Transcript Sean Nolan, Deputy Director, African Department (IMF) Presentation

Structural Transformation
in Sub-Saharan Africa
Regional Economic Outlook: Sub-Saharan Africa
African Department
International Monetary Fund
November 2012
1. Introduction and Context
2. Structural transformation: what has happened?
3. Barriers to diversification; lessons from success
4. Looking Ahead
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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• Many countries in sub-Saharan Africa (SSA) have experienced
strong economic growth since the mid-1990s.
• Has this growth been accompanied by structural
transformation – the shift of workers to sectors/activities with
higher average productivity?
• Motivation:
– Is SSA growth more than a “natural resources” story?
– Distinctive features of structural transformation in SSA?
– Obstacles to further transformation?
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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Real GDP, 1995-2011
(Index 1995=100)
250
240
230
220
210
200
190
180
170
160
150
140
130
120
110
100
90
World
Sub-Saharan Africa
Low-income Countries, excluding Fragile (SSA)
1995
1997
1999
2001
2003
2005
2007
2009
2011
Source: IMF, World Economic Outlook.
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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Annual percent change
-5
-10
Zimbabwe -4.7
Eritrea -2.7
Guinea-Bissau -1.9
Comoros -1.4
-1.1
Gabon
-1.0
Congo, Dem. Rep.
-1.0
Burundi
-0.7
Central African Republic
-0.7
Togo
-0.5
Côte d'Ivoire
-0.2
Madagascar
-0.1
Niger
Seychelles
Namibia
Congo, Rep.
Swaziland
South Africa
Kenya
Cameroon
Senegal
Benin
Gambia, The
Malawi
São Tomé and Príncipe
Sierra Leone
Mali
Zambia
Botswana
Lesotho
Ghana
Nigeria
Burkina Faso
Mauritius
Guinea
Tanzania
Rwanda
Cape Verde
Chad
Ethiopia
Uganda
Mozambique
Angola
Equatorial Guinea
10
5
0
0.0
0.5
0.7
0.8
0.8
0.8
0.9
1.0
1.1
1.1
1.2
1.8
1.9
2.1
2.3
2.3
2.6
2.6
2.7
2.9
3.0
3.1
3.1
3.2
3.4
3.6
3.6
3.9
4.8
6.1
20
16.9
Growth rate of real GDP per person in the labor force, 1995-2010
(Annual, percent)
25
15
Sources: IMF staff estimates.
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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800
Real GDP (Index, Takeoff = 100)
700
600
Uganda (1986)
500
Mozambique
(1992)
400
India
Asean 5
Vietnam
(1990)
Rwanda (1995)
300
Tanzania (1995)
200
100
1
3
5
7
9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39
Years after Takeoff
Source: IMF. World Economic Outlook.
Excludes China for presentation purposes, as China's growth is much higher than that for the
other countries. ASEAN 4 = Indonesia, Malaysia, the Philippines, Singapore and Thailand.
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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1. Large agricultural sectors, with low productivity
levels compared to other sectors of the economy.
2. The formal sector accounts for a modest share of
total employment – a situation that is unlikely to
change significantly for the foreseeable future.
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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2. Structural transformation: what has happened?
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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Growth rate
Growth rate of real GDP
of real GDP per person
per capita in the labor
force
2.3
2.1
Agricultural output share
Initial
Final
Average
agricultural
productivity
growth
LICs
36.6
33.6
2.6
Of which
Mozambique
4.8
4.8
41.7
26.3
4.1
Uganda
3.6
3.9
24.6
16.0
-3.5
Ethiopia
4.3
3.6
49.4
41.0
2.0
Rwanda
3.8
3.2
45.9
39.4
3.4
Tanzania
3.2
3.1
31.8
23.9
2.9
Burkina Faso
3.1
2.9
36.3
28.6
1.8
Malawi
1.6
1.2
33.3
27.2
5.3
Kenya
0.8
0.8
29.4
24.4
1.1
Sources: IMF staff calculations based on African Department database; and World Bank,
World Development Indicators.
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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Change in
Mining
agricultural
GDP share Initial Final
Manufacturing
Construction
Initial
Initial
Final
Final
Tertiary
Initial
Final
LICs
-3.0
2.1
2.9
8.5
7.7
4.3
5.8
45.0
46.3
Of which
Mozambique
-15.3
0.5
1.2
8.5
13.1
2.8
3.6
45.8
50.7
Uganda (2000-2010)
-8.6
0.3
0.4
7.9
7.5
11.8
16.2
51.0
56.7
Ethiopia (2000-2010)
-8.3
0.5
0.5
3.6
3.4
4.2
5.7
38.1
45.9
Rwanda
-6.5
0.2
0.5
8.1
6.7
5.1
7.8
39.5
44.8
Tanzania (1998-2010)
-7.9
1.5
2.4
8.5
9.5
5.2
7.0
45.8
48.3
Burkina Faso
-7.7
0.5
2.5
13.4
9.4
4.5
5.8
43.9
49.1
Malawi (2002-2010)
-6.1
0.3
2.3
8.2
10.4
2.6
3.1
51.3
53.7
Kenya (2000-2010)
-5.0
0.4
0.4
10.3
9.9
2.9
3.2
55.1
59.8
Sources: IMF African Department database; World Bank World Development Indicators; and FAOSTAT.
*For resource-abundant countries, sector shares of non-resource GDP are reported instead, and thus do not add up to 100.
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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Average labor productivity in the agriculture sector
(Agriculture value added per worker, constant 2000 US$, Index: 1995=100)
180
East Asia and the Pacific
170
South Asia
160
Sub-Saharan Africa
150
140
130
120
110
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
100
Source: World Bank, World Development Indicators.
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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-7
Sources: Food and Agricultural Organization, FAOSTAT.
Burundi
Seychelles
Uganda
Congo, Dem. Rep.
Cameroon
Comoros
Equatorial Guinea
Madagascar
Eritrea
Namibia
Chad
Kenya
Lesotho
Mauritius
Togo
Guinea
Ghana
Zimbabwe
Burkina Faso
Côte d'Ivoire
Liberia
Swaziland
Ethiopia
Sao Tome and Principe
Central African Republic
Botswana
Nigeria
Guinea-Bissau
Benin
Gabon
Tanzania
Congo, Rep.
Sierra Leone
Rwanda
Cape Verde
Mali
Senegal
Mozambique
Angola
Zambia
Gambia, The
Malawi
Niger
South Africa
7
Growth in real value added per worker in the agricultural sector, 1995-2010
(Annual, percent)
5
3
1
-1
-3
-5
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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1. The pace of productivity growth in the agricultural sector?
2. The growth of the manufacturing sector?
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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3. Barriers to diversification and lessons from success
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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• Large infrastructure gap: transportation, energy
• High costs of exporting (transport costs)
• Small markets and barriers to intra-regional trade
• Quality of government service delivery
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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1.
2.
3.
4.
Wider use of fertilizer and better seeds
Stronger research and development efforts
Improved extension services
Improved water management (including
irrigation)
5. Improved access to markets
Source: UNDP, African Human Development Report 2012
“Towards a Food-Secure Future”
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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Cotton is the most important agricultural product:
– employing directly or indirectly almost 20 percent of the population
– annual output growth of 7% per annum during 1995-2006
– resumed rapid growth from 2009
Key policy reforms:
– realistic price-setting, with “price smoothing” arrangements and use
of forward sales contracts;
– revolving door “input” funds to mobilize seasonal bank financing
and fertilizer subsidies;
– risk pooling: loans to agricultural inputs/cooperatives
New priorities:
– Innovation (better seeds, controlled land rotation)
– Expanded irrigation to hedge against drought
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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• Services: the largest contributor to growth of GDP growth and
foreign exchange revenue in recent years
• New growth areas:
– Transport services (air and shipping),
– IT-based services (e.g. call centers; business process
outsourcing)
– Regional financial services
• Sources of competitive advantage include low-cost telecomm
services and higher education levels
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4. Looking Ahead
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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• The preponderance of economies in SSA have experienced
sustained growth since 1995 – accompanied by some degree of
structural transformation, varying across countries.
• The pace of agricultural productivity growth has been modest
in the aggregate, but there have been many strong performers
• The manufacturing sector has played a modest role in
economic expansion – a sharp contrast to the Asian model
where exports of manufactures have been key to growth
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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• Agriculture in most SSA countries remains large (in terms of
employment share) and has low average productivity levels:
raising productivity levels will be key to boosting GDP growth
and rendering it more inclusive.
• The formal sector of the economy will continue to account for
a modest share of employment over the medium-term:
policies will need to avoid a pro-formal sector bias and give
due attention to boosting productivity in the informal sector.
• Exporting manufactures is not the only route to sustained
economic growth
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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Thank You
International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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