ECONOMIC RESEARCH Sub-Saharan Africa

In recent years, developments in many Sub-Saharan Africa economies have caught the attention of international investors who are looking for higher returns in emerging markets. The end of apartheid in South Africa sparked increased interest in the region initially and, since then, many countries have undertaken reforms backed by the IMF and World Bank prompting debt relief from the official community.


With the exception of South Africa, the effect of the global crisis on Sub-Saharan Africa was relatively muted. Benefiting from the commodity boom and a related increase in foreign direct investment, notably from China, the leading emerging markets in the region that are covered by the IIF (South Africa, Nigeria, Kenya, Tanzania, Zambia, Ghana, and Côte d’Ivoire) achieved an average growth rate of 4.7% in the five-year period 2007-2011. Growth was above 4.5% every year, except in 2009 when the recession in South Africa dragged the average down to 2.4%.


In contrast to the disinflationary trend in the global economy in recent years, many countries in Sub-Saharan Africa have struggled to control price pressures. This, together with burgeoning budget deficits, has meant that central banks have tended to keep monetary policy fairly tight and a large interest rate differential has been maintained vis-à-vis developed markets. High yields have resulted in a surge in portfolio flows, which together with increased inflows of foreign direct investment into resource rich countries has helped countries build reserves, despite running current account deficits. There has also been a renewed focus on gaining access to international capital markets. Several countries besides South Africa now have a formal credit rating and have issued international bonds over the past few years, including Ghana, Nigeria, Zambia, Gabon and Senegal. Others such as Kenya and Tanzania are actively considering tapping the markets in the near future.


Many challenges remain, however, including improving governance, reducing poverty and unemployment, strengthening public financial management, and enhancing infrastructure. Addressing these issues will be key to raising living standards, moving to a higher more inclusive growth path and attracting foreign investment.

Sub-Saharan Africa Publications

Country Publications

  • South Africa: Consolidating The Fiscal Position
    March 13, 2014

    South Africa’s budget was drawn up in a particularly challenging macroeconomic environment against a background of intensified global financial market volatility. Despite continued sluggish growth, there was no scope for fiscal stimulus through lower taxes or higher spending. Instead the government stuck to its plans, outlined in last October’s Medium Term Budget Policy Statement, to consolidate public finances, lower the budget deficit and stabilize the government debt-to-GDP ratio. It was framed to advance the aims of the National Development Plan and continued to focus on infrastructure development and improvement in service delivery.

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  • Kenya: Poised For Stronger Growth
    March 06, 2014

    Kenya looks set to enter a phase of higher growth and smaller deficits, but many challenges and risks remain. Reforms under the recently completed IMF program have put the economy on a firmer financial footing, and investment in infrastructure and the discovery of oil and coal have enhanced prospects further out. The large current account and fiscal deficits remain a challenge, however. The move to a devolved fiscal structure will add to costs initially and will need careful management, but revenue enhancing reforms should help consolidate public finances going forward. The upcoming maiden Eurobond issue will fund a significant portion of this year’s large borrowing requirement.

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  • South Africa: The Bumpy Road To A Post-QE World
    February 04, 2014

    South Africa, like other emerging market countries, is experiencing a new set of global headwinds as financial markets adjust to the start of Fed tapering and the movement to a post-QE world. Gyrations in capital flows and labor market unrest have undermined confidence in recent months, and monetary policy has been tightened amid concerns that the sharp rand depreciation will push inflation above its target range for a sustained period. Against this background, growth is likely to be well below potential again this year. Infrastructure investment should alleviate supply bottlenecks further out and boost exports, but the government will have to implement some fundamental structural reforms after the election to tackle problems in the labor market and improve the education system if the NDP growth target of 5.4% a year is to have any chance of being met.

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  • Tanzania: Nonconcessional Funding Adds to Vulnerabilities
    September 19, 2013

    Tanzania has gained access to international markets, but rising reliance on nonconcessional funding with a persistent deficit raises concerns. In the long term, the development of the gas sector should have a neutral impact on the balance of payments. FDI still finances most of the deficit and should continue to rise with gas-related projects through 2020 (but could taper off beyond that without reforms). The recent increase in reliance on nonconcessional loans calls for measures to redress the external imbalance and to improve debt management capacity.

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  • Nigeria: Fiscal Policy Challenges and Complexities
    September 05, 2013

    Despite its substantial oil wealth, Nigeria has recorded federal budget deficits for the past four years. Our projections suggest that the deficit will widen in 2013 rather than decline to 1.9% of GDP as budgeted. While difficulties in tightening fiscal policy are in part related to the country’s complex federal structure, they also highlight the need to push through partially implemented reforms that would strengthen the fiscal position. These include reducing petroleum subsidies, transitioning to a Sovereign Wealth Fund to instill greater savings discipline when oil prices are high, and restructuring the power sector to promote investment in oil and gas and increase revenues.

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  • Tanzania: The Promise and Challenge of Gas Discoveries
    August 22, 2013

    Real GDP growth should remain buoyant, at around 8% in 2013 and 2014. Strong FDI inflows are likely to continue over the medium term. Offshore gas production, from an estimated 35 tcf of reserves, could be a game changer further out. Ongoing debate over the still-to-be-voted-on oil and gas policy could delay the start of production. Domestic politics around a new constitution and general elections in 2015 could add an element of uncertainty.

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  • Côte d’Ivoire: Putting Public Finances on a Firmer Footing
    July 15, 2013

    The fiscal deficit narrowed to 3.1% of GDP in 2012 with a rebound in economic activity boosting revenue. Côte d’Ivoire will continue to run small and manageable fiscal deficits from 2013 onwards as public investment is ramped up. Strengthening fiscal administration, and in particular debt management, will be key to ensuring debt sustainability going forward.

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Regional Publications

  • Sub-Saharan Africa: Reforms Needed For Higher Growth
    November 10, 2013

    With the exception of South Africa, global financial market volatility over the past few years has had little effect on growth in Sub-Saharan Africa. Although the waning of the commodity super cycle has dampened export earnings, growth for the IIF-7 countries remains solid and is forecast to be broadly unchanged in 2013, at 4.7%. Growth is being held back by generally poor physical infrastructure, which raises costs, reduces efficiency and limits intra-regional trade. Appetite for African sovereign paper continues to grow and several countries have entered the international capital markets for the first time over the past couple of years at reasonable spreads. Budget deficits remain uncomfortably large, and the cost of domestic borrowing is on the rise. Consolidating public finances while creating fiscal space for higher infrastructure and development spending should therefore be a key priority for governments.

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  • 2012 Africa Financial Summit: Meeting in Review
    February 04, 2013

    The IIF held its inaugural Africa Financial Summit in Cape Town, South Africa on November 11-13, 2012. The meeting, which was graciously hosted by Standard Bank, attracted more than 120 participants from nearly 70 African and global institutions for two days of discussion of Sub-Saharan Africa’s economic and financial progress and prospects. The Meeting in Review summarizes the four keynote addresses and six panel discussions, and contains the agenda, the press release and photographs from the event.

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  • Sub-Saharan Africa: Growing Strong, Challenges Ahead
    November 06, 2012

    The seven countries in Sub-Saharan Africa covered by the IIF (accounting for 65% of the region’s economy) have averaged a robust 4.7% growth rate since 2007, demonstrating resilience in the global financial crisis. Future growth remains contingent on building diversified productive capacities with reduced dependence on natural resources. Investment in infrastructure, human capital, reform of government spending, and implementing deep, market-based reforms are key to high rates of sustainable, inclusive growth.

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