (tocandexecsum).* ### Executive Summary ### Executive Summary ### TWO-TRACK RECOVERY AMID ELEVATED UNCERTAINTY - Aggregate growth prospects: - Aggregate growth is set to pick up from 3 percent in 2018 to 3.5 percent in 2019 and stabilize at slightly below 4 percent over the medium term—or about 5 percent, excluding the two major economies, Nigeria and South Africa. - About half of the region’s countries, mostly non-resource-intensive, are expected to grow at 5 percent or more, and see a faster rise in income per capita than the rest of the world on average over the medium term. - The remaining countries, comprising mostly resource-intensive countries, are expected to fall behind. - Nigeria and South Africa, together with other slower-growing countries, are home to more than two-thirds of the region’s total population. - External and domestic headwinds: - Global expansion is losing momentum, including in key trading partners such as China and the euro area. - Trade tensions remain elevated. - Global financial conditions are volatile and have tightened somewhat relative to October 2018. - Commodity prices are expected to remain low. - Climate shocks are likely to impact agricultural output in southern Africa. - Policy uncertainty is weighing on growth prospects in several countries. - Financial and fiscal vulnerabilities: - Debt vulnerabilities remain elevated in some countries. - Reserve buffers are below levels typically considered adequate in more than half of the countries in the region. - High nonperforming loans continue to strain financial systems. - Weaknesses in public financial management systems are manifesting in large domestic arrears with potential effects on growth and domestic financial systems. - Policy priorities to build fiscal space, resilience, and inclusive growth: - Stepping up revenue mobilization. - Ensuring efficient public investment. - Strengthening public financial management. - Containing fiscal risks from state-owned enterprises. - Improving debt management and resolution frameworks. - Enhancing debt transparency. - Enhancing exchange rate flexibility in countries that are outside monetary unions. - Strengthening monetary policy and financial systems. - Raising productivity and private investment while ensuring more equitable sharing of benefits of increased prosperity. - Enhancing contestability of markets and fostering a dynamic private sector, including addressing constraints to business operations and deeper trade integration (notably through the African Continental Free Trade Area, AfCFTA). - Improving access to and the provision of financial services and basic services (including health and education). - Policy approach: - Accelerate reforms and calibrate the size and pace of policy adjustments to ensure consistency with credible medium-term macroeconomic objectives, available financing, and debt sustainability. - Recognize that downside risks to growth (for example, if global growth is even weaker than envisioned in the current baseline) would make meeting investment and inclusion challenges more difficult. ### THE ECONOMIC CONSEQUENCES OF CONFLICT - Conflict prevalence and nature: - The intensity of conflicts in recent years is lower than that observed in the 1990s, but the region remains prone to conflicts, with around 30 percent of the countries affected in 2017. - The nature of conflicts has changed, with traditional civil wars being replaced by non-state-based conflicts, including the targeting of civilians through terrorist attacks. - Economic impacts of conflict: - Conflicts are associated with a large and persistent decline in per capita GDP. - Conflicts have significant spillover effects on nearby regions and countries. - Conflicts pose significant strains on public finances by lowering revenue, raising military spending, and shifting resources away from development and social spending, further aggravating economic and social costs. - Policy implications for conflict-affected countries: - Prevent conflicts by promoting inclusive economic development, building institutional capacity, and social cohesion. - For countries in conflict, focus on limiting the loss of human and physical capital by protecting social and development spending. - Use well-targeted and coordinated humanitarian aid and concessional financial assistance to provide relief, recognizing fiscal pressures. ### IS THE AFRICAN CONTINENTAL FREE TRADE AREA A GAME CHANGER FOR THE CONTINENT? - AfCFTA objectives and scope: - The AfCFTA agreement envisions elimination of tariffs on most goods, liberalization of trade of key services, addressing nontariff obstacles that hamper intraregional trade, and eventually creating a continental single market with free movement of labor and capital. - Potential macroeconomic and distributional effects: - The AfCFTA can significantly boost intra-African trade, particularly if countries tackle nontariff bottlenecks to trade, including physical infrastructure, logistical costs, and other trade facilitation hurdles. - More diversified economies and those with better logistics and infrastructure will benefit relatively more from trade integration. - Fiscal revenue losses from tariff reductions are likely to be limited on average, with a few exceptions. - Deeper trade integration is associated with a temporary increase in income inequality. - Policy recommendations to maximize benefits and manage costs: - Complement tariff reductions with reforms to address country-specific nontariff bottlenecks. - For less developed and agriculture-based economies, combine trade policies with structural reforms to improve agricultural productivity and competitiveness. - Facilitate reallocation of labor and capital across sectors through active-labor market programs such as training and job-search assistance, and measures that enhance competitiveness and productivity. - Bolster safety nets (income support and social insurance programs) to alleviate the temporary adverse effects on the most vulnerable. *Executive Summary (tocandexecsum - Executive Summary), Regional Economic Outlook: Sub‑Saharan Africa* --- _Source: https://www.imf.org/-/media/files/publications/reo/afr/2019/april/english/tocandexecsum.pdf_