African Economic Outlook

OECD Development Centre

1999-1029 (online)
1995-3909 (print)
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This fact-filled annual reference book brings the reader the latest available economic information for most of the economies of Africa. Drawing on the expertise of both the African Development Bank and the OECD, it opens with an overview that examines the international environment, macroeconomic performance, progress towards attaining the Millennium Development Goals, and governance and political issues. The second part provides individual country reports for 30 countries. Each country report provides an assessment of recent economic performance, economic projections, an examination of structural issues, and a discussion of the political and social context. The statistical annex presents 24 tables comparing economic and social variables across all the countries of Africa.

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African Economic Outlook 2012

African Economic Outlook 2012

Promoting Youth Employment You do not have access to this content

OECD Development Centre

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28 May 2012
9789264176119 (PDF) ;9789264176096(print)

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This 11th edition of the African Economic Outlook reviews recent economic, social and political developments and the short-term likely evolutions of 53 African countries. This year’s edition will for the first time cover Eritrea and South Sudan. The focus of the 2012 AEO is the promotion of youth employment in Africa, presenting a comprehensive review of both challenges and opportunities Africa faces in providing its young population with sufficient and decent jobs.

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  • Foreword & Acnowledgements
    This 11th edition of the African Economic Outlook (AEO) is marked by a "twin-track" performance: while the North African region gradually recovers from the political events that affected several countries, sub-Saharan Africa is growing strongly. The continent is well placed to press ahead with structural reforms and lay the groundwork for strong and sustainable growth in the medium term.
  • Executive Summary
    After an initial rebound from the 2009 world economic crisis, Africa’s economy was undermined last year by the Arab uprisings. The continent’s growth fell back from 5% in 2010 to 3.4% in 2011.
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  • Expand / Collapse Hide / Show all Abstracts Africa’s Performance and Prospects

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    • Macroeconomic Prospects
      Africa’s economy should see a rebound in 2012 after popular uprisings and political unrest brought overall economic growth down to 3.4% in 2011. The continent is recovering from the global crisis of 2009 and this should be sustained even though a new global slowdown is constraining Africa’s growth. With the gradual recovery of North African economies, Africa´s average growth is expected to rebound to 4.5% in 2012 and to 4.8% in 2013. The international environment will remain difficult in the near term.
    • Domestic and External Financial Flows
      External and tax revenue resources available for development in Africa have tripled over the past decade and have never been so high. In 2011, external finances recovered to pre-crisis levels with foreign investment (FDI), official development assistance (ODA) and remittances estimated at USD 152.2 billion. As a share of Africa’s gross domestic product, external flows doubled from 6.8% in 2000 to 12.3% in 2006, but were still down at an estimated 8.2% in 2011.
    • Trade Policies and Regional Integration in Africa
      The trend towards concluding regional and bilateral trade agreements to promote trade and development has gained momentum worldwide. Participation in some form of Preferential Trade Agreement (PTA) has increased within the last 20 years, with the number of active PTAs rising from 70 in 1990 to almost 300 in 2011. African countries have concluded a considerable number of agreements among themselves (24 PTAs in force) but there is no evidence of a growing number of PTAs between Africa and its emerging partners in the Americas or in Asia (although four PTAs were concluded with West Asia and three with East Asia in 2010). Some African countries belonging to the group of African, Caribbean and Pacific (ACP) countries have signed Economic Partnership Agreements (EPAs) with the European Union (EU), making Europe the region outside Africa with the highest number of agreements with African countries (16) (WTO, 2011).
    • Human Development
      Improving quality of life in sub-Saharan Africa remains a daily struggle. The region again had the lowest aggregate level of human development indicators — life expectancy, education and standard of living — in 2011 but it had the second fastest annual increase over the period 2000-2011.
    • Political and Economic Governance
      The world will remember 2011 as the year of the "Arab Spring" when people in North Africa rose up against political oppression, social inequality and a lack of economic opportunity. The revolts against autocratic regimes have empowered democratically-elected Islamist governments and parliaments in Egypt, Tunisia and Morocco. These new governments must now tackle the root causes of the revolutions to appease legitimate, but high expectations in the short run, while providing citizens with a real democratic alternative in the long run.
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  • Expand / Collapse Hide / Show all Abstracts Special Theme: Promoting Youth Employment

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    • Promoting Youth Employment
      As successive editions of the African Economic Outlook (AEO) have shown, Africa’s rate of growth has outperformed the global rate over the last decade. Yet high growth is not sufficient to guarantee productive employment for all. Large sections of the population, and particularly the young, can be left behind and become frustrated. In the absence of a political process allowing them to express their views and produce policy changes, instability can result, as it did last year in a number of North African countries. This is an opportune time to reset the policy agenda of African governments towards an inclusive, employment-creating and sustainable growth strategy, aimed particularly at addressing the special needs of the young.
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  • Expand / Collapse Hide / Show all Abstracts Country Notes

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    • Country Snapshots
    • Algeria
      The Algerian economy grew by 2.6% in 2011. The rate of inflation was 3.9% and the budget deficit 3% of gross domestic product (GDP). The current-account surplus is estimated at 9.3% of GDP and at the end of December 2011, official reserves were put at USD 182.2 billion. If hydrocarbons are excluded, growth has been estimated at 4.8%. Production from the oil and gas sector in terms of volume, continues to decline, dropping from 43.2 million tonnes to 32 million tonnes between 2007 and 2011. Nevertheless, the sector accounted for 98% of the total volume of exports in 2011 and 70% of budgetary receipts, or USD 71.4 billion. The agricultural sector and services recorded growth of 10% and 5.3%, respectively. Fiscal policy remained expansionist and made it possible to maintain the pace of public investment and to contain the strong demand for jobs and housing. Growth of 3.1% is expected in 2012, rising to 4.2% in 2013.
    • Angola
      Angola is Africa’s second largest oil producer, after Nigeria, producing over 1.9 million barrels per day (bpd). Since the global economic slowdown and the acute oil price drop that triggered domestic fiscal and balance of payments shocks, the country has been gradually recovering. Its GDP growth slightly increased from 3.4% in 2010 to an estimated 3.5% in 2011, driven mainly by rising oil prices and strong non-oil sector growth of 7.7% which helped to offset production problems in the oil sector. The country is expected to record GDP growth rates of 8.2% and 7.1% in 2012 and 2013 respectively. This will be driven mainly by the start of the USD 9 billion Liquefied Natural Gas (LNG) project and the expected increase of oil production to over 2 million bpd. Inflationary pressures remained high at 14.5% in 2010 and an estimated rate of 13.5% in 2011 mainly as a result of strong growth in domestic demand. However, this is projected to fall to 10.0% and 9.4% in 2012 and 2013 respectively.
    • Benin
      Economic activity gradually recovered in 2011 following the presidential election in March and the general election in April. The growth rate rose from 2.5% in 2010 to 3.0% in 2011 thanks to the recovery of agriculture after the 2010 floods and the improvements to the country’s infrastructure. The recovery should continue into 2012 and 2013 with growth rates of 4.2% and 4.1% respectively. Nevertheless, Benin’s economy, which is too highly concentrated on agriculture and trade, is vulnerable to external shocks. However, Benin should experience strong, sustainable growth for the period 2011-15 thanks to strategies aimed at modernising and diversifying agriculture and developing infrastructure.
    • Botswana
      Botswana’s economy remains one of Africa’s success stories, having transformed itself from a Least Developed Country at the time of independence in 1966 to a Middle Income Country within three decades. Sound macroeconomic policies, good governance, well-functioning institutions and judicious management of diamond resources are the hallmarks of Botswana’s remarkable economic performance. The per capita income which stood at around USD 70 in 1966 is currently at about USD 6 500, bolstered by the discovery of diamonds.
    • Burkina Faso
      The economic outlook for 2012 is favourable, with growth of 5.3% expected, up from 5.1% in 2011. Inflationary pressure should increase, however, with the inflation rate rising from 2.8% in 2011 to 3.9%. Growth should be driven by the mining industries, cotton ginning and agriculture. The economy is vulnerable to several external factors however: a shortage of rainfall due to the unfavourable climate, the decline in the price of gold and a big increase in the price of oil on the international market.
    • Burundi
      The Arusha agreements in 2000 gave the country a period of stability. However, opposition boycotts of the presidential election in 2010 aroused serious political tensions. Since then there have been human rights violations, with extrajudicial political killings, torture and restrictions of civil liberties. There are still worries over the possibility of a return to armed rebellion.
    • Cameroon
      The economy of Cameroon should continue to progress in 2012, when it is expected to show growth of 4.4% compared to 4.1% in 2011. At sector level, the outlook for 2012-13 indicates that the primary sector will show 5% growth, thanks to average growth of 5% in the food-crop sub-sector and 5.7% in the cash-crop sub-sector. The secondary sector is expected to grow 1.4% over the same period, driven by the construction industry, better energy supply and higher production in the food-processing and manufacturing industries. The tertiary sector should progress 3.7%, thanks notably to buoyant conditions in transport and telecommunications.
    • Cape Verde
      Cape Verde, a small island state, is a lower middle-income country (MIC) under the African Development Bank’s (AfDB) credit policy. [1] Cape Verde’s Gross National Income (GNI) per capita in 2010 was about USD 3 270, exceeding the MIC classification threshold of USD 1 175 GNI per capita by a large margin. However, in spite of significant progress over the past two decades, Cape Verde continues to be confronted by a number of fundamental constraints and challenges to its development. Apart from its insularity, Cape Verde is facing problems in the form of its fragmented territory (there are ten islands), small population (fewer than 500 000 people) limiting its internal market, a dry Sahel climate, and scarce natural resources.
    • Central African Republic
      Prospects for 2012 are good, with real gross domestic product (GDP) expected to grow by 4.2% because of improved security conditions, the end of electoral uncertainty, good harvests and resumption of delayed investment in mining. Inflation is predicted to be below the convergence criteria of the Central African Economic and Monetary Community (CEMAC) but rising from 1% in 2011 to 2.8% in 2012 because of the recovery of domestic demand.
    • Chad
      Chad gross domestic product (GDP) growth is projected to reach 7% in 2012, driven by the non-oil sector as new power and cement plants come on stream, but it could slow to 3.2% in 2013 owing to a drop in oil production. Over the 2012-13 period, inflation will be held well below 3%, the convergence criterion of the Economic and Monetary Community of Central Africa (CEMAC). In 2011, Chad’s economic growth slowed sharply to 2.8%, against 14.3% in 2010, chiefly because of a drop-off in primary sector activity.
    • Comoros
      In a difficult international economic climate, growth in the Comoros should reach 2% in 2011, driven by agricultural exports and essentially private final demand, supported by remittances from emigrants. These transfers represented 23% of gross domestic product (GDP) in 2011 and should stay at a comparable level in 2012 despite unfavourable economic conditions in France, the main host country for Comorian migrants. Growth should continue and reach 3.1% in 2012 and 3.5% in 2013. It should be underpinned by the start of work on several major infrastructure projects in the fields of transport, tourism and energy, even though their launch is likely to aggravate the budget deficit by increasing imports. The current account deficit should fall slightly in 2012 before increasing to 9.7% in 2013. Despite the application of strict money-supply management criteria by the Central Bank of the Comoros (BCC), growth in 2012 and 2013 should generate some inflation (see table 1).
    • Congo, Democratic Republic
      Economic growth in the DRC in 2011 reached 6.5%, a slight drop from the 2010 figure of 7.2%, as a result of global inflationary trends and caution on the part of businesses during a period of elections. Growth, dependent on agriculture, the extractive industries, trade, and construction and public works, may slow further in 2012 to 5.1% because of persisting political uncertainties.
    • Congo Republic
      The Congo Republic’s economic prospects look good even if Europe’s debt crisis is a threat. Gross domestic product (GDP) growth of 5.7% for 2012 and 4.7% for 2013 is predicted – after a 5.3% increase in 2011. The increases are dependent on at least half of the 16 factories being built at the Brazzaville industrial zone coming into full production and on new investment by the state which envisages a real increase of 55% in capital spending in 2012. A slowdown in developed countries will hit growth, however. The crisis in Europe has highlighted the fragility of Congo’s economic situation and the need to promote the private sector.
    • Côte d'Ivoire
      The post-election crisis had a serious impact on the economic, social, security and humanitarian situation in Côte d’Ivoire, resulting in a pronounced fall in real GDP (-5.9%). A gradual recovery of the economy is expected in 2012 if the security situation continues to normalise, peace continues to be consolidated, the business environment improves and efforts to restore productive capacities are pursued and backed by incentives for the private sector. The economy’s recovery should lead to an 8.6% rise in real GDP in 2012, driven by significant demand for public sector investment and by buoyant conditions in the secondary and tertiary sectors. Growth should reach 5.5% in 2013.
    • Djibouti
      In 2011 Djibouti was hit by three unfavourable factors that weighed on its economic growth. The country continued to record a slow-down in growth caused by the effects of the financial crisis on its two main economic drivers: port activities and foreign direct investment (FDI). Its economy was also affected by a severe drought, and the presidential election led to a period of wait-and-see in the private sector. In 2012 and 2013 port activities and FDI should record growth linked to the implementation of investment delayed since the start of the financial crisis, the extension of the container terminal at Doraleh and the exploitation of the country’s geothermal resources. In February 2012 the country also signed a historic tripartite co-operation agreement with Ethiopia and South Sudan. The agreement targets infrastructure construction for telecommunications, roads, railways and oil transport in the three countries, to link South Sudan via Ethiopia to Djibouti, which has access to the sea. This will bring new investment to Djibouti and an increase in business, especially port activities, and enable the country to decouple its economic performance from Ethiopian trade.
    • Egypt
      Weeks of demonstrations brought down Hosni Mubarak’s administration in February 2011. Free and fair parliamentary elections were started within months, however, and by July 2012 the country should have an elected president in place. The new dominant parties have committed themselves to enhancing representative, accountable and transparent government along with efficient public services and efforts to alleviate poverty. The new political dynamic could create economic opportunities for young people who are desperate for change. About 60% of the population are aged under 30 and a high proportion of the 15-29 age group are unemployed.
    • Equatorial Guinea
      Equatorial Guinea's economy shrank in 2010 but 2011 saw growth of 7%. This upturn was sustained by renewed activity in the oil sector and public investment. Growth is expected to drop back to 4% in 2012 but gradually pick up again to 6.6% in 2013. These outcomes will depend on the world price of oil and gas staying high. The country is heavily dependent on oil, which contributes 78% to gross domestic product (GDP). Little progress has been made in diversifying the economy even though the government has substantial funds. Oil revenues should be put into services, agriculture and fisheries.
    • Eritrea
      Economic growth in Eritrea was strong in 2011, estimated at 8.2% compared to 2.2% in 2010. Underpinning this performance was the coming on stream of mining projects with substantial foreign investment (notably the Bisha gold mine) and high levels of production of silver, copper and zinc. Growth is projected to fall to 6.3% in 2012 however, before halving in 2013 due to expected falls in world mineral prices. The authorities believe that the country has good medium to long-term prospects for offshore oil production, fishing and tourism.
    • Ethiopia
      In 2011, the economy continued on the high-growth trajectory of the previous seven years. Growth has been broad-based, with the services and the industrial sectors growing at the highest rates. This momentum is expected to continue in 2012 and 2013, albeit at a slower pace. The five-year Growth and Transformation Plan (GTP), however, which emphasises agricultural transformation and industrial growth, projects the economy to grow at much higher rates. In the 2010/11 fiscal year (8 July – 7 July), macroeconomic management failed to reduce inflation, which was driven mainly by escalating food prices. Both domestic and exogenous factors were responsible for causing the resurgence in inflation. These include a loose monetary policy, rising prices of imported inputs, malfunctioning of the domestic market, and supply shocks. However, inflation is expected to decline notably in 2013 owing to continued macro stabilisation efforts. The government has been pursuing prudent fiscal policies which have focused on boosting domestic revenue mobilisation and reducing domestic borrowing.
    • Gabon
      Gabon is faced with declining oil production, which has been the backbone of its economy since it gained independence. In this context, the country is faced with a two-fold challenge: to create a diverse economic fabric that will rely on the development of natural resources, and the integration of the relatively young population into employment. Gabon aspires to become an emerging country by 2035. This ambition has driven the government to significantly increase public investment in 2010 and 2011, and this policy is likely to continue over the next two years. Gabon’s strategy also encourages domestic and foreign private investment through the special economic zones (SEZs).
    • Gambia
      Economic growth decelerated from 6.3% in 2010 to an estimated 5.5% in 2011 and is expected to stabilise around 5.6% in 2012 and 2013. Since late 2008, economic growth in The Gambia has been mainly driven by good performance in the agricultural sector. Nonetheless, poor weather conditions, which harmed crop production in 2011, and the global crisis in recent years have affected projected GDP growth negatively in the country. Reforms implemented by the government in agriculture, however, will continue to boost the economy and sustain its growth.
    • Ghana
      In 2011, Ghana made progress in consolidating the gains made in the management of its macro-economy in 2010 as year on year inflation dropped to 8.7 % and the fiscal deficit fell to 4.3 % of gross domestic product (GDP). The GDP growth for 2011 is projected to increase sharply from 7.7 % in 2010 to 13.7 % (7.5 % non-oil) aided by oil revenues and strong export performance of cocoa and gold. Future growth prospects remain strongly positive with projections of 8.3 % and 7.7 % for 2012 and 2013 respectively. Oil production and mining activities led industrial sector growth at 36.2 %. This was followed by the services sector (5.8 %) and the agricultural sector (5.2 %).
    • Guinea
      After years of heavy-handed government and political instability, Alpha Condé was elected president in December 2010, but the social and political climate is still tense, with disagreement about further elections and financial and logistical problems. Additional friction in the army led to an attempt to kill the president on 19 July 2011. Legislative elections have now been set for 8 July 2012.
    • Guinea-Bissau
      Guinea Bissau produced a strong economic performance in 2011. Growth in gross domestic product (GDP) rose to 5.1% from 3.5% in 2010, helped by exports, particularly of cashew nuts. Exports of the latter accounted for 81% of all exports in 2009/10 and reached 90% in 2011, thanks to an exceptional harvest. But the debt crisis in Europe is expected to lead to a drop in world prices for the nuts and, consequently, growth should fall to 4.6% in 2012, rising to 4.9% in 2013.
    • Kenya
      In 2011 Kenya’s economy recorded "checked" growth, primarily driven by financial intermediation, tourism, construction and agriculture sectors. Gross domestic product (GDP) growth rate for the first nine months was estimated at 4.2%, down from 4.9% in the same period in 2010. Overall, growth in 2011 was curtailed by an unstable macroeconomic environment characterised by rising inflation, exchange rate depreciation and high energy costs. The country also experienced limited rainfall in the first half of 2011, which affected aggregate food production. The year 2011 is therefore expected to record moderate positive growth estimated at 4.5%. Growth is expected to rise to 5.2% in 2012, and to 5.5% in later years.
    • Lesotho
      Lesotho’s economy showed signs of economic recovery in 2009, following the global financial crisis; however, the impact of floods during early January, 2011 has slowed the pace of the expected recovery. Growth is estimated to have reached 3.1% in 2011 (down by 2.5 percentage points compared to 2010) due to recovery of the manufacturing sector and high demand of diamond exports. Notwithstanding projected higher import requirements and low Southern African Customs Union (SACU) revenue, in the medium-term, growth is forecast to average 4.8%, driven by investment in phase II of the Lesotho Highland project and rehabilitation of infrastructure affected by the floods (Figure 1 and Table 1). Fiscal policy remains dependent on the performance of SACU revenue (in particular, the core SACU revenue, which is non-cyclical) which will average 27% of GDP in the medium-term, much higher than the average of 15% (2010-2011). Lesotho has traditionally relied on SACU revenue to fund close to 60% of its national budget. Lesotho’s share of SACU revenue is expected to decline from M4.9 billion in 2009/10 to M1.7 billion in 2010/2011. The government’s budget of M13.7 billion is based on the assumption of recovery in SACU recovery to M5billion and M4.7 billion in 2012/13 and M4.7 billion in 2013/14.
    • Liberia
      Liberia’s economy recorded its eighth consecutive year of post-war growth in 2011, expanding by an estimated 6.9% in the year. This was driven by the first iron-ore exports since the end of the war, strong rubber exports, and increased timber production. Foreign direct investment (FDI) in mine construction, rubber and timber exports, and recent investments in palm-oil plantations will contribute to growth in the coming years. GDP growth is expected to increase to 8.8% in 2012 due to the first full year of iron-ore exports, and to moderate to 7.2% in 2013.
    • Libya
      By any measure, 2011 was a momentous year for Libya. The fall of the Gaddafi government created, for the first time, an opportunity for the country to pursue the types of economic and social reforms that vested interests had previously prevented. Although the change is certainly an opportunity, the manner in which the revolution came about has had serious economic implications and created numerous challenges. Most importantly, Libya temporarily stopped producing and exporting oil, the country’s main revenue source, while the freezing of the country’s assets by the international community created significant obstacles. The conflict effectively brought the formal economy to a halt, resulting in an estimated 41.8% contraction in real GDP in 2011. Nevertheless, Libya’s economy is expected to pick up as the political situation stabilises, with growth projected at 20.1% in 2012 and 9.5% in 2013. The speedy return of foreign oil companies alongside the strong international support the country has received bodes well for Libya’s post conflict recovery.
    • Madagascar
      The political crisis continued in 2011, affecting the economy and society. Higher oil and food prices and poor rainfall also played their part and real GDP rose by only 0.6%, barely more than the 0.5% in 2010. The economy should expand, however, by 2.4% in 2012 and 4.5% in 2013, owing to hopes of a solution to the crisis after agreement on a road-map on 17 September 2011 and the strength of the mining sector. But the ongoing economic crisis in the euro area could undermine this momentum with a fall in demand for Madagascan goods and high unemployment in Europe that could reduce exports and affect the tourist industry.
    • Malawi
      Malawi’s economic growth in 2011 slowed to 5.8% from 6.7% in 2010 due to reduced donor inflows and shortages of foreign exchange and essential commodities such as fuel and inputs for manufacturing. The economy is projected to slow further, with growth falling to 5.0% and 5.2% in 2012 and 2013.
    • Mali
      Mali experienced a sharp decline in agricultural production in 2011 due to irregular rainfall and its unfavourable distribution in time and place. This was compounded by external shocks, including the post-election crisis in Côte d’Ivoire, the Libya war and rising oil and food prices. Real gross domestic product (GDP) growth stood at 1.1% in 2011. The poor performance was mainly due to the decline in food production (-16%), which represents almost a quarter of GDP, and especially in rice production (-25%). Growth is expected to reach 6.9% in 2012 and 5.2% in 2013, provided that the crop year is good, that gold and cotton prices rise and that trade with Côte d’Ivoire increases. But forecasts for 2012-13 are overshadowed by uncertainty as a result of political upheaval following the coup and the violence that broke out at the start of 2012.
    • Mauritania
      The economy (not counting oil) grew 4.3% in 2011 and was predicted to expand faster (4.7%) in 2012, to record a significant advance for the third running. This was driven by major investment in mining especially gold, sizeable government investment and the robust performance of manufacturing.
    • Mauritius
      The Mauritian four-pillar economy of sugar, textile, tourism and financial services has been increasingly tested for its resilience in recent years. While macroeconomic performance has been reasonably strong, the fragility and uncertainty of the global economic environment continues to threaten the country’s economic recovery. Anchored by a series of counter-cyclical policy measures, the country’s real gross domestic product (GDP) grew by 4.2% in 2010, up from 3.0% in 2009, driven by a recovery in tourism and a strong performance in financial services, transport and communication, and fisheries. The momentum eased in 2011 with real GDP growth estimated at having slowed to 4.1% as the euro area suffered another dramatic downturn. Prospects for a rebound in 2012 remain weak as external demand contracts, with projections showing a further decline in growth to 4.0%. Monetary policy in 2011 addressed price stability as well as risks to growth. With the headline inflation rate accelerating from 2.9% in 2010 to an estimated 6.5% in 2011, the Monetary Policy Committee raised the key repurchase agreement (repo) rate to 5.50% in the first quarter of 2011. In the fourth quarter, the key repo rate was cut to 5.40% as risks to growth outweighed inflationary pressures.
    • Morocco
      The development model adopted these past ten years by Morocco, featuring openness, economic liberalisation and the implementation of structural reforms, allowed the economy in 2011 to resist, in a difficult national and international context. In Morocco the Arab Spring and its social and political claims resulted in the adoption of a new constitution and triggered early legislative elections. Despite domestic tensions and a deteriorated economic situation in Europe, which is the country’s main economic partner, Morocco’s real growth in 2011 stood at 4.6%. The effects on the national economy of the slowdown in external demand were offset by a good agricultural season and vibrant domestic demand. The country’s growth rate is expected to confirm its vigour at 4.5% and 4.8% in 2012 and 2013 respectively.
    • Mozambique
      The boost in coal production from the first mega coal mining projects that came online this year, coupled with strong performance in the financial services sector, transport and communications, and construction, helped to push GDP real growth rate to 7.2% in 2011. The country has achieved an impressive average of 7.2% growth during the last decade. The continuation of high foreign direct investment (FDI) inflows, mostly in extractive industries, together with strong agricultural growth and infrastructure investment will drive growth to 7.5% and 7.9% in 2012 and 2013. Despite the strong growth, the Central Bank’s consistent tight monetary policy, supported by a prudent fiscal policy, reduced the end of year inflation from 12.7% to 10.8% in 2011. Prospects of a further decrease in inflation to 7.2% in 2012 and stabilisation at 5.6% in 2013, will allow a monetary policy easing in 2012, targeting credit expansion. The roll-out of pro-poor measures prepared during 2011, coupled with an ambitious infrastructure investment programme should widen the fiscal deficit from -3.3% in 2011 to -6.8 and -7.4% in 2012 and 2013. Mozambique’s main medium-term economic structural challenge is the broadening of its fiscal base. Aid flows are expected to decrease continually from 51.4% of budget in 2010 to 39.6% in 2012. The diversification of the revenue base, in particular through enhanced extractive sector taxation, is paramount to sustain and promote an inclusive growth agenda.
    • Namibia
      The Namibian economy slowed down in 2011 with a GDP growth rate of 3.8%, down from 6.6% in 2010, reflecting modest performances in mining and agricultural activities. Prospects for the medium-term remain favourable with GDP growth projected to continue on its path of recovery to an average of 4.2 percent for the years 2012 and 2013, driven by construction, livestock and crop farming, manufacturing and mining.
    • Niger
      External shocks – bad weather and little rain, as well as the effect of political crises in nearby Côte d’Ivoire, Nigeria and Libya – sharply reduced growth in 2011 to 4.2% (from 8% the previous year). Medium-term prospects are very good, however, and the economy should expand by 11.2% in 2012 before settling at 6% in 2013, mostly due to mining (uranium) and oil (the new refinery at Zinder).
    • Nigeria
      Nigeria’s economic growth has averaged about 7.4% annually over the past decade and remained robust in 2011 at 6.9%, driven by the non-oil sector, particularly telecommunications, construction, wholesale and retail trade, hotel and restaurant services, manufacturing and agriculture. Growth is projected at 6.9% and 6.6% in 2012 and 2013, respectively. The government is expected to reach its target of getting inflation under 10% in 2013. The inflation rate fell from 13.7% in 2010 to 10.2% in 2011 following monetary policy tightening and the easing of food prices. Inflation is projected to ease to 10.1% in 2012 and 8.4% in 2013.
    • Rwanda
      Rwanda’s economy has remained on a strong growth path with real gross domestic product (GDP) growth increasing to 8.8% in 2011 from 7.6% in 2010 higher than the initial projection of 7.0%. Growth was driven in 2011 by good harvests thanks to the crop-intensification programme, leading to an 8.2% expansion in the agriculture sector, an increase in exports largely due to rising commodity prices and high domestic demand supported by expanding credit to the private sector. Industry reported the highest growth rate, 15.1%, owing to a rebound in mining and construction, which grew by 15.5% and 22.3% respectively. Expansion in government spending and recovery in tourism have also contributed to growth. Growth in services at 7.2% was lower than the 9.6% reported in 2010, owing to slower growth in transport and communications as well as in financial services.
    • São Tomé & Príncipe
      São Tomé and Principe (STP), located on the Equator off the coast of West Africa, is Africa’s smallest country in terms of population, with an estimated Gross Domestic Product (GDP) of USD 253 million and GDP per capita of USD 1 222 in 2011. The country is considered a fragile state according to the harmonized African Development Bank (AfDB) and World Bank Country Policy and Institutional Assessment (CPIA) score, which was below 3.2 in 2010. Its vulnerability to exogenous shocks is accompanied by high dependence on agriculture and overseas development assistance (ODA). In 2011, real GDP growth is estimated to have dropped slightly to 4.3% (down from 4.5% in 2010) and was driven mainly by the construction, consumer, retail, tourism and mining sectors. The service sector dominates the economy, accounting for about 60% of GDP in 2010 and 48.6% in 2011 and employing nearly 60% of the workforce. The industrial and agricultural sectors each contributed 20% to GDP. Since 2009, the government has made significant progress in reforming the management of public finances. The measures implemented have led the country to be ranked 12th out of 53 countries in the 2011 Ibrahim Index of African Governance.
    • Senegal
      The pace of recovery slowed slightly in 2011, with a rate of growth put at 4%, chiefly because of electrical power cuts that continued until the end of September. Growth is forecast to reach 4.2% in 2012 and 4.7% in 2013. These projections assume that the government programme is implemented, with the backing of the Economic Support Policy Instrument (ISPE-II) 2010-13. The main investment programmes on which it is based relate to the energy sector in the framework of the plan to restructure and relaunch it (the Takkal plan) and the road sector, with continuation of work on the toll highway. Nonetheless the uncertainties arising from the elections of the first six months of 2012 may have a negative impact on the implementation of ISPE-II and in particular on energy sector reform and the road infrastructure programme. Fears on this score may be dissipated by the peaceful outcome of the presidential election.
    • Seychelles
      In 2011, the Seychelles economy, as measured by real growth in gross domestic product (GDP), is estimated to have grown at 5.0%, which, although slower than the GDP growth rate of 6.7% in 2010, is higher than was expected at the beginning of 2011. This stronger than expected performance was due to an 11% rise in tourism numbers and the positive impact of economic reforms. Growth was lower than 2010 due to a decline in foreign direct investment (FDI), as well as the impact of higher food and fuel prices. Tourism will continue to be the main driver of economic growth in 2012/13. As a result, GDP growth is projected to decline further in 2012 to 4%, as the financial crisis in Europe, which accounts for about 70% of tourists, continues. Higher inflation and interest rates, combined with continued fiscal consolidation, will also dampen domestic demand. From 2013, GDP growth is expected to increase to about 5%, due to a more favourable global economic environment, ongoing structural reforms, and higher investment and consumption spending.
    • Sierra Leone
      Real gross domestic product (GDP) growth increased from 5% (excluding iron ore) in 2010 to 5.7% in 2011 and is projected to rise gradually to 6.2% in 2012 and 2013 driven by recovery in the mining sector. According to International Monetary Fund (IMF) projections, new iron ore exploration planned for 2012 should result in a one-time expansion of real GDP growth (including iron ore) of 51.4% this year. Growth is expected to stabilise around 10.2% in 2013.
    • South Africa
      Gross domestic product (GDP) growth is estimated to have increased to 3.1% in 2011, up from 2.9% in 2010. Growth is expected to slow to 2.8% in 2012 mainly because of domestic structural weaknesses and the fragile global economic recovery. GDP growth is expected to rise to 3.6% in 2013, subject to global recovery taking place and an orderly resolution of the Eurozone fiscal and financial crisis during 2012.
    • South Sudan
      The Republic of South Sudan became Africa’s 54th nation on 9 July 2011, as it officially became independent following a historic referendum on self-determination held on 9 January 2011. Southerners voted overwhelmingly for total separation from Sudan.
    • Sudan
      Since the secession of South Sudan in July 2011, Sudan has not produced comprehensive economic data. The macroeconomic data used in this note is therefore based on estimates provided by the 2012 budget document for 2011 and 2012.
    • Swaziland
      The year 2012 presents an important opportunity for the government of Swaziland to utilise judiciously the projected large increase in Southern African Customs Union (SACU) receipts. The right fiscal measures, if accompanied by decisive reforms, could put the economy on a path of strong and inclusive growth. It is also a chance for Swaziland to draw on its strengths, including its strategic location, relatively diversified production base, and skilled labour force. For Swaziland, 2011 was a challenging year. Real GDP grew by 1.1% while the 12-month inflation reading hit 7.8% in December. The country faced a severe fiscal crisis, due to a sharp fall in SACU receipts, an historically high level of expenditures (especially wages), and the government’s limited access to borrowing. The crisis led to cuts in capital and social spending, undermining future growth. With government arrears of about 4% of GDP at the end of 2011, including debts to private contractors, the crisis has hurt an already struggling labour market and made things worse for small and medium enterprises (SMEs).
    • Tanzania
      Tanzania’s economy has been resilient to shocks and is expected to remain buoyant with a GDP growth forecast of 6.8% in 2012 and 7.1% in 2013 – well above the regional averages. Services, industry and construction continue to be the driving forces. However, frequent power outages continue to hurt potential output.
    • Togo
      Economic growth of 3.9% in 2011 was driven by better agricultural output and steady industrial activity. But domestic commerce was fragile because of two consecutive fuel price rises and dearer food imports. The budget deficit was put at 3.8% of GDP, up from 2.8% in 2010, due to efforts since 2009 to soften the effects of the world economic crisis.
    • Tunisia
      2011 saw the revolution of 14 January in Tunisia and its repercussion throughout the Arab world. On 23 October 2011, Tunisia held its first democratic election since independence. The election of the Constituent Assembly allowed the country to move on to a transition phase. This involves the drafting of a new Constitution, laying the foundations for a multi-party democracy based on respect for human rights. The following stage remains delicate, because of the challenge of maintaining social harmony, public security and achieving economic recovery. The political future and economic recovery are closely linked. There can be no economic recovery without stability, and no successful transition to democracy without recovery, providing a tangible response to young people’s aspirations.
    • Uganda
      In 2011, the Ugandan economy declined from gross domestic product (GDP) growth of over 6% the previous year to 4.1%. Over the course of the year, inflation averaged 18.8%, up from 4.1% in 2010, the exchange rate depreciated by 6.2% against the US dollar (USD), and the trade deficit increased from 9.6% to 10.8% of GDP.
    • Zambia
      Zambia’s economic growth slowed to 6.6% in 2011 from 7.6% in 2010, mainly as a result of a weaker mining sector performance. However, the medium-term economic outlook appears favourable, underpinned by sustained expansion in agriculture, construction, manufacturing, transport and communications, and by a rebound in mining. Inflation is projected to remain in single digits, reflecting prudent monetary policy, while the objective of exchange rate policy is to maintain external competitiveness. Increasing domestic revenue collection remains a priority for the medium term and large infrastructure developments will require additional resources. The government plans to raise USD 700 million (US dollars) via a bond issue in 2012 to cover a funding gap for infrastructure projects. This infrastructure investment is expected to boost growth by up to 2 percentage points per annum. Risks to the outlook include Zambia’s vulnerability to external shocks and a sluggish global economic recovery, which could reduce demand for exports. Moreover, maintaining investor confidence has emerged as a key issue after the government reversed the privatisation of Zambia’s telecoms company.
    • Zimbabwe
      Real gross domestic product (GDP) growth decelerated to 6.8% in 2011, from 9.0% in 2010 and is projected to decelerate further to 4.4% in 2012, before improving to 5.5% in 2013.
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