News Archive December 2015

Debt sustainability in Sub-Saharan Africa: unraveling country-specific risks

Sub-Saharan African countries as a group showed a considerable reduction in public and external indebtedness in the early 2000s as a result of debt relief programs, higher economic growth, and improved fiscal management for some countries. More recently, however, vulnerabilities in some countries are on the rise, including a few with very rapid debt accumulation.

This paper looks at the heterogeneous experiences across Sub-Saharan African countries and the detailed dynamics that have driven changes in public debt since the global financial crisis. Borrowing to support fiscal deficits since 2009, including through domestic markets and Eurobond issuance, has driven a net increase in public debt for all countries except oil exporters benefitting from buoyant commodity prices and fragile states receiving post-2008 Highly Indebted Poor Country relief. Current account deficits and foreign direct investment inflows drove the external debt dynamics, with balance of payments problems associated with very rapid external debt accumulation in some cases.

Pockets of increasing vulnerabilities of debt financing profiles and sensitivity of debt burden indicators to macro-fiscal shocks require close monitoring. Specific risks that policy makers in Sub-Saharan Africa need to pay attention to going forward include the recent fall in commodity prices, especially oil, the slowdown in China and the sluggish recovery in Europe, dependence on non-debt creating flows, and accounting for contingent liabilities.


The fiscal and debt landscape has changed significantly for many Sub-Saharan African (SSA) countries since the onset of the global financial crisis in 2007-2008. Record low interest rates worldwide coupled with the lowest SSA debt levels in decades after successful HIPC and MDRI debt relief has led to increased access to new sources of finance, especially non-concessional. For some countries there has been a sharp rise in indebtedness within a short time period, which if unchecked can lead to debt overhang problems similar to the ones seen in past decades among LICs and MICs. Further, volatile and changing global economic and financial conditions warrant a close monitoring of country debt situations in SSA.

This paper moves beyond the aggregate picture to look at more detailed debt profiles and dynamics of SSA countries, and aims to unravel more country-specific risks. The paper is structured as follows. Section 1 notes important data and methodology considerations. Section 2 presents an update on debt patterns in SSA countries, covering public debt and external debt separately. Section 3 reports post-global financial crisis debt dynamics, analyzing the underlying driving forces behind recent changes in debt burdens and comparing these factors with earlier periods. Section 4 discusses key vulnerabilities to debt sustainability in SSA countries, and Section 5 provides concluding remarks.

This paper is a product of the Macroeconomics and Fiscal Management Global Practice Group. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at

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tralac’s Daily News selection: 21 December 2015

The selection: Monday, 21 December

MC10 outcomes: The Nairobi Package

The Nairobi Package contains a series of six Ministerial Decisions on agriculture, cotton and issues related to least-developed countries. These include a commitment to abolish export subsidies for farm exports, which Director-General Roberto Azevêdo hailed as the “most significant outcome on agriculture” in the organization’s 20-year history. The other agricultural decisions cover public stockholding for food security purposes, a special safeguard mechanism for developing countries, and measures related to cotton. Decisions were also made regarding preferential treatment for least developed countries in the area of services and the criteria for determining whether exports from LDCs may benefit from trade preferences. [Download the outcome documentation]

Bridges Daily Update #5: WTO Members clinch agriculture export competition deal, weigh next steps for negotiating future

Enhanced Integrated Framework fund to help poor states misses target by Sh23bn (Daily Nation)

Profiled commentaries on MC10:

From the African press: Amina declares victory but lobbies contest deal (Daily Nation), Doha masks small Kenya wins (The Herald), Developing countries 'bite the bullet' in Nairobi (IDN), Collins Odote: 'Does Africa have any impact in global talks?' (Business Daily), China, India, South Africa still classed as developing nations (The East African), With rebasing, Kenya loses World Trade Organisation funds (The Standard)

From the Indian press: Message from Nairobi (Livemint), India eclipsed at WTO ministerial (Livemint), Government to respond to WTO’s ‘Nairobi package’ in Parliament (The Hindu), WTO steps forward and one step back for global trade regime in the domain of agriculture (The Economic Times), Nothing at Nairobi: WTO ministerial leaves India and developing countries in the lurch (Firstpost)

Profiled African statements to the MC10 plenary (dated 18 December 2015):

South Africa: Africa has defined a developmental trajectory for itself that involves moving away from its current insertion in the global trading system as a producer and exporter of primary commodities and an importer of finished goods. In this regard Africa, has defined a very clear agenda to move up the value chain and industrialise through an ambitious developmental integration programme that combines market integration alongside infrastructure development and cooperation to develop regional industrial value chains. This ambitious work programme is contained in Africa’s Agenda 2063 and can be recognized as Africa’s “mega-regional”, one constructed to meet Africa’s specific challenges and objectives. Any outcome in Nairobi or in future in the WTO therefore must in our view support this vision and certainly, at a minimum not undermine or complicate its realization. African and other Developing Countries must be offered the necessary policy space to pursue their objectives of industrialization and transformation.

Lesotho: The multilateral Trading System is of utmost importance to small countries such as Lesotho. Lesotho joined the WTO in pursuit of a promise that the multilateral trading system will integrate our nascent economy into the system. Twenty years on, we are still chasing the promise. Regrettably, all indications point to disintegration of African LDCs from the system and less so integration into the system. The WTO 2015 Report clearly illustrates this disintegration, with the greatest share of African Countries in international trade dictated by growth in regional trade. Whereas trade growth may be perceived as positive the concern is that there is no commensurate level of growth in the direction of value added trade with global trading partners. This story line is quite simple. It will take reforms of the Uruguay Round outcomes as well as realization of disciplines foreseen by DDA negotiation mandates, to truly integrate LDCs into global trade. It is for this reason that Lesotho firmly believes that commitments made by Members, in as far as the architecture of the DDA is concerned, must be honoured.

Mauritius: As part of the Development Agenda, we are in favour of an LDC package that would help the LDC’s integrate the multilateral trading system. However, such a package must be assessed from the perspective of its impact on other vulnerable developing countries so that appropriate mitigation measures may be agreed upon. Mauritius would also like to see an acceleration of the work program for small economies and for the timely implementation of measures that would support their integration into the global economy. In addition the specific situation of Small Island Developing States needs recognition at the WTO. We also require a dedicated aid for trade envelope to support their development.

Egypt: The track record of the WTO over the past twenty years has been solid, to say the least, across all those functions except one. The negotiating function has obviously not been advancing very well and reached a point today where it became the biggest institutional challenge facing the WTO. Our biggest and most important question today, is how can we make the negotiating arm of the WTO operational once more. Our determination in establishing this system envisioned the WTO as a forum for continuing negotiations aiming at serving the interest of all its Members. Today, unfortunately, the reality is that this function has not performed anywhere close to our aspirations.

Namibia: Namibia still holds the view that development oriented modalities must have substantial outcomes in strengthening and consolidating the special and differential treatment elements in each negotiating area of the Doha Work Programme, including in agriculture, NAMA and services. We hold the view that agriculture accounts for the most trade-distorted elements of the international trading system and it remains the most important component of the DDA Programme. This is where a large part of our development gains will be derived from. Agriculture should also set the level of ambition for NAMA and Services.

Access the full text of the country plenary statements here

The Nairobi Ministerial Conference: documentation

ECOWAS Authority of Heads of State and Government: final communique

The Authority reiterates its resolute commitment to the on-going integration process as a collective response to the region’s development challenges. It undertakes, with an even firmer determination, to sustain its efforts in the political, economic and institutional fields with a view to meeting all the challenges related to the deepening of this process. The Authority urges all Member States to take full ownership and ensure the implementation of all Community acts and protocols with a view to fast-tracking the integration process.

The Authority stresses the need to step up the process for the establishment of the common market. To this end, it agrees on the need to increase the volume of intra-Community trade, make the free movement of persons and goods a reality and pay particular attention to strategic sectors such as agriculture, infrastructure, energy and human capital. In this context, the Authority calls on the Commission to pursue the harmonisation of sectoral policies and take all necessary measures to support the effective implementation of programmes under these different sectors.

West Africa: USAID pledges $241m (Daily Observer)

The change of guard at Nigerian-American Chamber of Commerce (ThisDay)

Mnangagwa chides African countries for blocking PAP protocol (NewsDay)

SADC’s Pan African Parliament caucus vice-chairperson, Auxilia Mnangagwa has accused most African countries of refusing to ratify the revised Protocol of the Consultative Act for fear of losing their territorial integrity. The revised protocol, enacted by Heads of State and government last year, has so far been ratified by two countries – Mali and Mauritania – whereas it can only become operational if at least 27 countries give it the nod. Speaking to NewsDay from Senegal, where she attended the PAP meeting, Mnangagwa said it appeared most member States were afraid of losing their territorial integrity, as the Act seeks to give the Pan African Parliament legislative powers on trade and movement, environment and infrastructure.

Tanzania’s seaports and transport corridors as development opportunity for east and southern Africa (AfDB)

Continued efforts to invest in transport interconnectivity also suggest the need for institutional and regulatory reform, and enhanced infrastructure investment planning. Neither of these is without cost. The first is largely a question of political will, while the second offers policy choices, but requires that external support can be mobilized for substantial financial investments to achieve results. The extent of external financing will in turn depend on its growth prospects, and further enhancements of its national and regional institutions. Other policy objectives are to provide an environment attractive to investors and facilitate regional coordination.

EA Business Council to search for investment in Northern Corridor (The East African)

Linking Indian and Chinese maritime initiatives: towards a symbiotic existence (ORF)

If Africa builds nests, will the birds come?: comparative study on Special Economic Zones in Africa and China (UNDP)

Nepad's infrastructure focus: NEPAD Infrastructure Project Preparation Facility meeting, Donors welcome improved performance of NEPAD-IPPF in project preparation, Islamic Development Bank signs MOU with NEPAD

Zimbabwe: CZI sees capacity utilisation reaching 65% by 2017 (The Standard)

The Confederation of Zimbabwe Industries says capacity utilisation will nearly double to 65% by 2017 on the back of stakeholder partnerships. Capacity utilisation has been on the decline, reaching 34,3% this year from a peak of 57,2% in 2011 and this has been attributed to the declining economy. CZI believes that to reverse the trend, partnerships with its members, value chain stakeholders, development partners, experts, government and policy makers are key to improving capacity utilisation. According to the industry’s State of the Manufacturing Sector magazine released last week, CZI will employ several strategies to achieve this. [Download: CZI's 2015 Manufacturing Sector Survey]

Uganda’s exports drop by 4.6% (Daily Monitor)

BoU says the decline in exports was as a result of a reduction in the prices which declined by 7% as opposed to volume that increased by 2.5% in the same period. “The decline in price index is reflective of the impact of the decline in global commodity prices. Indeed, compared to the quarter ended October 2014, coffee export earnings recorded in the quarter to October 2015, decreased by $2.4m from $87.2m,” says BoU in its highlight of monetary policy report. “However, the total volume of coffee exported during the current quarter increased by 125,083 (60 kg) bags compared to 705,394 (60 kg) bags exported in the same quarter during 2014,” BoU added.

Nigeria’s foreign trade drops by N338bm in third quarter (ThisDay)

India remained the country's major export partner, accounting for N408.2bn or 17.5% of total exports in the period in review. Others are Netherlands, Spain, United Kingdom and Brazil. China was Nigeria's major source of imports which accounted for 459.4bn or 27.2%. Other are United States, Belgium, Netherlands and India.

Extract: The total value of Nigeria’s merchandise trade at the end of Q3, 2015 was ₦4,021.4bn. This was 7.8% less than the value (₦4,359.5bn, revised) recorded in the preceding quarter. This development arose from a decrease of ₦320.6bn or 12.1%, in the value of exports combined with a marginal decline of ₦17.4bn or 1.0%, in the value of imports against the levels recorded in the preceding quarter. [Download the report: National Bureau of Statistics'Latest Releases']

Trade between Canada and Africa to grow by $10bn

Improving short-term macroeconomic data for southern African policymakers (IMF)

Dr Lehohla, Statistician General of Statistics South Africa, highlighted the challenges of measuring rapid changes in the economy and pointed to the importance of improving data sources for the compilation of national accounts statistics. Mr. Bahadoor, Acting Director of Statistics Mauritius, added that users’ demand for these statistics has increased since the 2008 global financial crisis which had illustrated the size of data gaps.

Mozambique: IMF concludes 2015 Article IV Consultation

Balance of payments pressures are increasing and the exchange rate has depreciated substantially. While the overall current account is improving due to a decline in import-intensive megaproject investments (given the end of the gas exploration phase), the non-megaproject current account has continued to worsen, intensifying pressures in the foreign exchange market.

Gender Equality Strategy (World Bank)

Informed by months of consultations in 22 countries, with governments, civil society organizations, the private sector, and others, our new strategy builds on robust evidence that persistent gaps between men and women impose real and significant costs globally that can be addressed. Our new gender strategy builds on four objectives, all of them indispensable to a more equal world: reducing maternal mortality and closing remaining health and education gaps; creating more and better jobs for women and for men; closing the gender gap in ownership and control of key assets such as land, housing, technology and finance; and enhancing women’s ability to make themselves heard and direct the course of their own lives.

China-Kenya conference on agriculture cooperation: update (Daily Nation)

Five Southern Africa countries to plug sugar deficit in Kenya (The East African)

Kenya, EU set to ratify trade partnership by next December (Business Daily)

Zimbabwe: 4 judges express interest in SADC Tribunal (NewsDay)

Cote d’Ivoire Economic Update (World Bank)

French group opens first African mall (IOL)

AfDB posts new Integrated Environmental and Social Impact Assessment guidance materials

US Congressional approval of 2010 Quota and Governance Reforms: Lagarde statement (IMF)

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tralac’s Daily News selection: 21 December 2015

21 Dec 2015
The selection: Monday, 21 December MC10 outcomes: The Nairobi Package The Nairobi Package contains a series of six Ministerial Decisions on agriculture, cotton and issues related to least-developed countries. These include a...
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Slowing global growth has varied effects on low-income countries

Low-income developing countries have seen weakened external conditions over the past eighteen months, but the net impact has varied significantly across these countries, according to a new study by the IMF.

While all of the 60 IMF member countries classified as low income countries have been affected by slowing global growth, the key shock has been the dramatic drop in commodity prices over the past eighteen months. The report says while commodity-dependent exporting countries (especially oil exporters) are being adversely affected, countries that are more diversified in their exports have benefited from lower prices and continue to record robust growth.

Macroeconomic Developments and Prospects in Low-Income Developing Countries: 2015, analyzes recent events and looks at the near-term prospects for this group of countries, almost all of which are eligible for concessional IMF financing.

“While the global economic environment has weakened, especially in regard to commodity prices, the effects on low-income countries has varied with differences in country-specific exposures and domestic policy conditions,” said Seán Nolan, Deputy Director of the IMF’s Strategy, Policy, and Review Department who oversaw the production of the report. “Policy responses need to be tailored to country circumstances,” Nolan emphasized.

Varied impact of falling commodity prices

Hardest hit by low commodity prices are commodity exporters, particularly oil exporters, with growth, on average, set to decline from 5.7 percent in 2014 to 3.0 percent in 2015. By contrast, countries less dependent on commodities for export revenues, and that have benefited from lower fuel bills, for example, are expected to see growth as high as 6 percent in 2014-15.

The study shows a diverse picture when looking at the net impact of commodity price movements, even within country subgroups. While countries like Cambodia, Nicaragua, and Senegal have benefited, terms-of-trade losses are disproportionally high for some large oil exporters like Nigeria, for example (Chart 1).

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Rising vulnerabilities

The report says economic vulnerabilities in low-income developing countries have increased steadily over the past two years, with some 40 percent of countries now deemed to be highly vulnerable to growth shocks, up from 25-30 percent in recent years and the highest level recorded since the global financial crisis (Chart 2).

Key drivers are the drop in commodity prices, which has led to weaker fiscal and external balances, along with the gradual erosion of policy buffers over time. Diversified exporters have fared better than commodity exporters, but vulnerabilities are still rising in some cases.

The report emphasizes the need for commodity exporters to adjust to what is expected to be an extended period of relatively low commodity prices and to strengthen fiscal and external positions over time. Where growth has been strong but vulnerabilities have been rising, early action to rebuild policy buffers is now needed.

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The report lists climate change as an additional risk for low-income developing countries in the longer term. These countries are already more vulnerable to natural disasters than are countries at higher income levels. They are also projected to suffer more over time from the effects of global warming, given their geographic location (typically in already hot climates) and the large share of GDP accounted for by the weather-sensitive agricultural sector.

“Low income developing countries will need significant external financial support for national programs to adapt to climate change – otherwise, attaining ambitious development objectives will be very difficult over the longer term,” said Seán Nolan.

Capital inflows continue

Capital inflows to low-income developing countries have increased sharply in recent years, the report says, especially portfolio inflows to frontier-market economies (Chart 3). These frontier markets have typically liberalized their capital accounts more quickly than other low-income countries, and many are now as open as emerging market economies.

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Capital inflows have boosted domestic demand, with the use of external financing in consumption versus investment depending on national policy choices. In a few cases, the higher external financing of domestic spending has coincided with reduced public saving and increased public consumption.

Pointing to the tightening of financing conditions, the report sounds a cautionary message on tapping portfolio inflows. “Countries that are increasing their reliance on access to external funding thus face an additional risk – shifts in the external environment – and need to place a high premium on maintaining solid economic fundamentals, including strong public debt management capacity,” the study says.

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Cote d’Ivoire: Boosting shared prosperity through the creation of quality employment

Côte d’Ivoire is wrapping up a very good year. Peaceful presidential elections have just been held. The country’s growth rate is among the highest in Africa. It even won the Africa Cup of Nations. However, a new World Bank’s report on the economic situation in Côte d’Ivoire reveals that in recent years, this robust economic health is not translating to quality employment for the majority of the Ivorian population.

The Ivorian economy remained robust in 2015. Growth held steady at around 9%, supported by public and private investments and by the rapid growth in the building and public works and transport sectors, as well as in finance. This transformation is visible to anyone visiting Abidjan, with its impressive number of cranes, cars, and banks. However, Cote d’Ivoire must now tackle the challenge of shared growth, considering that this sound performance is not being reflected in a significant decline in the poverty rate or in higher incomes for the population living below the poverty line. The income gap between the poor and the rest of the population remains high, reveals a new report on the economic situation in Cote d’Ivoire, published by the World Bank.

In the report entitled “The Might of the Elephant – Benefitting from Strong Growth to Create Better Jobs” (La force de l’éléphant, pour que sa croissance génère plus d’emplois de qualité), World Bank economists recommend boosting productivity in the three main employment categories: self-employment, wage employment, and agricultural employment.

“The main economic challenge facing Cote d’Ivoire is the promotion of a shared economic growth that guarantees higher incomes for the population living below the poverty line, and narrows the income gap between the poor and non-poor. However, the rapid growth posted in recent years has not yet translated into a significant decline in poverty,” notes Jacques Morisset, Program Leader at the World Bank and co-author of the report. The report cites a myriad reasons for this phenomenon, which is mainly due to the dearth of quality jobs, in particular for the majority of Ivorians who are either self-employed or employed in a family business with no career development prospects.

Are jobs available? Yes, but they are far from productive.

The report notes that the extractive, finance, and communications sector are making a significant contribution to economic growth. However, they generate few jobs and have little direct impact on the vast majority of Ivorian households. Prior to the 2014-2015 period, the agricultural sector was less productive than other sectors, despite the fact that is employs the majority of Cote d’ Ivoire’s poor. The recent upturn in this sector is expected to lead to a sharp decline in rural poverty, owing in particular to the 17% increase in the farmgate price of cocoa in October 2015. Prices nevertheless remain dependent on international markets, where fluctuations continue to adversely affect the living conditions of producers.

Cote d’Ivoire has a large working-age population, the vast majority of whom are employed. 93% of working-age Ivorians report that they are employed, and the report notes an unemployment rate of just 7%. However, while the unemployment rate is extremely low relative to the rates observed in industrialized countries, young graduates are still struggling to make a decent living. This relatively low unemployment rate is explained in part by the use of statistical categories that are not adapted to the prevailing situation in Africa. It can also be attributed to the fact that unemployment is a “luxury” that few Africans can afford. They have to earn a living, even from small jobs that offer no job security, as unemployment benefits are not available in Africa.

Finding a job is not the main challenge facing Ivoirians, it is rather securing a quality job. Indeed, most Ivorians work long hours without earning an income that would allow them to enjoy a decent standard of living. The average monthly income for workers is approximately CFAF 97,266 (or $197), which is lower than the average in Africa. It should be noted that this average income has increased marginally over the past decade, owing to rapid population growth and the relative stagnation of the Ivorian economy up to 2011. Economic recovery has paved the way for higher incomes since 2012, and this positive trend is expected to continue through 2015, although the data is not yet available.

Going forward

Drawing on examples from other countries, the report explores ways in which Cote d’Ivoire could guarantee quality jobs for its working-age population, which is expected to double over the next 15 years. It recommends a structural transformation of the labor market through a gradual transfer of workers to non-agricultural jobs. This would be good news for the majority of Ivorians, as incomes earned by self-employed persons and workers in the non-agricultural sectors are generally higher. To successfully achieve this transformation, productivity in the following three employment categories needs to be boosted through several actions:

  • Self-employment: make jobs more secure through basic contracts, and support young entrepreneurs, including women, by combining training programs and the provision of micro-credit.

  • Wage employment: encourage business start-ups and the shift to the formal sector by streamlining administrative procedures; make access to credit easier by providing more information and developing innovative instruments; promote apprenticeships and continuing training by forging partnerships between government authorities and employers.

  • Agricultural employment: encourage the marketing of agricultural products by facilitating the emergence of economies of scale for small farmers; facilitate community networking and partnerships along the value chain; promote access to and the use of new technologies by farmers to help lower their production and transaction costs.

This report, which is intended for the general public, provides examples of best practices drawn from successful experiences in other countries, and can serve as a guide for Cote d’Ivoire. It recommends the urgent implementation of a comprehensive job policy that will allow Cote d’Ivoire to achieve its goal of become an emerging economy as soon as possible. The country must also boost the productivity of its working-age population by promoting the transfer of workers to more productive sectors of the economy and achieving productivity gains in the sectors that will continue to employ the majority of Ivorian workers.

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