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Sub-Saharan Africa Learning What Works

Guest post by: International Monetary Fund

Article Overview: Africa is the world's poorest continent. But for the first time in a generation—amid all the bad news—there is hope for change. An increasing number of countries in sub-Saharan Africa are showing signs of economic progress, reflecting the implementation of better economic policies and structural reforms.

Sub-Saharan Africa Learning What Works

Africa is the world's poorest continent. But for the first time in a generation—amid all the bad news—there is hope for change. An increasing number of countries in sub-Saharan Africa are showing signs of economic progress, reflecting the implementation of better economic policies and structural reforms. These countries have successfully cut domestic and external financial imbalances, enhancing economic efficiency. They have given greater priority to public spending on health care, education, and other basic social services. In addition, there has been a growing movement toward more open and participatory forms of government that encourage cooperation between the state and civil society.

Nonetheless, the economic and social situation in sub-Saharan Africa remains fragile and vulnerable to domestic and external shocks, and the region has a long way to go to make up for the ground lost over the past two decades. Despite some upturn in economic growth rates, poverty is still widespread and in many parts of the continent extremely acute. Investment remains subdued, limiting efforts to diversify economic structures and boost growth. Furthermore, a number of countries have only recently emerged from civil wars that have severely set back their development efforts while, sadly, new armed conflicts have erupted in other parts of the continent. These conflicts and other adverse factors, notably poor weather conditions and a deterioration in the terms of trade, have led to some loss in economic momentum in the region over the past two years.

Sub-Saharan African countries therefore face major challenges: to raise growth and reduce poverty, and to integrate themselves into the world economy. Economic growth rates are still not high enough to make a real dent in the pervasive poverty and enable these countries to catch up with other developing nations. What is needed is a sustained and substantial increase in real per capita GDP growth rates in these countries, coupled with significant improvements in social conditions.

This pamphlet presents the results of an empirical analysis of the factors affecting economic growth in sub-Saharan Africa, using data for the period 1981–97 and a sample of 32 countries. The empirical work involved the estimation of a growth equation to identify the key determinants of per capita real GDP growth, including economic variables that reflect the influence of economic policy changes as well as other explanatory factors. On the basis of this analysis and a review of the evidence of economic recovery during 1995–97, using a much larger sample of countries, the pamphlet attempts to determine which policies appear to have been the most effective in terms of increasing economic growth and suggests the key elements of a policy framework that could promote sustainable economic growth and reduce poverty in sub-Saharan Africa.

Promoting Growth in Sub-Saharan Africa: Learning What Works
Anupam Basu, Evangelos A. Calamitsis, Dhaneshwar Ghura
©2000 International Monetary Fund
August 2000

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Article Tags: civil wars, countries in sub saharan africa, economic efficiency, economic growth rates, economic momentum, economic progress, economic structures, external shocks, forms of government, gdp growth rates, health care education, number of countries, per capita gdp, pervasive poverty, poor weather conditions, poorest continent, public spending, social situation, sub saharan africa, world economy



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