International Monetary Fund Articles

What Drives China’s Growing Role in Africa? - Click To Read Article
China’s fast-growing economic ties with Africa are attracting considerable attention. The relationship came into the spotlight during the summit of the Forum on China-Africa Cooperation (FOCAC) in Beijing in November 2006 and the Annual Meetings of the African Development Bank (AfDB) in Shanghai in May 2007. While the expansion of trade and investment between Africa and China has been generally welcomed, concerns have been expressed about how China’s growing presence might affect African development.2 But what roles exactly has China played?

VII F. Attract Capital Flows and Encourage Foreign Participation: PROMOTING STOCK MARKET DEVELOPMENT IN AFRICA - Click To Read Article
Private capitals flows—foreign direct investment, remittances and portfolio investment and are an important for stock market development.

VII G. Strengthen Education: PROMOTING STOCK MARKET DEVELOPMENT IN AFRICA - Click To Read Article
Increasing public knowledge about the functioning of the stock market could promote the development of the stock market in Africa.

VIII. SUMMARY AND CONCLUSION: Stock Market Development in Sub-Saharan Africa - Click To Read Article
Over the past few decades, the world stock markets have surged, and emerging markets have accounted for a large amount of this boom. In Africa, new stock markets have been established in Ghana, Malawi, Swaziland, Uganda, and Zambia. The rapid development of stock markets in Africa does not mean that even the most advanced African stock markets are mature.

V. A. Markets for Exports: AID VS. COMMERCE: FACTORS INFLUENCING THE GROWING TIES - Click To Read Article
A silent feature of the recent developments in China’s economic engagement with Africa is that trade and other commercial activities have grown faster than aid flows.

V. B. African Demand for Infrastructure: AID VS. COMMERCE: FACTORS INFLUENCING THE GROWING TIES - Click To Read Article
Inadequate infrastructure is one of the top constraints to business in Africa, where energy and transportation are among the main bottlenecks to productivity growth and competitiveness.

V. C. China’s Approach to Financing: AID VS. COMMERCE: FACTORS INFLUENCING THE GROWING TIES - Click To Read Article
A pattern emerging in China’s official financial support to Africa is that it differentiates between social services and business development projects.

V. D. The Future of China-Africa Economic Relations: FACTORS INFLUENCING THE GROWING TIES - Click To Read Article
China’s growing role in Africa is not transitory. As China-Africa economic relations are increasingly based on trade and investment, and trade is based on more than just commodities, the relationship is likely to expand, along with economic growth in China and Africa. Economic relations are increasingly dominated by commercial ties rather than by aid considerations (Box 2).

V. STOCK MARKETS AND ECONOMIC GROWTH: THE MACRO CHANNEL - Click To Read Article
The results from the previous section suggest that large corporations in Africa have made considerable use of the stock market to finance their growth.

VI. A. Macroeconomic Stability: WHAT DETERMINES STOCK MARKET DEVELOPMENT IN AFRICA? - Click To Read Article
The previous section has provided enough evidence to make a convincing case that stock market development at least creates the enabling environment for a successful economic growth. The policy question, therefore, is what determines stock market development? The literature suggests that sound macroeconomic environment, well developed banking sector, transparent and accountable institutions, and shareholder protection are necessary preconditions for the efficient functioning of stock markets in Africa.

VI. B. Banking Sector Development: WHAT DETERMINES STOCK MARKET DEVELOPMENT IN AFRICA? - Click To Read Article
The development of the banking sector is important for stock market development in Africa.

VI. C. Institutional Quality: WHAT DETERMINES STOCK MARKET DEVELOPMENT IN AFRICA? - Click To Read Article
Institutional quality is important for stock market development because efficient and accountable institutions tend broaden appeal and confidence in equity investment.

VI. D. Shareholder Protection: WHAT DETERMINES STOCK MARKET DEVELOPMENT IN AFRICA? - Click To Read Article
Another key determinant of stock market development is the level of shareholder protection in publicly traded companies, as stipulated in securities or company laws (Shleifer and Vishny, 1997).

VII. A. Automation: PROMOTING STOCK MARKET DEVELOPMENT IN AFRICA - Click To Read Article
The results from the previous sections show that African stock markets are small, illiquid, with infrastructural bottlenecks and weak regulatory institutions. Despite these problems, stock markets in Africa have helped in the financing of the growth of large corporations but there is little evidence of broader economic benefits. How do you make the stock market more beneficial to African countries?

VII. B. Demutualization: PROMOTING STOCK MARKET DEVELOPMENT IN AFRICA - Click To Read Article
Demutualization can be defined as a change in the legal status, structure and governance of an exchange from a non-profit, protected interest one to a profit oriented.

VII C Regional Integration :PROMOTING STOCK MARKET DEVELOPMENT IN AFRICA - Click To Read Article
Another proposed solution to problems faced by African stock markets is to integrate stock exchanges.

VII D. Promote Institutional Investors: PROMOTING STOCK MARKET DEVELOPMENT IN AFRICA - Click To Read Article
The involvement of institutional investors in African exchanges must be pursued vigorously. Institutional investors often are at the forefront in promoting efficient market practices and financial innovation.

VII E. Strengthen Regulation and Supervision: PROMOTING STOCK MARKET DEVELOPMENT IN AFRICA - Click To Read Article
Regulation and supervision of the financial system play a great role in determining both its stability and the extent of services provided.

Sub-Saharan Africa Learning What Works - Click To Read Article
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.

Social Safety Nets and Poverty and Social Impact Analysis - Click To Read Article
Certain government expenditures, such as temporary income transfers or public works programs, can help form social safety nets to protect the poor from the short-term adverse effects of reforms.

Revenue Composition and Growth - Click To Read Article
An efficient and fair tax system is an important component of a progrowth strategy. While foreign aid can make an important contribution, the main source of finance for a country’s public expenditure must be its own tax revenue.

Public Spending on Education and Health Care and the MDGs - Click To Read Article
Government expenditure policy will have a key role in determining whether countries meet the MDGs. In many countries, the government will have a central role in ensuring that its citizens, especially the poor, have access to education and health services by either providing these services itself or financing private sector provision.

References: Fiscal Dimensions of Sustainable Development - Click To Read Article
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References: What Drives China’s Growing Role in Africa? - Click To Read Article
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References: Stock Market Development in Sub-Saharan Africa - Click To Read Article
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Policy Implications - Click To Read Article
The empirical work undertaken highlights a number of key policy-related and conventional variables that have significantly affected the growth performance of sub-Saharan Africa during 1981–97. To a large extent, it has also shown that the positive evolution of these variables has played an important role in the economic recovery of the region during 1995–97.

Private Chinese Direct Investment in Africa: Some Examples - Click To Read Article
The examples below are based on Naidu (2007) and a Chinese government website (http://preview.english.mofcom.gov.cn). The examples are by no means comprehensive; nor are they necessarily consistent with official statistics. Nevertheless, they suggest the scope and scale of private Chinese investment in Africa.

Moving Forward: Developing Countries - Click To Read Article
There are many economic, social, and environmental challenges along the path to sustainable development, and there is no panacea to address them all. Rather, accelerated development will require progress in multiple policy areas, with the right policy mix and focus varying from country to country. Countries may also need to make difficult choices regarding trade-offs between competing policy objectives. Achieving more sustainable development will thus require a concerted effort from developing countries, the international community, and the international financial institutions.

Moving Forward: International Community - Click To Read Article
Freer access to industrial country markets and greater and more predictable aid are needed to support sustainable development (included under Goal 8 of the MDGs).

Moving Forward: International Financial Institutions - Click To Read Article
The international financial institutions (IFIs) need to continue to provide financial support to countries pursuing sustainable growth and poverty-reduction strategies.

Many Countries Fall Short - Click To Read Article
There is substantial scope to make budgets more growth oriented.

IV. A. Private Traders: THE ROLE OF THE PRIVATE SECTOR - Click To Read Article
Mirroring its contributions to domestic economic activity, China’s private sector is in the forefront of the country’s external trade and investment expansion. However, its role in China-Africa economic relations has been much less appreciated, in part because there are no reliable data. Understanding China’s private enterprises (including those that are joint ventures and collectively owned) and their activities in Africa is important for assessing the evolution of trade and capital flows between China and Africa.

IV. B. Private Investors: THE ROLE OF THE PRIVATE SECTOR - Click To Read Article
While the deals of Chinese state-owned oil companies such as CNPC, CNOOC, and SINOPEC in Angola, Equatorial Guinea, Nigeria, and Sudan caught headlines, millions of U.S. dollars were being invested by Chinese private enterprises in Africa with little fanfare (Box 1). These investments are not confined to textiles and mining. They cover a variety of services from agriculture to processing and manufacturing.

IV. C. Private Contractors and Builders: THE ROLE OF THE PRIVATE SECTOR - Click To Read Article
Private Chinese companies compete actively for construction contracts in Africa. When Chinese companies first entered the market, they tended to be large and state-owned (e.g., China Overseas Engineering Corporation, China Roads and Bridges Corporation, China Railway Construction Corporation, and Harbin Power Corporation).

IV. THE STOCK MARKET AND THE FINANCING OF CORPORATE GROWTH IN AFRICA - Click To Read Article
Having looked at the trends and characteristics of stock markets in Africa, this section examines the contributions of the stock markets to the financing of corporate growth in Africa.

Introduction: Fiscal Dimensions of Sustainable Development - Click To Read Article
One of the challenges facing the international community is to achieve sustainable development. Sustainable development has three pillars— economic development, social development, and environmental protection.

Introduction: Stock Market Development in Sub-Saharan Africa - Click To Read Article
This paper examines the economic importance and the future of African stock markets. It seeks to shed light on the controversial link between stock market and economic growth— from both corporate finance and macroeconomic perspectives. It also discusses policy options for promoting the development of the stock market in Africa.

II.a Merchandise Trade: TRADE AND CAPITAL FLOWS BETWEEN CHINA AND AFRICA - Click To Read Article
This section pulls together the information available and attempts to quantify, to the extent possible, China’s economic engagement with Africa.3 Emerging from the review is a recognition of China’s multifaceted influence: as market for Africa’s exports, donor, financer and investor, and contactor and builder. While official financial and technical assistance predominated in the past, commercial activities, which have increased rapidly in the last few years, are now dominant in financial terms.

II.B. Official Development Assistance and Debt Relief: TRADE AND CAPITAL FLOWS BETWEEN CHINA AND AFRICA - Click To Read Article
China started providing aid to Africa in 1956. By May 2006, it had contributed a total of 44.4 billion yuan (US$5.7 billion) for more than 800 aid projects, according to a researcher at the Chinese Academy of Social Science (He, 2006).

II.C. Other Debt-Creating Financial Flows: TRADE AND CAPITAL FLOWS BETWEEN CHINA AND AFRICA - Click To Read Article
Aside from intergovernmental loans, there are other debt-creating financial flows from China to Africa, mainly trade credits, some of which are medium- and long-term.13 Trade credit may be provided by suppliers or financial institutions. Of these the Export-Import Bank of China (China Exim Bank) is the most active. Its total export credit and international guarantee business increased to US$19.8 billion in 2006, from US$15.2 billion in 2005. Though China Exim Bank does not report activities by region, there is clear evidence of significant and expanding operations in Africa.

II.D. Foreign Direct Investment: TRADE AND CAPITAL FLOWS BETWEEN CHINA AND AFRICA - Click To Read Article
China’s direct investment in Africa, as reported by the National Bureau of Statistics of China, amounted to US$392 million in 2005, up from US$317 million in 2004. Data from other sources show significantly higher figures: in 2004, Chinese FDI was estimated to be more than US$900 million; total FDI in Africa was US$15 billion (Table 2). China’s Ministry of Commerce puts China’s direct investment to Africa for 2000–06 at US$6.6 billion. Among the 800 Chinese enterprises investing in Africa, only about 100 are state-owned. The rest are private businesses with interests ranging from trade, manufacturing and processing, services, and communications to agriculture and natural resource development.

II.E. Contract Labor and Other Services: TRADE AND CAPITAL FLOWS BETWEEN CHINA AND AFRICA - Click To Read Article
Africa is an important market for Chinese enterprises that contract for construction and engineering projects (roads, bridges, schools, shopping centers, housing and office buildings, water conservancy, and power plants).

III. A. China’s African Policy and New Commitments for 2007–09: THE ROLE OF CHINA’S PUBLIC SECTOR - Click To Read Article
As China’s economic engagement with Africa has become more sophisticated, involving more and different players, it has become necessary to look beyond the central government to understand the driving forces behind recent developments. This chapter pays particularly better attention to China’s state financial institutions.

III. B. State Financial Institutions: THE ROLE OF CHINA’S PUBLIC SECTOR - Click To Read Article
Among the large number of state-owned financial institutions, China Exim Bank and China Development Bank (CDB) are the two primary agencies implementing China’s new pledge to Africa; the former is responsible for the preferential credit component (US$5 billion) and the latter for the FDI support fund (US$5 billion).

III. C. Commercial Policies: THE ROLE OF CHINA’S PUBLIC SECTOR - Click To Read Article
Market access and trade policy are important in fostering China-Africa trade. The Chinese government in January 2005 implemented the Special Preferential Tariff Treatment (SPTT), which removes the tariff from some 190 items exported to China from 25 of the least developed countries in Africa.

II. STOCK MARKET AND ECONOMIC GROWTH: THEORETICAL AND ANALYTICAL ISSUES - Click To Read Article
In principle, the stock market is expected to accelerate economic growth by providing a boost to domestic savings and increasing the quantity and the quality of investment (Singh, 1997).

III. STOCK MARKET DEVELOPMENT IN SUB SAHARAN AFRICA:TRENDS AND CHARACTERISTICS - Click To Read Article
There has been a considerable development in the African capital markets since the early 1990s. Prior to 1989, there were just five stock markets in sub-Saharan Africa and three in North Africa.

Governance and Sustainable Development - Click To Read Article
Poor governance poses a number of obstacles to human development.

Fiscal Balances and Growth - Click To Read Article
A prudent, sustainable fiscal position promotes economic growth.

Fiscal Dimensions of Sustainable Development - Click To Read Article
The achievement of sustainable development—combining economic development, social development, and environmental protection—is a key challenge facing the international community. To this end, progress will be needed in a number of different policy areas, with the right mix of policies varying from country to country.

Fiscal Policy, Incentives, and Growth - Click To Read Article
Fiscal policy can also affect growth through its effects on the incentives faced by individuals and firms.

Fiscal Policy for a Sustainable Environment - Click To Read Article
In both developed and developing countries, fiscal policy has an important role to play in assuring sustainable use of natural resources and safeguarding the environment. This applies to both the tax and spending sides of the government’s budget.

Financing Corporate Growth in Ghana: The Role of the Stock Market - Click To Read Article
We examine how listed corporations in Ghana finance their growth and to what extent do they rely on external finance relative to internal finance. As companies expand through the acquisition of assets they have choices to make in how that growth is financed. Past earnings can be retained as a source of internal finance or be paid to shareholders as dividends. External sources of finance include both the issuance of new equity (external equity) and various debts instruments (external debt).

Expenditure Composition and Growth - Click To Read Article
Allocating a higher share of public spending to physical and human capital formation can also promote growth.

Economic Growth, Sustainable Development, and the Millennium Development Goals (MDGs) - Click To Read Article
Economic growth is essential for sustainable development and improving social outcomes.4 Growth usually—but not always—benefits the poor; in about 90 percent of the cases in which countries have experienced per capita GDP growth of at least 2 percent per year over a five-year period, the poor also experienced rising real incomes.

Determinants of Growth in Sub-Saharan Africa - Click To Read Article
Several underlying factors can affect the rate of output change. Key among these are the rate of investment, increase in the size of the workforce, and changes in economic policies.

Conclusions - Promoting Growth in Sub-Saharan Africa: Learning What Works - Click To Read Article
Both domestic and external factors contributed to sub-Saharan Africa's poor overall economic performance in the 1980s and early 1990s. Key constraints to growth included inappropriate economic policies, inadequate human capital development, and low levels of private investment. But for the first time in a generation, there is evidence of economic progress in an increasing number of countries in the region.

CONCLUSION: What Drives China’s Growing Role in Africa? - Click To Read Article
This paper intends to provide an assessment, based on fractional information, of China’s economic involvement in Africa and to identify the forces shaping burgeoning China-Africa economic relations. The study is undertaken against the background of a rapidly changing landscape of international trade and finance that has eclipsed traditional aid flows to middleincome countries, making Africa ever more central for development finance.

5.0 Conclusions: Microfinance in Africa - Experience and Lessons from Selected African Countries - Click To Read Article
In sub-Saharan Africa, there is ample evidence that the poor, particularly those in the rural sector, value both deposit and credit facilities. The existence and growth of cooperative banking and combined savings and credit institutions in the microfinance sector in sub- Saharan Africa reflects the growing demand for both savings and credit facilities.

6.0 References: Microfinance in Africa - Experience and Lessons from Selected African Countries - Click To Read Article
References

Adjustment and Recovery During 1995–97 - Click To Read Article
To what extent did the variables highlighted above play an important role in explaining the more recent economic recovery? To answer this question, IMF researchers looked at the experiences of a sample of 46 countries during 1995–97.

1.0 Introduction: Microfinance in Africa - Experience and Lessons from Selected African Countries - Click To Read Article
Small enterprises and most of the poor population in sub-Saharan Africa have very limited access to deposit and credit facilities and other financial services provided by formal financial institutions. For example, in Ghana and Tanzania, only about 5–6 percent of the population has access to the banking sector. This lack of access to financial services from the formal financial system is quite striking, when one considers that in many African countries the poor represent the largest share of the population and that the informal sector is an important part of the economy.

2.0 Deposit Collection and Credit Extension: Microfinance in Africa - Experience and Lessons from Selected African Countries - Click To Read Article
The importance of deposit collection in the development of microfinance services has arisen from the fact that the poor value both deposit and lending services

2.1 The CommunityBased Approach in MFI Development: Microfinance in Africa - Experience and Lessons from Selected African Countries - Click To Read Article
An approach commonly followed in African countries has been to rely on local communities to support the development of MFIs, outside the formal banking sector.

2.2 Formalizing Informal Methods of Financial Intermediation: Microfinance in Africa - Experience and Lessons from Selected African Countries - Click To Read Article
Traditional informal systems for the collection of savings and for lending have provided substantial insight for the operations of licensed MFIs in African countries.

2.3 Looking for Financial Sustainability: Microfinance in Africa - Experience and Lessons from Selected African Countries - Click To Read Article
The technologies described above, based on the formalization of informal techniques and on group-based instruments, have been used to promote financial sustainability of MFIs. They have the advantage of addressing a number of problems faced by financial institutions when operating with the poor or with the informal sector, for example, asymmetry of information, lack of collateral, and difficult enforcement of legal rights.

3.1 Links Between the Operations of MFIs and Banks, Donors and NGOs: Microfinance in Africa - Experience and Lessons from Selected African Countries - Click To Read Article
A. Developing Complementarities between MFIs and Banks

3.2 The Roles of Donors and NGOs: Microfinance in Africa Experience and Lessons from Selected African Countries - Click To Read Article
Donors and NGOs have generally provided support through two main channels: domestic NGOs or donor-managed microfinance projects, and microfinance institutions that function more or less like leasing companies (receiving wholesale external resources and lending to clients).

4.0 The Role of Governments: Microfinance in Africa - Experience and Lessons from Selected African Countries - Click To Read Article
In several African countries—for example, Ghana, Guinea, Tanzania and Uganda— governments have in the past relied on state-owned banks to extend rural credit and microfinance services.

4.1 Objectives and Coverage of the Regulatory Framework: Microfinance in Africa - Experience and Lessons from Selected African Countries - Click To Read Article
Overall, the rationale for microfinance regulation is to create a healthy environment for microfinance activities while not stifling the growth of the sector by imposing undue requirements.

4.2 Minimum Regulatory Requirements and Supervision Practices: Microfinance in Africa - Experience and Lessons from Selected African Countries - Click To Read Article
The principal regulatory requirements are licensing, information transmission requirements, and prudential norms. These should be used in line with the objectives of the regulatory design discussed above. Reviewing the experience of four countries shows a similar gradual approach to licensing requirements: newer and smaller institutions are encouraged to apply for licensing without much regulatory requirement while larger institutions are regulated and supervised more closely and strictly.

4.3 Accompanying Measures: Microfinance in Africa - Experience and Lessons from Selected African Countries - Click To Read Article
The capacity of MFIs has an important bearing on the compliance with regulatory requirements. It is therefore important to put in place appropriate measures in the following areas:


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