structural transformation in sub-saharan africa regional economic outlook: sub-saharan africa
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Structural Transformation in Sub-Saharan Africa Regional Economic Outlook: Sub-Saharan Africa. African Department International Monetary Fund November 2012. Structure of the presentation. Introduction and Context Structural transformation: what has happened? - PowerPoint PPT PresentationTRANSCRIPT
Structural Transformation in Sub-Saharan Africa
Regional Economic Outlook: Sub-Saharan Africa
African DepartmentInternational Monetary Fund
November 2012
Structure of the presentation
1. Introduction and Context
2. Structural transformation: what has happened?
3. Barriers to diversification; lessons from success
4. Looking Ahead2International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
Introduction
3International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
• 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?
SSA countries as an aggregate experienced solid growth since the mid 1990s
4International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
90100110120130140150160170180190200210220230240250
1995 1997 1999 2001 2003 2005 2007 2009 2011
WorldSub-Saharan AfricaLow-income Countries, excluding Fragile (SSA)
Real GDP, 1995-2011 (Index 1995=100)
Source: IMF, World Economic Outlook.
-4.7 -2.7 -1.9 -1.4
-1.1
-1.0
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3.1
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3.6 3.9 4.8 6.
116
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Sources: IMF staff estimates.
Marked differences across SSA countries in output and productivity growth rates
5International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
Growth rate of real GDP per person in the labor force, 1995-2010(Annual, percent)
Several countries have experienced something of a take-off over the period
6International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
India Asean 5
Vietnam (1990)
Uganda (1986)
Mozambique (1992)
Rwanda (1995)
100
200
300
400
500
600
700
800
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39
Real
GDP (
Index
, Tak
eoff =
100)
Years after TakeoffSource: IMF. World Economic Outlook.Source: IMF. World Economic Outlook.
Tanzania (1995)
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.
SSA Low Income Countries: Key Stylized Features
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.
7International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
Structure of the presentation
2. Structural transformation: what has happened?
8International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
Low income countries : falling agricultural share, rising labor productivity
9International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
Initial Final
LICs 2.3 2.1 36.6 33.6 2.6Of which
Mozambique 4.8 4.8 41.7 26.3 4.1Uganda 3.6 3.9 24.6 16.0 -3.5Ethiopia 4.3 3.6 49.4 41.0 2.0Rwanda 3.8 3.2 45.9 39.4 3.4Tanzania 3.2 3.1 31.8 23.9 2.9Burkina Faso 3.1 2.9 36.3 28.6 1.8Malawi 1.6 1.2 33.3 27.2 5.3Kenya 0.8 0.8 29.4 24.4 1.1Sources: IMF staff calculations based on African Department database; and World Bank, World Development Indicators.
Agricultural output shareGrowth rate of real GDP per capita
Growth rate of real GDP per person in the labor
force
Average agricultural productivity
growth
Low income countries : resources moving into construction and services
10International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
Initial Final Initial Final Initial Final Initial Final
LICs -3.0 2.1 2.9 8.5 7.7 4.3 5.8 45.0 46.3Of which
Mozambique -15.3 0.5 1.2 8.5 13.1 2.8 3.6 45.8 50.7Uganda (2000-2010) -8.6 0.3 0.4 7.9 7.5 11.8 16.2 51.0 56.7Ethiopia (2000-2010) -8.3 0.5 0.5 3.6 3.4 4.2 5.7 38.1 45.9Rwanda -6.5 0.2 0.5 8.1 6.7 5.1 7.8 39.5 44.8Tanzania (1998-2010) -7.9 1.5 2.4 8.5 9.5 5.2 7.0 45.8 48.3Burkina Faso -7.7 0.5 2.5 13.4 9.4 4.5 5.8 43.9 49.1Malawi (2002-2010) -6.1 0.3 2.3 8.2 10.4 2.6 3.1 51.3 53.7Kenya (2000-2010) -5.0 0.4 0.4 10.3 9.9 2.9 3.2 55.1 59.8Sources: 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.
Change in agricultural GDP share
Mining Manufacturing Construction Tertiary
SSA: agricultural productivity growth has been disappointing in the aggregate
11International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
Average labor productivity in the agriculture sector(Agriculture value added per worker, constant 2000 US$, Index: 1995=100)
Source: World Bank, World Development Indicators.
100
110
120
130
140
150
160
170
180
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
East Asia and the Pacific
South Asia
Sub-Saharan Africa
Sectoral Perspectives: agricultural labor productivity growth across countries in SSA
12International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
Growth in real value added per worker in the agricultural sector, 1995-2010(Annual, percent)
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Sources: Food and Agricultural Organization, FAOSTAT.
Structural change in SSA: what is missing?
13International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
1. The pace of productivity growth in the agricultural sector?
2. The growth of the manufacturing sector?
Structure of the presentation
3. Barriers to diversification and lessons from success
14International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
Some impediments to structural transformation in SSA
15International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
• Large infrastructure gap: transportation, energy
• High costs of exporting (transport costs)
• Small markets and barriers to intra-regional trade
• Quality of government service delivery
Boosting agricultural sector productivity
1. Wider use of fertilizer and better seeds
2. Stronger research and development efforts
3. Improved extension services4. Improved water management
(including irrigation)5. Improved access to markets
Source: UNDP, African Human Development Report 2012
“Towards a Food-Secure Future”16International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
Burkina Faso: agriculture-led growth
17International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
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
Kenya: boosting service sector exports
• 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
18
Structure of the presentation
4. Looking Ahead
19International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
Looking back:
20International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
• 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
Looking Ahead:
21International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012
• 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
Thank You
22International Monetary Fund, Regional Economic Outlook for sub-Saharan Africa, October 2012