Front Matter

© 2011 International Monetary Fund

Cataloging-in-Publication Data

Regional economic outlook. Sub-Saharan Africa. – Washington, D.C. : International Monetary Fund, 2003-

• v. ; cm. – (World economic and financial surveys, 0258-7440)

• Twice a year.

• Began in 2003.

• Some issues have also thematic titles.

1. Economic forecasting – Africa, Sub-Saharan – Periodicals. 2. Africa, Sub-Saharan — Economic conditions – 1960- – Periodicals. 3. Economic development – Africa, Sub-Saharan – Periodicals. I. Title: Sub-Saharan Africa. II. International Monetary Fund. III. Series: World economic and financial surveys.

HC800.A1 R445

ISBN-13 978-1-61635-061-1

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Contents

• Abbreviations

• Preface

• Main Findings

• 1. Recovery and New Risks

  • Introduction and Summary

  • How and Where Has Output Recovered from the Impact of the Crisis?

  • Has Fiscal Policy Started to Pay Heed to the Recovery?

  • What Are the Implications of the Resurgence in Food and Fuel Prices?

  • Policy Priorities Going Forward

• 2. Capital Inflows to Frontier Markets in Sub-Saharan Africa

  • Introduction and Summary

  • The Nature and Volume of Flows to Sub-Saharan African Frontier Markets in a Global Context

  • Other Private Flows to Frontier Markets

  • How Different Is the Recent Experience of Sub-Saharan Africa’s Frontier Markets?

  • Long-Term Determinants of Private External Financing in Sub-Saharan Africa

  • Policy Recommendations

• 3. The East African Community: Taking Off?

  • Introduction and Summary

  • The EAC Growth Experience

  • How Does the East African Community Compare with Other Fast Growers? Benchmarking East African Community Growth

  • New Challenges and New Opportunities

• Statistical Appendix

• References

• Publications of the IMF African Department, 2009–11

• Boxes

• 1.1 Why Has South Africa’s Recovery from the Recession Been Subdued?

• 1.2. How Unique Is Sub-Saharan Africa’s Growth Surge of the Last Decade?

• 1.3. An Adverse Oil Shock Scenario

• 2.1. What Are Frontier Markets?

• 2.2. Foreign Direct Investment to Sub-Saharan Frontier Markets

• 2.3. Do Sub-Saharan Africa Exchange Rates Respond to Changes in Foreign Interest Rates?

• 3.1. East African Community—An Overview

• 3.2. The East African Community Common Market: Achievements and Remaining Challenges

• 3.3. Kenya: Mobile Money and Financial Sector Deepening

• 3.4. Competition in East African Community Banking Systems: Evidence from a Price-Setting Behavioral Model

• 3.5. Shifting Trends in EAC Trade

• 3.6. Regional Bond Market Development in West Africa

• Tables

• 1.1. Sub-Saharan Africa: Macroeconomic Aggregates, 2004–12

• 1.2. Sub-Saharan Africa: Contributions to Real GDP Growth, 2004–11

• 2.1. Developments in Private Capital Flows during 2010

• 2.2. Factors in Attracting Private Capital Inflows

• 2.3. Formal Evidence on Determinants of Capital Inflows

• 2.4. Comparison of Key Indicators, 2009

• 2.5. Current Macroeconomic Indicators

• 3.1. Top 20 Fastest-Growing Economies in 2005–09

• Figures

• 1.1. Sub-Saharan Africa: Trends in Output among Low-Income and Oil-Exporting Countries

• 1.2. Sub-Saharan Africa: Trends in Output among Middle-Income Countries

• 1.3. Changes in Inflation and Policy Rates

• 1.4. Sub-Saharan Africa: Broad Money and Private Sector Credit Growth, December 2005–September 2010

• 1.5. Nominal Effective Exchange Rate Change, January 2009 versus January 2011

• 1.6. Sub-Saharan Africa: External Account Indicators

• 1.7. Sub-Saharan Africa: Total Revenue Excluding Grants, 2000–12

• 1.8. Sub-Saharan Africa: Real Government Expenditure Growth, 2004–11

• 1.9. Real Government Expenditure Growth, 2011

• 1.10. Sub-Saharan Africa: Overall Balance Excluding Grants, 2000–12

• 1.11. Sub-Saharan Africa: Change in Fiscal Balance and Net Present Value of Public Debt

• 1.12. World Commodity Price Index

• 1.13. Sub-Saharan Africa: Food Inflation Rates

• 1.14. Sub-Saharan Africa: Food Inflation

• 1.15. Relationship between Domestic and International Food Prices

• 1.16. Trade Balance Effects of Commodity Price Changes in 2011

• 1.17. Sub-Saharan Africa: Real Policy Interest Rate

• 1.18. Sub-Saharan Africa: Relationship between CPI Inflation and Food and Fuel Inflation Rates, 2000–10

• 2.1. Private vs. Official Financing to Sub-Saharan African Countries

• 2.2. Net Private Capital Flows to Emerging and Developing Economies

• 2.3. Net Private Capital Flows to Sub-Saharan African Countries

• 2.4. Net Portfolio Investment in Emerging and Developing Economies

• 2.5. Sub-Saharan Africa Frontier Markets: Portfolio Investments

• 2.6. Portfolio Investment Net

• 2.7. Average Stock of Portfolio Investment Liabilities

• 2.8. Stock of Portfolio Investment Liabilities

• 2.9. Sub-Saharan Africa Frontier Markets: External Bond Issuance

• 2.10. Other Frontier Markets: External Bond Issuance

• 2.11. Morgan Stanley Capital International (MSCI) Indices

• 2.12. Country Stock Market Indices

• 2.13. Sub-Saharan Africa Frontier Markets: Foreign-Held Equity Securities

• 2.14. Sub-Saharan Africa Frontier Markets: Consolidated Foreign Bank Claims

• 2.15. Average FDI as Percent of GDP, 1991–2009

• 2.16. FDI as Percent of GDP

• 2.17. Foreign Ownership of Government Securities

• 2.18. Global Indicators

• 2.19. Real GDP Growth

• 2.20. Policy Rates Across Regions

• 2.21. Change in Policy Rate Spreads, end-2008 to end-September 2010

• 2.22. Average 91-Day Yield

• 2.23. Evolution of Average Exchange Rates Against the U.S. Dollar

• 2.24. Mauritius: Portfolio Investment by Destination, 2009

• 2.25. Mauritius: Portfolio Liabilities by Creditor, 2009

• 2.26. Mauritius: Portfolio Liabilities, 2009

• 2.27. Coefficient of Variation for Nominal Effective Exchange Rate, 12-Month Period

• 2.28. Sub-Saharan Africa Frontier Markets: Foreign Currency Deposits in the Banking System

• 2.29. Effective Exchange Rate Volatility and Dollarization, 2009 vs 2010

• 2.30. Foreign Holdings of Government Securities, 2005:Q1–2010:Q3

• 3.1. Real GDP Growth

• 3.2. Cumulative Growth in Real per Capita GDP

• 3.3. Inflation since Growth Turnaround

• 3.4. Real GDP per Capita (at 2000 exchange rates)

• 3.5. East African Community: Macroeconomic Stabilization

• 3.6. Total Factor Productivity

• 3.7. Exports since Growth Turnaround

• 3.8. Export Concentration

• 3.9. East African Community: Business Environment

• 3.10. East African Community: Investment and Savings

• 3.11. SGs: Investment and Savings

• 3.12. Grants

• 3.13. Inward Foreign Direct Investment

• 3.14. Misalignment from Equilibrium Exchange Rate (3-year moving averages)

• 3.15. Financial Deepening

• 3.16. Private and Official Flows to the East African Community

• 3.17. Exchange Rate Volatility

Abbreviations

AREAER

Annual Report on Exchange Arrangements and Exchange Restrictions

BRIC

Brazil, Russia, India, and China

CBOE

Chicago Board Option Exchange

CET

Common External Tariff

CFA

Currency zone of CEMAC and WAEMU

CIS

Commonwealth of Independent States

CPI

Consumer price index

CPIA

Country Policy and Institutional Assessment

CPIS

Consolidated Portfolio Investment Survey

EAC

East African Community

EM

Emerging market

EMBI

Emerging Market Bond Index

EME

Emerging market economy

FDI

Foreign direct investment

FM

Frontier market

G-7

Group of seven industrialized nations

GDP

Gross domestic product

LAC

Latin America and the Caribbean

LIC

Low-income country

MSCI

Morgan Stanley Capital International

MDG

Millennium Development Goal

MIC

Middle income country

MDRI

Multilateral Debt Relief Initiative

MNA

Middle East and North Africa

MSCI

Morgan Stanley Capital International

NEER

Nominal effective exchange rate

OECD

Organisation for Economic Co-operation and Development

PPP

Public-private partnerships

REER

Real effective exchange rate

REO

Regional Economic Outlook

SACU

Southern African Customs Union

SARB

South Africa Reserve Bank

SG

Sustained growth

SME

Small and medium-sized enterprises

SSA

Sub-Saharan Africa

TFP

Total factor productivity

VAT

Value added tax

WAEMU

West African Economic and Monetary Union

WEO

World Economic Outlook

Preface

This April 2011 issue of the Regional Economic Outlook: Sub-Saharan Africa (REO) was prepared by a team led by Abebe Aemro Selassie under the direction of Saul Lizondo. The team included Valerie Cerra, Hamid R. Davoodi, Shiv Dixit, Matthew Gaertner, Rodrigo Garcia-Verdu, Martine Guerguil, Duval Guimarães, Cleary Haines, Robert Keyfitz, Nir Klein, Maitland MacFarlan, Catherine McAuliffe, Alexis Meyer-Cirkel, Montfort Mlachila, Rogelio Morales, Maxwell Opoku-Afari, Laure Redifer, Sarah Sanya, Jon Shields, Alun Thomas, and Masafumi Yabara with editorial assistance from Jenny Kletzin DiBiase. Natasha Minges was responsible for document production, with assistance from Anne O’Donoghue. The editing and production was overseen by Joanne Blake and Martha Bonilla of the External Relations Department.