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Renaissance in Sub-Saharan Africa
The bank at your side
Country Information Country Risk Research
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1 The main statements at a glance 03
2 General trends in Sub-Saharan Africa 04
3 Developments in selected countries 09
3.1 Western Africa Nigeria and Ghana as locomotives 09
3.2 Central Africa Petroleum and manyother mineral resources 11
3.3 Southern Africa Angola, Botswana, Mozambiqueand Zambia are booming 12
3.4 Eastern Africa Ethiopia, Kenya, Tanzania,Uganda and Rwanda recording successes 14
Structure
Closing date: October 15, 2012
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ForewordA glance at the map reveals that Sub-Saharan Africa with its abundance of various raw materials is home to no less than
48 countries with 1.3 billion inhabitants, each of different size and market specialities.
After the lost decade in the 90ies and a relative state of underdevelopment the region thereafter, Sub-Saharan Africa jumped
into the limelight since the middle of the last decade. With a real economic growth of 5.0 per cent in 2012 and a predicted 5.7
per cent in 2013, Sub-Saharan Africa is today ranking second behind the front-runner Asia. This overall favourable develop-
ment let the area emerge as a promising market with attractive locations, creating unprecedented opportunities for exports
and imports and attracting increasingly foreign investors thus brightening Sub-Sahara Africas long-term prospects. In addition,
the large and growing consumer sector provides excellent business prospects in the domestic market.
Size and heterogeneity of the Sub-Saharan Africas economies, however, raise numerous questions for foreign business people
and investors. Our study is based on macro-economic fundamental data and socio-political perceptions to introduce the economic
climate in the most important countries of Sub-Saharan Africa, highlighting developments in specific sectors and markets
and to provide practical information for those interested.
Commerzbank has a long tradition of doing business in various countries of Sub-Saharan Africa. We are active in trade and
project financing and manage key capital market transactions while keeping partnerships with African banks, Central Banks
and Government Agencies. This enables us to provide also to our corporate customers in our core markets in Europe and Asia
the necessary financial advice and services. Sub-Saharan Africas growing status as an important new emerging market has
prompted us to expand so we may meet the changing needs of our German, European and of course international clients. With
our expertise and representative offices in Lagos/Nigeria - covering West and Central Africa, Addis Ababa/Ethiopia coveringEast Africa and Johannesburg/South Africa covering Southern Africa. Additionally, with our representative office in
Luanda/Angola which opened last year, we look forward to offering our institutional and corporate clients a wide range of
banking services.
We invite you to discover Sub-Saharan Africa with us or if you are already present on this continent to discuss with us your
expansion plans. As the bank at your side we appreciate to become your partner of choice as regards financial advice and
service in Sub-Saharan Africa.
| Foreword | Renaissance in Sub-Saharan Africa
Florian Witt
Head of Africa
Wholesale Banking
Dr. Rainer Schaefer
Head of Group Country Research
Global Risk Management
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3| Country Information | Renaissance in Sub-Saharan Africa
1. The main statements at a glance
1 Leapfrogging generally designates (voluntary) omission of individual stages in the course of a development process.
G Even though some states still reveal shortcomings with re-
gard to democracy and the efficiency of their political insti-
tutions, there has been an overall increase in political and
economic stability in Sub-Saharan Africa. Some countries
have made great progress in theareas of education, thefight
against corruption and the investment climate.
G Theturnaroundto stability-oriented economic policy andthe
rawmaterialsboom have increased the crisis-resistance of
many countries in Sub-Saharan Africa. Some of them are
already recording notable surpluses in the current account
and state budget. Parallel to this, foreign exchange reserves
have risen.
G Themanufacturingsectorislikelytoconcentrateonthepro-
cessing of mining and agricultural raw materials. Growing
added-value share makes the countries more independent of
fluctuations in the prices of raw materials. An export push in
industrial production alongthe linesof theAsian modelis not
to be anticipated.The reasons forthis can be found in thefact
thatthe fragmentation of Sub-Saharan Africa intomany small
countries barely permits high returns to scale, also in the ab-
sence of rather ineffective cross-border free trade agree-ments, uniform jurisdictions and larger economiccentres.
G The greatest challenge for Sub-Saharan Africa is the demo-
graphic development.The labourforce potential,whichis gro-
wing strongly becauseof thehighpopulationgrowth, canonly
be absorbed by the creation of additional jobs. This can only
succeed if the depth of added value is decisively increased,
which is most conceivable in labour-intensive agriculture.
G In larger cities a middle class is forming with a demand for
increasingly higher-quality products. The services sector
and in particular finance will also benefit from this. The de-
velopment of the infrastructure and residential construction
shouldgive thebuilding industry special momentum.Tech-
nological leapfrogging1 offers opportunities in renewable
energies and in information and communication techno-
logy.
G We estimate the medium-term growth potential of Sub-
Saharan Africato be about6 per centper annum inthe next
few years, a forecast for which our basic scenario assumes
that the prices of raw materials will remain comfortable.
Countries which manageto attractforeign investors could see
even higher growth, since their investments frequently ini-
tiate or boost growth momentum. Theprerequisites area sta-
ble political frameworkand a large population which allow
higher returns to scale withfixed investment costs, plusgoodavailabilityof rawmaterials. Countries which meetthesecri-
teria include in particular Nigeria, Ghana, Angola and Mo-
zambique.
Chart 1: Overview Sub-Saharan Africa
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C O M M E R Z B A N K G R O U P R I S K M A N A G E ME N T4
2. General trends in Sub-Saharan AfricaIn its world-wide outlook the International Monetary Fund
(IMF) forecasts for Sub-Saharan Africa real economic growth
of 5.0 per cent in 2012 and 5.7 percent in 2013. The region is
thus defying the global financial crisis, as it already did the
year before as well, to rank second behind front-runner Asia
with 7.3 per cent. The global sovereign debt crisis has left fe-
wer marks in Africa than elsewhere. On the one hand, the fi-
nancial andbankingmarkets arefirstand foremost locally ori-
ented, which eliminates a possible transmission channel. On
the other hand, export dependence on the ailing European
countries, at just under 20 per cent, is not too high either; for
Africa the action ismorein theUSA andthe emergingmarkets.
Despite a little setback in growth in 2009, above all the coun-
tries of Sub-Saharan Africa with an abundance of raw materi-
alsare benefiting from therapid recovery of marketprices and
increasingly developing into lucrative growth markets which
arouse international interest. The perspectives in some states
of western and southern Africa augur particularly well for a
sustainable upturn, butthe dynamic marketsof eastern Africa
must not be underestimated either. However, before the regi-
ons and countries are analysed in detail, here are some gene-ral trends and developments in Sub-Saharan Africa to begin
with.
Asia Sub-Saharan
Africa
CIS LatinAmerica
MiddleEast and
NorthAfrica
Centraland
EasternEurope
AdvancedEconomies
0
1
2
3
4
5
6
7
8
9
2010 2011 2012
Sub-Saharan Africa unperturbed by the world-wide financial crisisReal GDPgrowth in percent, 2010-2012
Source: IWF
Togo
Burkina Faso
Mali
Sierra Leone
Sudan
Tanzania
Ghana
Rwanda
0 10 20 30 40 50 60 70 80 90 100
Doing Business Indicator 2006Doing Business Indicator 2012
Progress of investment climate in selected countries DoingBusiness Indicator2006 and2012, scaled on 100
Reading: The lowerthe index, the morefavorablethe investment conditions.
Sources:World Bank,own estimates
Political stability advancing
African history is marked by a lack of political and economic
stability which also results not least from colonialism. The li-
nes of the borders, above all in Central Africa, strongly reflectthe colonial past and are barely oriented towards homogene-
ous population groups. In the past, this has ledtime and again
to ethnic conflicts and civil wars which have ripped open ex-
tremely deep woundsin theeconomy. In the last fewyears, ho-
wever, political and economic stability has increased, even
though civil war and economic-policy chaos still prevail in a
few states, such as Sudan and Somalia. As a rule, the increa-
sing democratisation of the countries results in minorities
being more heavily involved in the political process, so that
tensions are consequently eased. Good examples of this are
South Africa, Nigeria, Kenya and Liberia. Models such as Bo-
tswana, Rwanda, Mauritius and Uganda can also have a posi-
tive influence on other countries, especially as greater econo-
mic stability and consequently greater prosperity are usually
connected with political stability too. Bureaucratic obstacles
and corruption still often have a curbing effect on economic
development. Thus, in view of corruption and thegeneral eco-
nomic environment, the majority of countries in Sub-Saharan
Africaare still a long waydown therelevant ranking lists.Even
though there is doubtless still a need for further reform here,
a more detailed look at the development of the past years is
worthwhile: here individual countries have taken clear stepstowards a better economic policy, for instance Ghana and
Rwanda, but further down the scale there is also movement,
for instance in Tanzania, Sudan and Burkina Faso, even if the
results are still far from being satisfactory by global compari-
son.
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5| Country Information | Renaissance in Sub-Saharan Africa
Increase in crisis-resistance
The fact that a substantial improvement in the economic situa-
tion is possible is revealed also by the good examples of some
Latin American countries Brazil, Peru and Colombia where
successful macroeconomic stabilisation took place after the
great debt crisis thanks to a stability-oriented and predictable
economic policy. The debt reschedulings in the 1990s and the
commitment of multilateral organisations made a significant
contribution to this. A similar situation can be observed in
Africa at present: 28 African countries have meanwhile benefi-
ted from the debt relief granted through the HIPC initiative
(HIPC:Heavily Indebted PoorCountries) of theWorld Bankand
the IMFsince 2004. In return, these countries have basedtheir
economic policy on fixedcriteria. This is also backed by the re-
cent turnaround in development aid, away from loans and to-
wards grants (non repayable allocations), after the credit ex-
tensions of the eighties andnineties had ledto the over-indeb-
tedness of many African countries. In the course of this policy
andthe rawmaterials boomthe crisis-resistanceof manyAfri-
can countries has increased. Like Latin America or the Gulf
States, Sub-Saharan Africa has benefited strongly from the im-
provement in the terms-of-trade2: in many countries export pri-
ces rose in the course of the raw materials boom, whereas inmany countriesimport pricesfell as a resultof globalisation. Fo-
reign indebtedness has thus become more acceptable in rela-
tion to exports, and foreign exchange reserves have risen cle-
arly in relation to imports of goods and services. In addition to
this, for some years nowa whole series of stateshas even been
recording current-account and budget surpluses. However,the inflation which for years was on the decline inmostAfrican
countries is again increasing moderately in many countries
in the region the exception being the countries of the CFA
franc currency zone3, whose currency is linked to the euro.
Whereas increases in the price of imported foodstuffs and raw
materials are frequently standing behind this development, in
some countries it can nevertheless be attributed to a loose fis-
cal policy which is often fed by the windfall profits4 of the raw
materials sector. Caution is advised here, for a low and pre-
dictable price development is important in viewof investments
andgross national savings: low inflation promotesinvestments
because they become more projectable, it lowers exchange-
raterisksand makes the countries moreattractive to foreignin-
vestors. Theresultis that foreign direct investmentsincrease,
in conjunction with a build-up of employment and the transfer
of know-how although this does not mean the modern colo-
nialism which China is practising in Africa. The improved and
more stable economic situation has also led to a decline in the
widespread capital flight and to a rise in the grossnational sa-
vings a trend in which Africa has followed many emerging
markets. The higher volume of savings on principle permits
more investments, thustending to raise the potential growth of
the economies. However, so far the role of the often dominantstate banks has not been very fruitful here, since they have not
mobilisedenough risk capital. If, on topof this, theinflationra-
tes which have risen again in some countries settle perma-
nently at the current level, there is a danger that the progress
made in the last few years will be thwarted.
2 The terms of trade show how the real exchange relationship of imports and exports develops over a certain period. If, for example, export prices rise with import prices
remaining constant or falling, the terms of trade improve, because more import goods can be imported for the same amount of exports.
3 In order to maintain currency relations with France, after the colonial territories gained political independence in the sixties the CFA franc (Franc de la Communaut
Financire de lAfrique) was introduced as legal tender in 14 West and Central African states. It was linked to the French franc until December 31, 1998, after which the
euro superseded the French franc as anchor currency from January 1, 1999.
4 The English term windfall designates an unexpected piece of luck or profit. If, for example, world market prices for oil rise on account of political or cyclical develop-
ments, there may be oil producers whose oil production costs remain unchanged. The profits attained additionally through the higher price are windfall profits.
199 0 19 92 19 94 19 96 19 98 20 00 200 2 20 04 2 006 2 008 2 010
0
10
20
30
40
50
Inflation generallyon thedecline butlately some reversalsInflation rate in Sub-Saharan Africa, annual average in percent
Source: IWF
1995 2003 20100
5
10
15
20
25
30
35
40
45
50
Asia
Middle East andNorth Africa
Latin America
Sub-Saharan Africa
Central andEastern Europe
Gross national savings in Sub-Saharan Africa on the riseGross national savings in percent of GDP
Source: IWF
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C O M M E R Z B A N K G R O U P R I S K M A N A G E ME N T6
Need to catch up in infrastructure, but opportunities
through technological leapfrogging
On no other continent does the trend in raw materials prices
determine economic growth to such an extent. The low raw
materials prices which prevailed in the eighties and nineties of
the last century have contributed to the erosion of the growth
potential and the consequently disappointing economic deve-
lopment vis--vis other regions. In addition, high raw materials
prices are not a blessing if fuels such as oil and coal have to be
imported. Even if the general price trend is to be considered at
least stable in the case of raw commodities, there are still pro-
found differences, such as, for instance, with the countries Bu-
rundi, Gambia and the Seychelles, in which the negative terms-
of-tradeeffectcanby allmeans curbthe economicdevelopment.
Nevertheless, the economic opportunities of Sub-Saharan
Africa do lie primarily in its abundance of raw materials. Even
if this means a high degreeof dependence on price trends in the
internationalraw materialsmarkets,it doesnot necessarily have
to be negative. Forone thing, other states in a similar situation,
such as Chile andPeru,for instance,can also look back on a verysatisfactory longer-term economic development. Especially as
Sub-Saharan Africatoo hasthe possibility to increase added va-
luethrough the processing of domesticallyproducedandgrown
products.As theadded-value shareincreases,dependence on
theraw materialspricesdecreases andthe courseof theeco-
nomy stabilises. For another thing, a drastic drop in prices on
the raw materials markets is not to be expected in the foresee-
able future, since especially in the Asian emerging markets
growth momentum and consequently demand should remain
high. Incontrast, an exportpushvia low-wage products as inthe
Far Eastern countries is not a viable alternative for Africa. The
fragmentation of the region into many small countries does not
permit high returns to scale in industrial production, especially
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012(f)
40
30
20
10
0
10
20
30
40
50
private public
Increasing inflow of private capital to Sub-Saharan AfricaPrivate andpublic netcapital inflow in billion US-$
Source: IWF
Oil Gold Diamonds Copper Cocoa Coffee0
100
200
300
400
194
369
172
206
143
214
Price increase of rawmaterials in percent from 2005 - 2011Market price index 2005=100
Source: International FinancialStatistics, own evaluations
as the existing cross-border agreements on free trade areas are
not veryeffectiveandthereare hardly anyuniform jurisdictions.
As compared with Asia or Latin America, Sub-Saharan Africa is
also lagging behind in the development of economic agglome-
rations; these form only slowly in places where there are large
raw materials reservoirs or where transport hubs have develo-
ped. With regard to infrastructure Sub-Saharan Africa has in-
deed caughtup, forinstanceas faras thenumber of ports is con-
cerned. Nevertheless, until now the infrastructural set-up has
essentially been aimed at the transportation of mineral resour-
ces or agricultural products and its quality is in need of impro-
vement, so that direct and low-cost transportation via the searoute isavailable only to a limited extentparticularly to themany
landlocked states.
The lacking infrastructure thus aggravates one of Africas
most burning problems: food shortage. And yet the world-wide
increase in the price of foodstuffs, triggered amongst other
things by the use of agricultural areas for biofuels, is being in-tensifiedby home-madeproblems, for many countries have ne-
glected the development of the agricultural sector for years. As
a result, almost all of the 48 states have become net importers,
in particular for the staple foods cassava, maize, yams, rice and
wheat.The high food priceshit half of the population of Sub-Sa-
haran Africaparticularly hard, forhere they arenot only fully re-
flected in the household budgets, butalso often mean undernu-
trition. And yet the African continent has sufficient fertile soils
which oftenonly liefallow because forlocal production thereare
no added-value chains via harvest, storage, transportation and
marketing. Afterneglectingagricultural production fordecades,
countries such as Nigeria, Angola and Zambia are meanwhile
relying on targeted investments in agriculture and thus increa-
Nigeria South Africa Botswana Zambia Ivory Coast EthiopiaAngola Ghana Angola DR Congo Ghana KenyaSudan Mali DR Congo Cameroon Uganda
Eq uatorial T anza nia South Af rica Nigeria CameroonGuinea Zimbabwe Namibia
Rep. Congo GuineaGabon LesothoGhana
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7| Country Information | Renaissance in Sub-Saharan Africa
sing their self-sufficiency rate sustainably. Furthermore, there
is still evenscopefor exports the Gulf states are already acqui-
ring agricultural areas to grow rice and wheat for their domes-
ticmarkets. Onaccount ofthe geographicalproximity, this isthe
case above all in Sudan and Ethiopia.
However, besides the agricultural and raw materials sector
there are also areas in which Africa benefits from its straggling
position on the world-wide development carousel. For techno-
logical leapfrogging allows environment-friendly, low-cost
and effective technologies and thus also offers opportunities to
foreign investorswith therelevantknow-how:the currentpower
shortages present a great obstacle to growth. Blackouts are wi-despread and even affect the economically well-developed
South Africa. In the last few years, the situation in many coun-
tries haseven grown more acute in view of the robust economic
development and the resulting higher energy demand. This
could be overcome by intensified use of renewable energies
such as solar technology, wind and hydro power, which could
catapult even underdeveloped areas into the new age. The ex-
traction of biogas from biomass also constitutes an interesting
alternative. Ethiopia,Malawi and Mozambique rely on biodiesel
from the jatropha plant, which can be grown even on low-yiel-
ding soils.
Lacking communication through fixed networks and/or sa-
tellite connections is long since a thing of the past. Wireless
technology is advancing and helps to overcome the old omissi-
ons and hurdles. In the countries south of the Sahara, the mo-
bile phone sector is recording exorbitant growth rates. Subma-
rineopticalfibre cables andlarge-scale expansionof broadband
networks provide for internet connection and television recep-
tion. Thus, in Kenya and Somalia there are already mobile tele-
phone networks with mobile telephone banking 15 million
people already use their mobiletelephone forpayment transac-
tions.
Better education is the key to higher sustainable growth
In comparison withother development regions, themiddle and
southern part of Africa usually performs moderately in the
economic and social core indicators. Measured by the per
capitaincome,the regionranks only marginally in front of South
Asia withoutthe economic heavyweightSouthAfrica, whichac-
counted for about 35 per cent of the GDP of Sub-Saharan Africa
in 2010, the comparison would be even more unfavourable. In
addition,within the other African countriesthere is also a consi-
derable prosperity gap. Inspiteof good economicsuccesses on
thepart of many countries, a large section of theurbanand rural
population will continue to live below the poverty line. In no ot-
her development area does the population grow as quickly as in
Africa. However, as a result of the great susceptibility of the
people to epidemics and fatal diseases such as malaria or Aids,
and in spite of medical schemes which are slowly taking effect,
theWorld Bankis forecastinga declinein growth rates until 2015
thehighAids infectionrate hasreduced life expectancyto about
50aboveall insouthernAfrica. The high population growth can
beacurseorablessing:itisadisadvantagethatayoung,rapidly
growing population is pushing up the share of the economicallyinactive population in the total number of inhabitants. In other
words: relatively few people have to feed many. On the other
hand, more and more people are entering employment at a low
average age, which boosts future economic growth. However,
forthis calculation to work out another condition shouldbe met:
the new young population must have a sufficiently good educa-
tion. Here there is a considerable need to catch up in Sub-Sa-
haranAfrica notonlythe level ofthe educationalindicators, but
also the progress of the educational initiatives is clearly lagging
behind those of other development regions. Nevertheless, the
moderate overall picture must not hide the fact that individual
countries havemadeenormousprogresshere,whereas others
hardly tackle the topic. A higher educational standard, which is
indispensable to increases in productivity, is therefore not a
questionof time, butof theeffortsmade.Good exampleshere are
Tanzania and Ghana, but also Ethiopia and Mozambique, albeit
on a much lower level. Nevertheless, here too it will be a chal-
lenge to create sufficient jobs for the growing labour force po-
tential.
Burundi
Mozambique
Burkina Faso
Zambia
Nigeria
Republic Congo
Namibia
South Africa
Gabon
Botswana
0 2000 4000 6000 8000 10000 12000 14000 16000 18000
High discrepancies in living standardper capita incomein 2011 in US-$, based on purchasing power parity
Source: IWF
Average Sub-Saharan Africa
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Sub-SaharanAfrica
South Asia
Middle East/North Africa
Latin America
Eastern Europe
East Asia
0 10 20 30 40 50 60 70 80 90 100
19912009
In education Sub-Saharan Africa lags behind percentage of pupils who obtained a primary school leaving certificatein world comparison
Source: WorldBank
Ivory Coast
Ethiopia
Mozambique
Dem. Rep. Congo
Uganda
Senegal
Rep. Congo
Ghana
Zambia
South Africa
Botswana
Tanzania
0 10 20 30 40 50 60 70 80 90 100
19912009
but partial success observedpercentage of pupils who obtained a primary school leaving certificatein selected Sub-Saharan African countries
Source: WorldBank
The increasing migration of people to cities, for which
Africahas oneof thehighestratesin theworld, is similarly am-
bivalent: on the one hand, immigration, population growth,
bad education and a lack of jobs provoke crime, as can be ob-
served in the large centres Lagos and Nairobi. On the other
hand, larger agglomerations promote the settlement of com-
panies in the manufacturing trade and the services sector and
only then allow an economic structure which is based on the
division of labour and is therefore more productive. In this re-
spect, populouscountries are also especially interesting for fo-
reign investors because the fixed costs of an investment have
less ofan impact here on account ofthe higher returns to scale.
In addition, the larger cities are gradually giving birth to a
high-spending middle class, with a demand for increasingly
higher-quality products. It willbe primarily the servicessector
which benefitsfrom this, alsoin the financial areawhere Africa
still has a need to catch up in some regions in both retailand
corporate banking.Thus, social securitysystems,for example,
especially the private old-age insurance, havebeen rare so far.
The development of the infrastructure and residential con-
struction are lending the building industry specialmomentum.
G Weak institutionsG Low per capita incomeG Consequences of colonialism (monocultures, fragmenta-
tion, ethnic conflicts)G Low level of educationG Weak infrastructure, especially in the energy sector
Strengths
G Abundance of raw materials/Good soilsG Macroeconomic stabilizationG DemocratizationG Increase in gross national saving
Weaknesses
G High population growthG Prosperity gapG Moderncolonialism(China)G Volatility of raw materialspricesG Inflation
Opportunities RisksG Growing middle classG Not yet saturated marketsG Debt remission for HIPCG Increasing investments (domestic and foreign)G Know-how transferG Sectors: infrastructure, raw materials, finance, trade, trans-
port, consumer goods, new technologies
no figures for 1991
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9| Country Information | Renaissance in Sub-Saharan Africa
3. Developments in selected countries
Oil giant Nigeria: Robust economic growth
Nigeria is Africaslargestpetroleumproducer and,with 162mil-
lion inhabitants, also the most populous state. Petroleum ac-
counts for 95 per cent of exports and 80 per cent of public reve-
nue. On account of themultipliereffect emanatingfrom theoil
sector, the domestic economy is booming, particularly the buil-
ding, telecommunications and financial services sectors, as wellas state and privately organised infrastructure projects. Agri-
culture is playing an increasinglyimportant role, with a share of
40 per cent in the gross domestic product (GDP). Under the
Agriculture Transformation Action Plan (ATAP) the second
largest economy in Sub-Saharan Africa is aiming to generate a
considerable numberof newjobsin agricultureby 2015 inorder
to reduce the high dependence on imported staple foods and
evenadvanceto self-sufficiency.The potentialis there, forabove
all in the north there are enough uncultivated, fertile soils.
In spite of many obstacles, theeconomy of this multi-ethnic
state has for years been proving to be robust and growing at
anaverage rate of between 6 and 8 percent. The petroleumex-
ports producehigh current-accountsurpluses;for 2012we an-
ticipate a surplus of about 7 per cent, measured by the GDP.
These surpluses, however, could be much higher if a large
share of refined oil did not have to be imported because of lo-
cal capacity bottlenecks. The highdirect investments flowinto
the oil and gas sector, but also increasingly into the infra-
structure.
Nigeria has the largest financial centre in West Africa
and,after Johannesburg, the second largest stock exchange inSub-Saharan Africa. The global financial crisis of 2008 caused
3.1 Western Africa Nigeria and Ghana as locomotives
the stock market in Nigeria to collapse; market values fell by
30 to 60 per cent. The uncontrolled lending of the almost ex-
clusively listed banks in exposures with high risks (for exam-
ple, for speculation in shares) turned out to be fatal. The huge
loan loss ratios rocked the banks to their foundations. Me-
anwhile the governments bailout packages to undercapitali-sed banks, the absorption of non-performing loans into the
newly founded Asset Management Company and the recapi-
talisation of thebanksby new investors have ledto thedesired
success. Now that radical reforms have been additionally im-
plemented by the central bank with a strict regulatory frame-
work, theconsolidation of thebanking sectoris regarded as al-
most fully completed.
It was no easy legacy which President Goodluck Jonathan,
who was confirmed in office in the elections held in April 2011,
took on after many years of delayed reforms. Thedilapidatedin-
frastructure is in need of urgent improvement; corruption and
mismanagement are rife. The ambitious targets of the new ca-
binet, amongst other things with Finance Minister Ngozi
Okonjo-Iweala, formerly Managing Director at the World Bank,
envisage first andforemosta reorganisationof public finances
and the privatisation of the oil and energy sector. In particu-
lar the obscurely structured state-owned oil company, the prin-
cipal earner of foreign exchange, is considered to be dilapida-
ted and intransparent. For the fiscal year 2012 the government
is planning to reduce the budget deficit to approximately 3 per
cent,measuredbytheGDP.Inviewofthefailedattemptstoabo-
lish fuel subsidies fully at the beginning of 2012, and given the
massive public infrastructure scheme, it is more likely that thistarget will be missed.
Agriculture 39%
Manufacturing 7%
Oil and gas sector 15%
Wholesale andretail trade 20%
Rest 19%
GDP growth by sectors (2011)
Sources:IWF, National Bureau of Statistics
2006 2007 2008 2009 2010 201 1 201 2(f)
0
2
4
6
8
10
6.2
7.0
6.0
7.0
8.0
7.2 7.1
Real GDPgrowth in percent to previous year
Sources:IWF, National Bureau of Statistics
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2007 2008 2009 2010 2011 2012(f)
-16
-14
-12
-10
-8
-6
-4
-2
0-14.3 -12.4 -6.2 -8.4 -8.3 -6.0
-9.2
-14.7
-9.8
-7.4
-5.1
-6.7
Current account deficitin%ofGDP
Source: IWF
Ghana: A political model state with high imbalances
Since President John Agyekum Kufuor assumed office in 2001
(term until January 2009) Ghana has been considered a model
state for democracy and political stability. The real growth of
the GDP of 13.5 per cent in 2011 was the highest in Africa, sup-
ported by a high domestic and foreign demand. However, in
2012 a decrease to 8.2 per cent is realistic. After South Africa,
Ghana is the continents second largest gold producer with an
export share of 34 per cent. In addition, Ghana ranks behind
Ivory Coast as the worlds second largest cocoa producer, the
export share being 32 per cent. Since the end of 2010 Ghanasmove upinto theleague ofpetroleumproducershas been giving
the country new economic impetus. Foreign exchange reserves
have indeed risen since then but, with an import cover ratio of
just under three months, are still in the low range. In the service
sector, financial services and transit trade with the landlocked
countries Burkina Faso, Mali and Niger are dominant. In spite
of rising export income, the disproportionately high import re-
quirements for fuels, foodstuffs and above all capital goods for
the petroleum industry and mining are causing high current-
account deficits, which willbe between 6 and 8 per cent of the
GDP in 2012 as well. The government is pursuing an expansio-
nary fiscal policy with increased expenditure in the area of in-
frastructure. Despite the high level of foreign budget and infra-
structural support, the 2009 budget deficit reached a record 12
per cent in relation to the GDP, which is not viable in the long
run. The planned reduction to about 6 per cent in 2012 is, ho-
wever, hardly likely to succeed also in view of the pending pre-
sidential elections in December 2012. In July 2012 John Atta-
Mills, Ghanaian President since January 2009, died unex-
pectedly in office and Vice President John Mahama was sworn
in as successor.
Ivory Coast: Breathing a political sigh of relief a new
start on a solid economic basis
Theworldslargestcocoa producer is in a long desired phase of
politicaland economicrecovery fromthe ethnicconflicts which
broke outin 1999. These conflicts shatteredthe country,dividing
it for a long time into a north occupied by rebels and a south go-
verned by President LaurentGbagbo.A peace agreement signed
in 2007 alsoremained unsuccessful. In thepresidentialelections
finally held in November 2010, Gbagbo launched a constitutio-
nal coup asa result ofhis electiondefeat. The winnerof the electi-
ons,Alassanne Ouattara, wasnotableto assume office until June2011; newparliamentary elections inDecember2011 confirmed
hisvictory. Regardlessof thepoliticalquarrelling,Ivory Coast has
beenproducing current-account surpluses for years, withcocoa
contributing 33 per cent and crude oil together with refined oil
27percenttotheexportrevenue.In2011therealGDPfellby4.7
per cent, and for the current yeara growthof 8.1 per centis tobe
anticipated. The extremely highforeign indebtedness with inte-
rest and redemption arrears caused a burden. However, the Re-
public of Ivory Coast reached itsCompletionPoint underthe en-
hanced HIPC Initiative on 26 June 2012 and the representatives
of the Paris Clubcreditor countries agreed on an immediate debt
cancellationof 6.5billionUS dollarsbecauseof thestabilisedpo-
litical situation. The structural reform in the coffee and cocoa
sectorwas oneof themain conditions.Thismade good progress
with the foundation of the Coffee and Cocoa Council in January
2012. In future this state-controlled organisation will take over
the international marketing, andin additionthe cocoa farmers in
particular will alsobenefit fromfixedpricesfor thefirst time. Like
Senegal, Gabon and the Republic of the Congo, amongst other
countries, IvoryCoast isa memberof theWestand CentralAfri-
can Economic and MonetaryUnion, the currency of which has
beenpeggedtotheeurosinceJanuary1,1999,withanexchange
rateof 655.957 CFA francsper1 euro. At3 to5 per cent, the an-nual price increase rates of these countries are therefore also in
the low range..
Senegal: The economy is limping the outcome of the
election gives reason for hope
Senegal has relatively well-functioning institutions. Financial
services, trade andtelecommunications areexpanding; the buil-
ding sector is benefiting from high investments in the infra-
structure which are intended to contribute to a favourable eco-
nomictrendwithan estimated growthof theGDP of 4 percentin
2012 (2011: 2.6per cent).Afterthe firstinternational bond issue
for200 millionUS dollarsin 2007, theSenegalese state launched
Budget deficit
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11| Country Information | Renaissance in Sub-Saharan Africa
a second bond for 400 million US dollars in May 2011, primarily
to financeroad projects. Foreigntrade suffersunderthehigh im-
port dependence; the share of heating and motor fuels, as well
as foodstuffs, is 50 per cent, followed by 20 per cent capital
goods. France is the traditional main tradingpartner.The export
basisis small. Chemicalproductshavea shareof 22per cent, and
this involves the mining of extensive phosphate deposits which
are processed into fertilisers. Fishery products account for a 20
per cent share of exports. Revenue from tourism and transfer
payments of the international donor community reduced the
2011 current-account liability to about 8 per cent, measured by
the GDP. As a result of the slackening budgetarydiscipline, with
higher capital and interest expenditure, and because of the
election held in February 2012, an increase in the budget deficit
to around 7 per cent of the GDP is to be anticipated. The ambi-
tionof the85-year-oldPresidentAbdoulaya Wadeto sidestepthe
constitutionallystipulatedterm of twolegislativeperiodsand ex-
tend it to a third onecameup against greatprotests, especially in
the predominantly young population. However, an African
spring didnot take place, for with Wade obtaining only 35 per
cent of thevotes democracytriumphedwith a peaceful change
of power.In thesubsequent secondballot held on March 25, the
politician Macky Sall with his Alliance pour la Rpublique (APR)
was elected new President of the country.
Gabon: Declining oil production puts on the pressure to
diversify the economy
With Ali Bongo, who was appointed President after the death of
his father Omar and after elections in 2009, the political situa-
tion in Gabon remains stable. Thanks to the petroleum which
has been extracted since the 1960s, the country has been pro-
ducing current-accountandbudgetsurplusesofbetween6and
12per cent of the GDP. 80per cent of export and 63per cent of
taxrevenueoriginatefrom theblackgold. Theper capitaincome,
at 17,000 US dollars, is oneof thehighestin Sub-Saharan Africa.
The share of the urban population is 83 per cent, and the natio-
nal economy, numbering only 1.5 million inhabitants, has a sol-
vent middle class which is relatively large for the region. Impor-
tantsectorssuchas financial services,air trafficand telecommu-
nications have already been privatised.The bond for1 billion US
dollars issued on the international capital market at the end of
2007, windfall profits in the oil revenues and local bond issues
madeitpossibleforthestatetoredeem2billionUSdollarsworth
of debts with the Club of Paris5
at the end of 2008. This reducedsovereign indebtedness to a moderate 21 per cent of the GDP.
However, the marked decrease in petroleum production which
has been taking place since 1997 because of sources running
short isnow urgingthe government to aim fora diversification of
its economy. The efforts to expand the production of iron ore,
manganese and gold are under way; a leap into modern infor-
mation technology is also being considered.
Democratic Republic of the Congo (Kinshasa):
Enormously rich in minerals
In the huge area of the Democratic Republic of the Congo (Kin-
shasa), President Joseph Kabila assumed his second term of of-
3.2 Central Africa Petroleum and many other mineral resources
fice at the end of 2011 after his re-election, in spite of considera-
blepolitical uncertainties.Indeed, the domesticpoliticalsituation
is still difficult, but economically, with a realgrowth of the GDP
ofover7percentin2012, thingsare continuing toimprove.The
country is enormously rich in minerals. It is not just the immense
copper and cobalt deposits in the province of Katanga which at-
tract foreigninvestors. Other miningproducts are diamonds, pe-
troleum,zinc,gold andsilver.In thenortheasternpartof thecoun-
trythe rare coltanis mined, a tantalum compoundwhich has be-
come indispensable to the high-tech sector. On account of the
good progress made with reforms, the IMF granted the country
a debt relief in the amount of 12.3 billion US dollars in mid-
2010. Thehighimportrequirements forcapital goods formining
and services keep the current-account deficit at a high level; for
2012 we anticipate 13 per cent, measured by the GDP. Foreign
exchange reserves, with an import cover ratio of somewhat over
a month, are at a chronically low level.
Republic of theCongo (Brazzaville): Petroleum dominatesthe
economy
The economy of the Republic of the Congo (Brazzaville) is do-
minated by thepetroleum sector, themainpurchasersbeingthe
USA, China andKorea. Theexport share is 88per cent. Theeco-
nomic indicators are distinctly more positive here than in the
neighbouring country with a prospective real growth of 5 per
cent in 2012, some two-digit current-account and fiscal sur-
pluses. Foreign exchange reserves are at a comfortable level
with an import cover of over six months. As a result of its pre-
vious reforms and privatisation efforts, the Republic of the
Congo hasalso beenbenefiting since 2010 from the full debt re-
lief granted by the Club of Paris.
5 TheClubof Parisis an international body of several states, inwhichsovereign claimsagainstinsolventstates aredealt with,oftenfollowedby a reschedulingand/or debt remission
relief.
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South Africa an economic hub
South Africa, with its 51 million inhabitants, is the largest and
most developed economy in Sub-Saharan Africa. The gross do-
mestic product per capita is at 8,000 US dollars. South Africa is
the worlds leading producer of gold, platinum and chromium;
platinumaccountsfor14percentoftheexportrevenue,andgold
for12 percent. Theservice sector,whichaccountsfor64 percent
of GDP is supported by a well-established and progressive ban-
king and insurance industry, transportation and tourism. Alt-
hough the growth of the gross domestic product increased so-
mewhat in 2011 at 3.1 per cent, the slowdown of growth in
Europe andthe imponderables in otherexport markets willpush
theincreaseintheGDPdowntoabout2.6percentin2012.From
an economic point of view, South Africa is the regional arteryfor
the surrounding countries, which traditionally settle a substan-
tial part of their exports and imports via South African airports
and deepwater seaports. This interlinking is anchored in the
South African Customs Union (SACU), which consists of the
countries Botswana, Lesotho, Namibiaand Swaziland, as wellas
South Africa. The customs duties andcharges obtainedfromthe
non-SACU countries are disbursed to the member countries ona prorata basis, with theamount of theintra-SACU trade of each
country and its degree of development playing a role.
Oil country Angola: Strong economic recovery on the
way to its old strength
Angola is Africassecond largest petroleumproducer. Since the
endof thecivil warin 2002, thepetroleum boom hasmarked the
beginning of lively investment activity which has spread increa-
singlyto other branches ofindustry. Thegrowth rates ofthe GDP
were partly in thetwo-digit range. In 2009 theslump in theprice
of oil plunged the country into a deep crisis. Foreign exchange
reserves andthe exchange rate fell sharply andthe high current-
account and budget surpluses melted away. Thanks to an IMF
programme and the recovery of the price of petroleum, the eco-
nomy revived quickly. On account of the rapid revival of public
andprivate investment activityand domesticdemand,we antici-
pate a strong recovery of economic growth, which was 3.9 per
centin 2011, by16.8 per centof the GDP for 2012, alsodriven by
the non-oil sector, above all agriculture. After the crisis year
2009, foreign exchange reserves also recovered continuously
again by January 2012; at present they areback in the comforta-
ble range with an import cover of over six months.
The petroleum sector dominates exports with a share of 97
percent.The oilfieldsare in theexclave of Cabinda andoffshore
3.3 Southern Africa Angola, Botswana, Mozambique and Zambia are booming
to the north of the capital, Luanda. The development of new
sources of oil means that an increase in the present oil pro-
duction of currently1.8 million barrels perday is realistic. In ad-
dition, the export of liquid gas is scheduled to get under way.
The main purchaser is China, followed by the USA. Despite the
increased requirements for consumer andcapital goods for mi-
ning, for 2012 we anticipate a current-account surplus of about
10 per cent measured by the GDP, after 8 per cent in the pre-vious year. Besides diamonds, Angola also has other important
mineral resources such as iron and manganese ores, gold, cop-
perand platinum.The foreign direct investments flow primarily
into theoffshorepetroleumsector, butalso increasinglyinto the
modernisation of the mines. Thegovernment launched a public
investment programme with the budget surplus of 12per cent
of the GDP resulting from the petroleum revenue in 2011. The
estimated 8 billion US dollars are intended to contribute to the
diversification of the economy and flow mainly into the ex-
pansion of theroad network andthe energyfield. Parliamentary
elections were held in September 2012. The 70-year-old Presi-
dent Jos Eduardo dos Santos, who has been rulingthe country
since 1979, was confirmed for another term, as a constitutional
amendmentimplemented in 2010 means that he,in hiscapacity
as head of thegoverningre-elected MPLA party wasautomatic-
ally confirmed in his office.
Botswana: a sparkling economic diamond
Landlocked Botswana, with a population of 1.8 million, glitters
as the politically and economically most stable country in
Africa, thanks to democracy, diamonds and tourism. Its per
capitaincome,at 8,680 USdollars,is evensomewhathigher than
thatof South Africa.The economicindicatorsarefavourable: the
growth rates of the gross domestic product fluctuate between 3
2006 2007 2008 2009 2010 2011 2012(f)
0
5
10
15
20
25
Angola increase in GDP (percent)
Source: IWF
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13| Country Information | Renaissance in Sub-Saharan Africa
and 7 per cent, and the above-average foreign exchange re-
serves have an import cover ratioof fourteen months. Botswana
is the worlds leading producer of jewellery diamonds. Dia-
monds account forover60 percent of exportrevenue.The focus
is on local added value; after high-tech open-cast mining, ap-
praisal and sorting take place locally in the ultra-modern dia-
mond centre. The second most important source of foreign ex-
change is tourism in the top-of-the-market range. Further po-
tential is created by the rich deposits of nickel, gold, copper and
coal. Since thecountrybecame independent, state earningsfrom
thediamondsector have been flowing in exemplary fashion into
the modern infrastructure and into the education and healthsectors as common property of thepeople.With a literacyrate
of 81 per cent, Botswana is in the upper range here too in com-
parison withthe other countriesofsouthernAfrica.Theatypically
high budget deficitsof thepast three years of up to 11 percent of
theGDP arethe resultof theconstruction of thecoal-fired power
station Moropule,which after completion in 2012/2013 willcon-
tinuously increase the countrys own production of electricity,
thus reducing the high level of dependence on South African
electricity imports. As a result of increased revenue from the
South AfricanCustoms Union, the government is planningto re-
duce thedeficit substantially inthefiscal year2012/13and iseven
anticipating a small surplus of 0.9 per cent of the GDP. In addi-
tion, Botswana is one of thefew countriesin Sub-Saharan Africa
with exemplary external debt management; there were never
any debt reschedulings. The present sovereign indebtedness,
witha share of23 per centin the GDP,is ata low level.Within the
framework of a managed floating, the exchange rate is pegged
to a currencybasket.Since South Africais themaintrading part-
ner, the South African rand plays the main role in it with a
weighting of 65 per cent.
Mozambique: Megaprojects boost the upturn
Economic recovery at the end of the 1992 civil war was very he-
sitant in Mozambique. However, since 2006 the annual growth
of the gross domestic product has been increasing by a breath-
taking 6 to 8 per cent, boosted by forthcoming megaprojects
suchastheminingofcoalintheworldslargestcoalminesinTete
province, the enterprise Mozal which is the worlds largest and
most modern smelting plant for the production of aluminium
frombauxite, and the approximately 900-kilometrelong natural
gas pipeline to South Africa. At the end of 2006, after more than
30 years of negotiationswith Portugal,the Mozambican govern-
mentacquiredcontrol of the Cahora Bassa hydro-electric power
station,the largestin southernAfrica,throughthe additionalpur-
chase of 67 per cent and thus increased its share to 85 per cent.
10 per cent of the foreign exchange revenue alone comes from
the sale of electricity to South Africa. In addition, the develop-
ment of huge new natural gas fields offshore (Rovuma Basin) is
forthcoming. A new rolling mill for steel covers the nationwide
requirements of the building sector. There is further potential in
theexpansionof theports of Nacala (connection to therailwayto
Malawi), Beira (corridor to Zimbabwe)and Maputo(aboveall, re-
lieving the South African port of Durban). At present the increa-
sing exportsare countered by requirementsfor capitalgoodsim-
ports which continue to be even higher. However, the high cur-
rent-account deficit of over 10 per cent of the GDP of 2011 is fi-
nancedby foreign direct investments to an extentof 70 percent.Thecentralbankhassufficientforeign exchange reserves, which
cover the imports of over five months. Without the high budget
support of the international donor community, the budget defi-
cits of 5 to 6 per cent of the GDP to be financed by the country
would be twice as high.
2007 2008 2009 2010 2011 2012(f)0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Exporte Importe
Mozambique: Trade balancein bnUS-$
Source: IWF
Zambia: The blessing of copper
Zambias engine of growth is in the copperbelt, where Africaslargest deposits lie together with cobalt. In the 1970s the dras-
tic drop in the price of copper plunged the country into a per-
sistent, deep economic crisis. Favoured by the copper price,
which had increased steeply since 2004, the state-owned Zam-
bia Consolidated Copper Mines and foreign mining companies
effected substantial large-scale investments in the modernisa-
tion of existing and development of new copper mines. The mi-
nes Konkola-Deep and Lumwana Copper are regarded as the
largest in the world. Forthe copper to be processed into ingots,
it first has to be separated from the copper ore. This is carried
outin the huge smelting plantsin Mufulira andNchanga, which
are equipped with the latest technology and also already per-
form the refinement. The largest purchaser is Switzerland, fol-
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2007 2008 2009 2010 2011 2012(f)0
2
4
6
8
10
12
-10
-8
-6
-4
-2
0
2
4
-8.4-9.2
1.92.4
3.3
2.1
Exports Imports Current account balance
Zambia: Current account balance in percent of GDPin bnUS-$
Source: IWF
lowed by South Africa, India and China. From 2004 to 2011 an-
nual production expanded by more than 200 per cent. Thanks
to the mining industry as its mainspring, in the past five years
the economy has recorded growth rates of the gross domestic
product averaging 7 per cent. Besides food processing (foods-
tuffs, beverages,tobacco),the buildingindustry, transportation,
communication, financial services and agriculture sectors are
also booming. Copper and cobalt have an export share of over
75 per cent. Despite persistently high import requirements for
capital goods,machinery, means of transportation and services
formining,since2009the current-accountbalance hasforthe
first time been recording small surpluses of 2 to 3 per cent ofthe GDP. With an import cover of three months, foreign ex-
change reserves are still in the low range at present. The char-
ges from mining constitute the Zambian governments largest
source of revenue. Despite high budget supports from foreign
donor countries, the state budget shows deficits of between 3
and 4 per cent of the GDP. Public investments flow predomi-
nantly intothe expansionof energy management, especially im-
portant for the electricity-consuming mining of copper and the
smelting plants; furthermore, they go towards the expansion of
transportation.
3.4 Eastern Africa Ethiopia, Kenya, Tanzania, Uganda and Rwanda recording successes
Ethiopia: Agrarian country with a high level of economic
growth
With its 87 million inhabitants, Ethiopia is Africas most popu-
lous country after Nigeria. The annual growth rates of the gross
domesticproductin thepastfew yearshave averaged 8 percent.
With a share of 52 per cent in the GDP, the agricultural sector
dominates. Coffee has an export share of about 40 per cent; ot-
her export products are cut flowers, oilseeds and pulses. The
marketing of the agrarian economy, which is often still organi-
sed in subsistence, is makingprogress andgives growth impul-
ses for other sectors, such as the services sector with financial
intermediation, the manufacturing industry and the building
sector.
Structural imbalances burden the balance of trade. On ac-
count of the extremely high dependence on imports of fuels
andcapitalgoods, imports arethreeand a half times higherthan
exports. The current transfers correspond to about double the
amount of exports; they comprise high transfer payments from
the Ethiopian diaspora. Despite this relief, the current-account
deficit for 2011is likely to be 5.4 per cent of the GDP. To reduce
thedeficit,in September2010 thecentral bank devalued thena-
tional currency by 20 per cent against the major international
currencies andhas since then been pursuing a policyof gradual
devaluation of the exchange rate. Foreign direct investments
are rather small. The slow increase which is nevertheless oc-
curring is due not least to the economic policy, which has been
pushing the leasing of agricultural areas to foreign investors
since the drastic rise in agricultural prices. These investors are
mainly from the Middle East and Turkey. The strategy is part of
the ambitiousGrowth and TransformationPlan 20102015 of
the Ethiopian government, which initiated lively investment
activity. Its focus is the promotion of the agricultural sector and
industry with mining, and infrastructure projects with the ex-
pansion of the road network and the improvement of the elect-
ricity supply by hydro power. Dependence on the international
donor countries is high. The budget deficits of 3 to 4 per cent of
the GDP would be double the amount without foreign aid. The
governments expansionaryspendingpolicy withgenerousloan
extensions, the depreciating exchange rate and the negative
real interest rates ledto anincreasein therate of inflation, which
in January 2012 climbed to 32 per cent (versus the previous
year), and to a strong increase in foreign indebtedness (appro-
ximately 150 per cent of exports).
Kenya: On the road to recovery
Kenya, the largest and most diversified economy in eastern
Africa, has a strong domestic market with a rapidly growing
middle class. The country is now slowly recovering from the
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slump in economic growth, triggered by the controversial re-
election of President Mwai Kibaki in 2007, and the ensuing
ethnic conflicts at the beginning of 2008. Agriculture has a
share of33 percentin thegross domesticproduct.The foreign
exchange earners are above all tea (Kenya is the worlds lar-
gest tea producer), coffee, cut flowers, fruit and vegetables.
Earnings here were increased by 50 per cent in the past few
years. Besides the building sector and the manufacturing in-
dustry with a share of 20 per cent in the GDP, the services
sector with a share of 43per centplays the actualmain part. It
comprises the growth sectors of the wholesale and retail trade,
tourism, information and communication technology, finan-cial services with innovative mobile banking, and transport
andtraffic. Transittrade is flourishing. Withthe deepwater and
container port of Mombasa and a well-developed road net-
work, Kenya forms the gateway to the countries of the East
African Community (Uganda, Rwanda, Burundi, Democratic
Republic of theCongo, North Tanzania, Ethiopia)and to South
Sudan, which has been independent since July 2011. Presi-
dential elections are coming up in March 2013. President Ki-
baki is not permitted to run for a third term of office. The new
constitution gives reason to hope for a more peaceful election
this time.
With an economic growth of 4.4 to 5.1 per cent of the GDP
in 2011 andprospectively in 2012, the economy, which is cur-
rently suffering from high inflation, is provingto be robust. The
global increase in the price of raw materials, unexpectedly
high food imports on account of the drought at the Horn of
Africa, interest rate increases and the governments generous
spending policy caused theinflation rate to rise steeply; in De-
cember 2011 it was 18.9 per cent (versus the previous year).
Thehigh pressure which this puton theexchangerate against
the US dollar brought this rate down to a 17-year low at times.
The current-account deficit in the fiscal year 2011/2012 is
around 10 per cent of the GDP, the imports being more than
double the exports. With a share of 70 per cent in the transfer
payments, remittances from the Kenyan diaspora predomi-
nate. Foreign direct investmentsare still farfrom reaching the
level of 2007 again. External borrowing requirementsare high;
Kenyais dependenton multilateraldonors. Since 2011budget
deficits have increased to 7 to 8 per cent of the GDP, caused
amongst other thingsby an economic stimuluspackagefor in-
frastructure measures (road and railway construction, energy
management for the expansion of electricity generation). The
indebtedness of the state has increased to 47 per cent of the
GDP, whereas the countrys foreign indebtedness is more at alow level.
Tanzania: Robust growth at the expense of high deficits
Tanzanias economy grew by 6.4 per cent in real terms in 2011,
and the same performance can also be expected in 2012. Until
some years ago, agriculture traditionally dominated with the
cultivation of coffee, tea, tobacco and cotton. Now mining has
come to the fore as the strongest engine of growth. Above all
the mining of gold, with an export share of 40 per cent, produ-
ces increasing foreign exchange revenue which covers five
monthsimports.Tanzania hasprogressed to become thefourth
largestproducerof goldafterSouth Africa,Ghana andMali. Fa-
vourable general conditions andthe still farfrom exhausted po-
tential of uranium, diamond, nickel and cobalt deposits are en-
suring a slowincrease inforeign direct investments.Tourismac-
counts for 82 per cent of the revenue from services. It does in-
deed fall behind Kenyas tourism, but is nevertheless recording
steady growth rates and earnings. On account of the extremely
high import demand for investment goods in mining, as well as
high fuel invoices, the current-accountdeficits remain between
8 and 10 per cent of the GDP. Dependence on international do-
nor countries is high. Without the latter the budget deficits,2005 2006 2007 2008 2009 2010 2011 2012(f)
0
1
2
3
4
5
6
7
8
Kenya: Real GDP in percent of previous year
Source: IWF
2006 2007 2008 2009 2010 2011 2012(f)
0
5
10
15
20
25
Tanzania:Real GDP in percent of previousyear
Quelle: IWF
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C O M M E R Z B A N K G R O U P R I S K M A N A G E ME N T16
which are between 6 and 8 per cent, would be far higher. The
weaker exchange rate, the increase in energy and food prices,
also caused by the drought at the Horn of Africa, meant that
2011 sawa steep increase in the inflationrate, which climbed to
19.8 per cent (y-o-y) in December. The reforms are moving so-
mewhat sluggishly. However, since it gained its independence
Tanzania has been enjoying political stability.
2005 2006 2007 2008 2009 2010 2011 2012(f)
-14
-12
-10
-8
-6
-4
-2
0
without grants with Grants
Tanzania: Budget deficit in percent of GDP
Source: IWF
2004
2005
2006
2007
2008
2009
2010
2011
2012(f)
0 0.2 0.4 0.6 0.8 1.0 1.2 1.4
Uganda: Foreign Direct Investmentin bnUS-$
Sources:InternationalFinancialStatistics,Uganda Statistical Office
Uganda: Investment fever fuels growth
Withgrowthratesbetween4 and8 percent of theGDP inthepast
fewyears, Uganda is alsorecording economicsuccesses,fuelled
by highstateand private investments in thesectors of mining,
trade, telecommunications, financial services and building. The
most important trading partner is Kenya, since almost all goods
trafficis handledvia theKenyanport ofMombasa. Traditional ex-
portproductsare softcommodities,headed by coffee. However,
the re-exportof commoditiesandrelief suppliesto South Sudan,
which became independent in July 2011, plays an increasing
part. As a result of the high dependence on imports of capital
goodsfor infrastructure projects, the current-account deficits arebetween 7 and 10 per cent of the GDP, financed at a rate of over
75 per cent by foreign direct investments. Foreign exchange re-
serves show a comfortable import cover ratio of seven months.
In the nationaldevelopmentplan for2010 to 2015, theUgandan
government banks on large-scale investments in transportation
and in energy projects (hydro power). In 2011 the rate of infla-
tionincreasedsharply, reaching27 percent (y-o-y)inDecember.
The exchange rate, which had depreciated heavily by the third
quarterof2011,hasmeanwhilerecovered.Attheendof2012the
regionalinfluenceof Uganda willgrow furtherwhenthe first pe-
troleum revenue starts to gush in the Lake Albert Basin. The
building of a local oil refinery and an oil pipeline to the Kenyan
port of Lamu is already being planned.
Rwanda: Agrarian state on the way to becoming
Cyberland
In Rwanda the genocide between the Hutus and the Tutsis
whichtook placein the1990s is gradually fading into theback-
ground. The democratisation efforts are making further pro-
gress. Reconstruction is bringing in astonishingly high real
growth rates, which were about 7.7 per cent of the GDP in
2011 and are likely to be 8 per cent thereof in 2012. Agricul-
ture traditionally dominates; the main export products, coffee
andtea,are benefiting from thehighworldmarket prices. Fur-
thermore, the services sector with financial services and tour-
ism is flourishing. With the ambitious programme Vision
2020, the government under President Paul Kagame is in-
tending to catapult the country into the modern age with in-
tensive investments in innovative information and communi-
cation technologies. The nationwide layingof opticalfibre con-
nections is supposed to make mobile and super-fast internet
access available to all citizens and permit the control of elect-
ricity consumptionwith the capital, Kigali, as a service centre.
However, it remains to be seen whether these measures willpushexports and,in general, the possibilities of generating fo-
reign exchange inflows. Further measures provide for access
to educationand care for every citizen. With the improvement
of the land rights and the legal system, as well as the fight
against corruption, the progress of reformhas assumed an as-
tonishing pace, has a positive impact on the level of employ-
ment and is increasingly boosting foreign direct investments.
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17| Country Information | Renaissance in Sub-Saharan Africa
Popu
lation
Po
litica
l
Macroeconom
ic
Rawm
ateria
ls
Spec
ialf
ea
tures
inm
illions
sta
bility
sta
bility
focuse
don
West
Africa
Nigeria
161.9
+
+
Petroleum
Agricultu
reaskeydriver
Ghana
24.8
+
+
Gold,cocoa,petroleum
Highinfrastructureinvestments
IvoryCoast
22.1
0
+
Cocoa,petroleum
Politicalr
estart
Senegal
13.2
+
+
Phosphate
Growing
servicesector
Centr
alAfrica Gabon
1.5
+
++
Petroleum
Promotionofminingandinformation
technolog
y
DRCongo
69.7
-
0
Coppe
r,cobalt,diamonds
Miningattractsinvestors
RCongo
3.8
-
+
Petroleum
Infrastruc
tureinvestmentsenvisaged
South
ern
AfricaSouthAfrica
51.0
+
+
Gold,platinum,chrome
Highlydiversifiedeconomy
Angola
19.5
+
++
Petroleum,diamonds
Diversific
ationofeconomyenhancedby
government
Botswana
2.0
++
++
Diamo
nds
Bestfram
eworkforforeigninvestors
Mozambique
23.9
+
+
Coal,n
aturalgas,bauxite
Highdem
andforcapitalgoodsimports
Zambia
13.6
+
+
Coppe
r,cobalt
Agricultu
reaskeydriver
Easte
rnAfricaEthiopia
87.0
+
0
Softco
mmodities(esp.coffee)
Agro-industryaskeydriver
Kenya
42.0
0
+
Softco
mmodities(esp.tea,
Growing
middleclass,economyencouraged
horticulturalproducts)
infrastruc
tureprojects(transport,energy
sector)
Tanzania
46.4
+
+
Gold,softcommodities
Booming
construction,miningandservice
sector
Uganda
34.9
+
+
Softco
mmodities(esp.coffee)
Inflowof
foreigninvestors
petroleum
(asofendofDec.2012)
Rwanda
10.9
+
+
Softco
mmodities
Informationandcommunicationtechnology
keydrivers
Overv
iewSub-SaharanAfrica
++very
good
+good
0fairnotyetsufficient
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