Afrika Studie E

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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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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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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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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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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


12/20


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.


13/20


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


14/20


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-


15/20


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


16/20


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


17/20


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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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


19/20


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Afrika Studie E

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