On the cover of Objectif Afrique: the IMF’s regional economic outlook for Sub-Saharan Africa in 2023 and 2023
The IMF Regional Economic Outlook for Sub-Saharan Africa in 2023 and 2024
The regional economic outlook for sub-Saharan Africa published by the IMF in April 2023 points to a shortage of funding in the region. Interest rates have risen, while there are no more bond issues on the international markets and the currencies of the zone have depreciated sharply against the dollar, increasing the debt burden. On the other hand, the consequences of Russia’s invasion of Ukraine are keeping inflation high.
Borrowing costs for African economies have risen sharply as the region is experiencing some of the highest levels of public debt and inflation in decades. The IMF considers under these conditions that the growth in the zone will experience a further slowdown, from 3.9% in 2022 to 3.6% in 2023.
The drying up of funding is compromising the ability of several countries in the area to remedy the consequences left by the pandemic and to meet the basic needs of their populations. GDP per capita has still not returned to its pre-pandemic level and 132 million people were in acute food insecurity in 2022.
On the other hand, the IMF estimates that growth should pick up again in 2024 for 4/5th sub-Saharan African countries and stand at 4.2% for the region subject to a return to normal supply chains, a decline in global inflation and a drop in crude oil prices. However, significant downside risks could degrade these forecasts. A bearish global scenario could see global real GDP growth 1.8 percentage points below the baseline scenario level for 2023 (1.4 percentage points below for 2024). Such a slowdown would be accompanied by disinflationary effects and a slowdown in world trade which would affect African economies.
The IMF identifies four main priorities for public action which are: i) a fiscal policy taking into account the tightening of financial conditions, ii) a monetary policy responding to high inflation, iii) exchange rate management combating depreciation pressures and iv) a necessary response to the challenges of climate change without sacrificing the basic needs of populations.
Sub-Saharan Africa : real GDP growth, 2023
- South Africa – InvestSA exceeds the target of ZAR 1,200 billion (€60 billion) of investments over five years
The Conference on Investment in South Africa, InvestSA, which was held on April 13, 2023 in Johannesburg, enabled President Ramaphosa to exceed his target of ZAR 1,200 billion (EUR 60 billion) over five years and to present a new objective of 2000 billion ZAR (100 billion EUR) of investment over the next five years. The four previous conferences had made it possible to reach 1,140 billion ZAR (57 billion EUR) of investments, nearly 70% of which are either completed or in progress. During this 5th conference, public and private investors pledged to finance more than 400 billion additional ZAR Among the announcements, we can note 105 billion ZAR (5 billion EUR) from the green energy supplier Hive Energy, 60 billion ZAR ( 3 billion EUR) from Vodacom, including 16 billion ZAR for the development of energies with independent electricity producers, 29 billion ZAR (1.5 billion EUR) from the mining company Anglo American and 15.5 billion ZAR (800 million EUR) from the brewer Heineken.
President Ramaphosa reaffirmed that solving the energy crisis remains the country’s priority. He announced measures to facilitate access to visas for skilled labour, as well as the creation of a national logistics crisis committee. Finally, he underlined the efforts made to fight against crime and corruption.
- Burkina Faso – IMF approves emergency food financing of USD 80.8m
In a statement published on March 27, 2023, the Executive Board of the IMF announced the approval of a loan of 80.7 M USD (60.2 M SDR, or 50% of quota) under the food shock window the Rapid Credit Facility (RCF) for Burkina Faso. As a reminder, this emergency financing aims to help the country meet the urgent needs of its balance of payments and to mitigate the impact of the food shock on the most vulnerable (about 16% of the population would be in a situation of food insecurity acute). The country is facing serious economic difficulties with a budget deficit that has reached 10.2% of GDP and growth that has slowed to 2.5% in 2022.
- Ivory Coast – Increase in the amount allocated under the future program with the IMF
In a statement dated April 5, 2023, IMF staff announced an increase in the amount allocated under the Extended Credit Facility (ECF) and the Extended Credit Facility (MEDC) to USD 3.5 billion, i.e. 400% of the quota to support the economic program of Côte d ‘Ivory. This modification follows a communication made on March 15, 2023, of financing initially planned for USD 2.6 billion. As a reminder, the program will aim, among other things, to: (i) strengthen revenue mobilization in order to create fiscal space for social spending, security and investments; (ii) encourage the promotion of inclusive growth driven by the private sector.
- Democratic Republic of Congo – Launch of the construction works of the port of Banana
The construction works of the deep water port of Banana, in the province of Kongo Central, could start soon. The announcement was made by the President of the Republic, Félix Antoine Tshisekedi, during the 90th meeting of the Council of Ministers on Friday March 10, 2023. Progress was reportedly made within the framework of the collaboration agreement granting a public service on the port of Banana. The first stone for the construction of the latter, carried out by DP World, a company from the United Arab Emirates, was laid in January 2022. The project comprises four phases of work, the overall investment cost of which is estimated at 1.2 USD billion. The first phase foresees the construction of a 600 square meter quay and 25 hectares of storage space at a cost of 350 M USD.
- Senegal – France, 1er country’s bilateral donor
On the occasion of the joint review of the partnership framework between the State of Senegal and the French Development Agency (AFD), held on March 23, 2023, the Ministry of Economy, Planning and Cooperation has indicated that France’s overall contribution over the 2019-2023 period was estimated at EUR 1.5 billion, which makes it the country’s leading bilateral donor. This partnership between the two countries covers priority areas on the agenda of Team France such as health, education, vocational training, basic infrastructure, water, electricity, or access to digital. For the years to come, the Senegalese government confirms that it wants to continue its partnership with AFD by focusing as a priority on financing the response to the main social challenges.
- Zimbabwe – Hydrogène de France develops the first green hydrogen power plant in the country
Hydrogène de France (HDF Energy) signed, on March 23, 2023, an agreement with the national electrician Zimbabwe Electricity Transmission and Distribution Company (ZETDC) for the development of a green hydrogen power plant – the first in the country. The Middle Sabi Renewstable project, developed in the Chipinge district of Manicaland province, within the Chipangayi Renewable Energy Technology Park (RETPark), should produce, by 2024, nearly 178 GWh per year, i.e. the needs of 220 000 inhabitants. This project is part of the Zimbabwean “Vision 2030” strategy, in order to encourage the development by independent electricity producers of more than 1,000 MW of renewable projects, while the country is facing a significant energy deficit.