南非國(guó)際事務(wù)研究所（SAIIA）：非洲的新冠肺炎疫情宏觀經(jīng)濟(jì)政策應(yīng)對(duì)系列26：通過(guò)在撒哈拉以南的非洲實(shí)施逆周期政策構(gòu)建宏觀經(jīng)濟(jì)韌性

CoVID-19

MACROECONOMIC

POLICYRESPONSES

INAFRICA

26

BuildingMacroeconomic

ResilienceThrough

Counter-CyclicalPolicyin

Sub-SaharanAfricaConradVanGass

IDRC·CRDI

Canada

AboutCoMPRA

TheCOVID-19MacroeconomicPolicyResponseinAfrica(CoMPRA)projectwas

developedfollowingacallforrapidresponsepolicyresearchintotheCOVID-19

pandemicbytheIDRC.Theproject’soverallgoalistoinformmacroeconomicpolicy

developmentinresponsetotheCOVID-19pandemicbylowandmiddle-income

countries(LMICs)anddevelopmentpartnersthatresultsinmoreinclusive,climate-

resilient,effectiveandgender-responsivemeasuresthroughevidence-basedresearch.

ThiswillhelptomitigateCOVID-19’ssocialandeconomicimpact,promoterecovery

fromthepandemicintheshorttermandpositionLMICsinthelongertermfora

moreclimate-resilient,sustainableandstablefuture.TheCoMPRAprojectwillfocus

broadlyonAfricancountriesandspecificallyonsixcountries(Benin,Senegal,Tanzania,

Uganda,NigeriaandSouthAfrica).SAIIAandCSEA,astheleadimplementing

partnersforthisproject,alsoworkwiththinktankpartnersinthesecountries.

OurDonor

ThisprojectissupportedbytheInternationalDevelopmentResearchCentre(IDRC).TheIDRCisaCanadianfederalCrowncorporation.ItispartofCanada’sforeign

affairsanddevelopmenteffortsandinvestsinknowledge,innovation,andsolutionstoimprovethelivesofpeopleinthedevelopingworld.

Glossaryanddefinitions

Thefollowingdefinitionsareofferedastopic-specificandquantifiabletermsofdescriptioninthetextualanalysisofmacroeconomicresilience,itsdeterminantsandrelationshipwithgrowth.

Table1Glossaryofterms

Timeperiodisationforstrategicplanningandcontracting

Shortterm=shortrun

Lessthan1year

Mediumterm=mediumrun

Between1and5years

Longterm=longrun

Between5and15years

Generational

Between15and25years

Structuralversuscyclical

Structural

Long-termtogenerationaltrend(line)

Incrementallybuiltupordismantled

Cyclical

Medium-termbusiness,electoralorplanningcycle

Production=realGDPcycle

Upcycle=acceleration,downcycle=deceleration,crisis=negativerealpercapitagrowth

Price=inflationcycle

Inflationarysurge=pricegrowthaccelerating,disinflation=pricegrowthdecelerating,deflation=pricesdropping

Real

Nominalvaluestrippedoftheeffectofpriceinflationandindicatingchangesinoutput

Countercyclical

Reactingintheoppositedirectiontothecycleintheshortterm

Procyclical

Movinginthesamedirectionasthecycleintheshortterm

Peaktrough

Whenrealpercapitagrowthratesareabove/belowaverage

Crisisversusresilience

(Socio-economic)crisis

DecliningrealpercapitagrowthinGDP=socio-economicrecession

Deceleration

Positivebutdeclininggrowthrates=downcycle

Acceleration

Positiveandincreasinggrowthrates=upcycle

Resilience

Capacityforanddurationofrecoveryfromcrisis

Exogenous

Emanatingfromoutsidethenation/region

Endogenous

Emanatingfromwithinthenation/region

Shock

Impulsecausingadeviationfromagrowthtrendlineintocrisisordeceleration

3BuildingMacroeconomicResiliencethroughCountercyclicalPolicyinsub-SaharanAfrica

Magnitudes

Positive

Eitherabove-zerogrowthratesormovinginthesamedirectionas

Negative

Eitherbelow-zerogrowthratesormovingintheoppositedirectionto

Low

Realpercapitagrowthratesbelow2%peryear

Medium

Realpercapitagrowthratesbetween2%and4%peryear

High

Realpercapitagrowthrateshigherthan4%peryear

Negligible=undetectable

Correlations=co-movements=correspondencelessthan0.1or10%probabilityofbeingrelated

Weak

Correlationsbetween0.1and0.3or10%to30%likelihood

Weaklymoderate

Correlationsbetween0.3and0.4or30%to40%likelihood

Moderate

Correlationsbetween0.4and0.4or40%to70%likelihood

Strong

Correlationsabove0.7or70%+probabilityofbeingrelated1

Coincident=concordant

Occurringsimultaneouslywithinthesameyear

Discordant

Occurringindifferentyears(possiblywithaleadorlag)

Monetarypolicy

Monetarypolicy

Focussingonmoderatingtheinflationaryovertheproductioncycle,whichmay/notcoincideovertheshortterm

(Conventional)monetarypolicytools2

Theseincluderaising/loweringbasemoneysupply,reserverequirementsoncommercialbanksorthecentralbankpolicyrate

Activemonetarypolicy

Wherethecentralbankhastheinstitutionalandpoliticalautonomyand

capacitytoexogenouslyshiftthemoneysupplycurveoralterinterestrates(orusesoneorbothinstrumentstocounterthecycle)

Passivemonetarypolicy

Wherethecentralbanklackstheinstitutionalandpoliticalautonomyorcapacity

tocounterendogenousmovementalongthemoneysupplycurve

(orusesoneorbothinstrumentstoaccentuatethecycle)

Financialmarketdeepening

Extendinganddiversifyingtherangeofmoney,creditandinsuranceproductsavailabledifferentiatedbymaturity,riskpremiums,collateralrequirementsandlegislativeframeworks

Fiscalpolicy3

Fiscalpolicy

Focussedonmoderatingtheproductionovertheinflationarycyclewithaviewtosecuringfiscalbalancebetweenspendingmeasuresandrevenuegeneration

Activefiscalpolicy

Wheregovernmenthastheinstitutionalcapacitytocontrolspendingandrevenuegrowthandusesoneorbothinstrumentstocounterthecycle

Passivefiscalpolicy

Wheregovernmentlackstheinstitutionalcapacitytocontrolspendingandrevenuegrowthandusesoneorbothinstrumentstoaccentuatethecycle

1PatrickSchober,ChristaBoerandLotharASchwarte,“CorrelationCoefficients:AppropriateUseandInterpretation”,Anesthesia&Analgesia126,no.5(May2018):1763–1768.

2Micro-andmacro-prudentialtoolsarenotexplicitlyconsideredinthisanalysisduetoinsufficientdataformostofthecohortexceptSouthAfrica.

3Chorng-HueyWong,“AdjustmentandInternal-ExternalBalance”,inChorng-HueyWong,MohsinKhanandSalehNsouli,MacroeconomicManagement:ProgramsandPolicies(WashingtonDC:InternationalMonetaryFund,April2002).

4BuildingMacroeconomicResiliencethroughCountercyclicalPolicyinsub-SaharanAfrica

Socialspending

ExpenditureonrealisingthefourprimarySustainableDevelopmentGoals(SDG1–4)onpovertyreduction,foodsecurity,healthandeducation

Automaticstabilisers

Fiscalmeasuresthatareformulaicallyprocyclical,suchaswelfareandfoodsecuritybenefitsorprogressiveincometaxes,andcanbeeffectedoverthe

shortrun

Mandatoryvsdiscretionaryspending

Mandatoryspendingisfixedagainstthenumbersofbeneficiariesrequiring

publicservice(suchaseducationandhealthcare);discretionaryspendingcanbeadjustedaccordingtotheeconomiccycleandincludesinfrastructureandnon-

essentialservices

Macroeconomicbalance4

Internalbalanceimbalance

Thecombinationofgovernmentexpenditureandnetdomesticcreditthat

maximisesthechancesofalow(er)andstableoutputgrowthandinflationpath;imbalancesincluderecessions(decelerationsintocrisis)andinflationarysurges

Netdomesticcredit

Basemoney(M1)+broadmoney(M3-M1)+reserveassets+netcredittogovernment+netcredittoprivatesector+netforeignassets5

Externalbalanceimbalance

Thecombinationofrealeffectiveexchangerates(REER)andrealoutput(GDP)thatmaximisesthechancesofinternalbalancecorrespondingwithbalance

betweenthecurrentandfinancialaccounts;imbalancesincluderecessions/

inflationarysurgeswithdeficitsorsurplusesontheoverallbalanceofpayments

Realeffectiveexchangerate

Theinflation-adjustedexchangerateofthedomesticcurrencytoatrade-weightedbasketofinternationalcurrencies

Componentsofmacroeconomicresilience

Monetary

Capacitytobothcontrolcost-pushinflationwhileallowingaccommodationofthegrowthcycle–impliesdeepeningoffinancialmarkets

Fiscal

Capacitytoeffectcountercyclicalpolicyreducingdeficitsduringtheupcycles,sustainingthemduringdowncyclesandaccumulatingthemtostimulateoutofacrisis

Externaldebt

Capacitytolimitaccumulationofdebt(countercyclically)andcontrol

debt-servicingburdensthatcrowdoutsocialandinfrastructurespending

Trade6

Capacitytostimulateanddiversifyexports,limitanddiversifyimportsandsustaincurrentaccountbalance

Investment

Capacitytostimulategrossfixedcapitalformation,attractnetforeign(direct)investmentandsustainfinancialaccountbalance

Governance

Capacitytocontrolcorruption,implementruleoflaw,providequalityregulation,negotiateandeffectpolicy,ensureinstitutionalandpolicystability,prevent

violenceandenablevoiceandaccountability

Humancapital

Reflectedinincreasingemploymentratios,improvededucationalandhealthoutcomesandthedemographicdividendofsustainabledependencyratios

4Wong,“AdjustmentandInternal-ExternalBalance”.

5CentralBankofNigeria,MonetaryProgramme,“UnderstandingMonetaryPolicy:Series2”,2021.

6Withrespecttothemacro-econometriccompanionpaperonSouthAfrica(seeEliphasNdou,“TheinformationContentofMacroeconomicResilienceIndices:EvidencefromGDPGrowthDynamicsinSouthAfrica”,SouthAfricanInstituteofInternationalAffairs[forthcoming]),an

alternativeconfigurationtothetradeandinvestmentsub-indicesisusedwiththesameindicatorset.Thisconfigurationreflectsexternalbalanceandeconomicdiversificationrespectively.

5BuildingMacroeconomicResiliencethroughCountercyclicalPolicyinsub-SaharanAfrica

Abstract

Macroeconomicresilienceisthecapacityofacountrytowithstandandrecoverfromexogenousandendogenousshockscausingsocio-economiccrisesandtoreverttoapositivestructural

growthpath.Thispaperanalysestherelationshipsbetweenkeyexplanatoryvariablesofresilienceandgrossdomesticproduct(GDP)growthfor12sub-SaharanAfricancountries(rangingfrom

low-toupper-middle-incomestatus)for2000–2021withafocusontheapplicationofmonetaryandfiscalinstrumentsofcyclestabilisation.Itcontextualisesstructuralvulnerabilityintermsof

currencyregimes,inheritedgrowthpathsandtradedependenceanddiversification.Correlationanalysisreviewstherelationshipsbetweenmonetaryandfiscalpolicyvariablesandtheirinflationandproductioncyclestabilisationperformance.Amacroeconomicresilienceindexconsisting

oftrade,investment,externaldebt,monetary,fiscal,governanceandhumancapitalsub-

indicesisconstructedasanindicationofcyclicalandstructuralresilience.Furthercorrelation

analysisrevealsthedirectionandprobabilityoftherelationshipbetweenthesecomponentsof

resilienceandGDPgrowthforeachcountry.Policyrecommendationsaremadeinrespectoftheprogressivesynchronisationofexchangerateregimesacrossregionaleconomiccommunities

andtheAU,tradedependenceanddiversification,andthetrackingandconsistentuseof

countercyclicalmonetaryandfiscalpolicytobuildresilience.Somesuggestionsarealsomadeonstabilisinginfrastructureandprotectingsocialwageexpenditureforinclusivegrowth.

Introduction

Thispolicy-synthesisreportisacomparativesummaryof(a)sixsub-Saharancountry-partnerpolicyinsightsintomacroeconomiccrisesandtheirmanagement;(b)statisticalanalysisof

theutilisationofmonetaryandfiscalpolicyinstruments;and(c)therelationshipbetween

(componentsof)macroeconomicresilienceandGDPgrowth.Thisservesasapreludeto

(d)theeconometricmodellingofmonetaryandfiscalpolicyimpulseandresponsefunctions

inSouthAfrica,thecountrywiththehighestdataavailabilityandinstitutionalpolicycapacity.7

TheseoutputsbringtofruitionthethirdphaseoftheCOVID-19MacroeconomicPolicyResponsesinAfrica(CoMPRA)projectfundedbytheInternationalDevelopmentResearchCentre.During

thisphase,alongitudinal(2000–2021or,datapermitting,2023)studyofsixpartnercountries(Nigeria,SouthAfrica,Tanzania,Uganda,SenegalandBenin)andtheirregionalandincome-statuspeers(Ghana,Botswana,Kenya,Rwanda,MaliandTogo)wasundertaken.

7Ndou,“TheinformationContentofMacroeconomic”.

6BuildingMacroeconomicResiliencethroughCountercyclicalPolicyinsub-SaharanAfrica

Rationaleandobjectives

InthefirstphaseoftheCoMPRAproject,thesixpartnercountries’vulnerabilityandpolicy

responsestotheCOVIDshockwereassessed.Thisfinalphaseexaminestheresilienceofthe

casestudyandpeercountriestorecoverfromtheseshocksandsustainpositiverealpercapitagrowth.Althoughthestudyislimitedtothe20-yearperiodpriortotheCOVIDshockin2020–2021,thehistoricalreviewofcapacitytorecoverfromshocksisrelevanttothecurrentperiod

ofescalatinggeopoliticaltensionsandtheexogenousshocksthesegenerateontheAfricancontinent.

Theobjectiveofthisreportistoassessthecapacityofsub-SaharanAfricannational

governmentstoimplementmacroeconomic(especiallymonetaryandfiscal)policywithintheconstraintsoftheglobaltradeandinvestmentregime.Assessingtheselimitationsenables

insightintotheextentofnationalagencyinrespondingtobothexternalandinternalshocks,andtheireffectivenessindoingso.Cross-countrycomparisonofpolicycapacityandresponsiveness

allowsfortheidentificationofgenerictrendsandwhatmay/notbebetterabletobemanagedornegotiatedatregionalorcontinentallevel.Finally,bothgenericandcountry-specificpolicyrecommendationscanbegeneratedonhowresiliencecanbebuilt,orvulnerabilityreduced.

Structureandmethodology

Thispaperdrawson12countryworkingpapersthatwerecompletedbytheCoMPRAresearchteamtrackingtheendogenousandexogenousshocksthatthecohortexperiencedoverthe

period2000–2023.SeeAnnexuresA1-6foranoverviewofthetypesofshocksthecountries

experienced.Thisworkwascomplementedbythedevelopmentofsevensub-indicesstructuredaroundthefollowingindicators:fiscal,monetary,externaldebt,trade,investment,governanceandhumancapitaldevelopment.Thesecomprisedannualiseddatadrawnmainlyfromthe

WorldBank’sWorldDevelopmentIndicators(WDI)andtheInternationalMonetaryFund(IMF)andsupplementedbycountry-leveldatasetswhereavailable(seeAnnexureC1-3).Allinall,theanalysisdrawsonover15000datapoints.

Thefirstsectionofthisreportsetsouttheoreticalframingandthenreviewsthelong-term

structuraltrendscharacterisingthe12nations’macroeconomicperformancein2000–2023.It

notestheimportanceofcurrencyregimesinshapingpolicycapabilitiesandpriorities.Althoughnottheobjectiveofthisproject,therearepossibleimplicationsforthepotentialof(monetary

andfiscal)policycoordinationacrossregionaleconomiccommunities(RECs)andthecontinent.

7BuildingMacroeconomicResiliencethroughCountercyclicalPolicyinsub-SaharanAfrica

Thesecondsectionidentifiestheproximatecausesofbothexogenousandendogenousshocks,

theirtransmissionmechanismsandtheirpolicyresponses(bothprocyclicalandcountercyclical)foreachofthe12countriessince2000.Generictrendsacrossthecontinent(orREC)aredrawn

fromtheindividualcountry-partnerpolicyinsightsthataresummarisedinthecountry-with-peertablesoncrisisidentification(AnnexureA).

ThethirdsectionreviewsthepolicyimplicationsfromacorrelationanalysisbetweenGDP

growth,inflationandthemainmonetaryandfiscalpolicyinstrumentsthatgovernmentscanmanipulateatthemargins.Thisstartsananalysisofthecapacityofnationalgovernmentstoeffectcountercyclicalmonetaryandfiscalpolicies,andsomeofthetrade-offsbetweenthem.Thisanalysisisbothcountry-specificandgenericacrosscountriesorregions.

Thefourthsectiondefinesmacroeconomicresiliencebyconstructinganindexthereofwiththe

sevensub-componentsreflectingtheestablishedtheoreticalrelationshipsusedinreferenced

studies(namelyfiscal,debt,tradeandinvestmentpositionsandgovernance).Thisalsoincludesamonetarysectorsub-indexandthecompilationofamorecomprehensivehumancapital

component.Eachofthesesevensub-indicesisconstitutedbyrelevantindicatorsavailablefrominternationallycomparabledatabasescompiledbytheWorldBankandtheIMF.Eachcomponentindicatorandsub-indexisweightedequally(intheabsenceofprincipalcomponentsanalysis)8

andstandardisedaccordingtothemin-maxformula,whichservestoconvertanyindicator

intoascorebetween0and1onascaleofincreasingresilience,butwithintheparametersof

eachcountry’sownhistoricalperformance(ratherthanbyindicatoraccordingtoitsmulti-

countryhistoricalrange).TheconsequentanalysisoftherelationshipsbetweenGDPgrowthand(componentsof)macroeconomicresilienceispresentedingraphicalandtabularformforthe

country-specificfindings.Thisiscomplementedwithtextualanalysisofthecross-countryresults.

Thefifthsectionpullstogetherthecrisisidentification,correlationandresilienceindex

constituentsofthisanalysisintoasetofcountry-specificandregionalorcontinent-widepolicy

recommendationsonmonetary,fiscalandothermacroeconomicmechanisms.Theaimoftheseistodevelopresilienceandshiftorstrengthentherelationshipwithpercapita,realGDPgrowth.9

8Thepaucityofdataformanycountryindicatorsyieldsstatisticallyinsignificantresultswithwhichtoenableaprincipalcomponentsanalysisofmostcountries’performance.Thisproblemiscompoundedifmulti-countryanalysisisattempted.

9Thecompanionpiecetothispolicysynthesis(referredtoearlier)deepensaneconometricanalysisofSouthAfrica’srelationshipbetween

macroeconomicgrowthandresiliencethroughprincipalcomponentsregressionofthecomponentindicators,vectorautoregressiontoascertainthedominantdirectionofcausality,andimpulse-responsefunctionstodeterminethemagnitudeanddurationofmonetaryandfiscalstimuli.

8BuildingMacroeconomicResiliencethroughCountercyclicalPolicyinsub-SaharanAfrica

Theoreticalframework

Thetheoreticalframeworkinformingthestructureofthisreport,thechoiceof(available)

indicatorsandthelinkbetweenanalysisandpolicyrecommendationsaredrawnfromtheIMF’sexpositionofexternalandinternalmacroeconomicbalance10anditssequentiallyprogrammedcombinationsofexchangerate,monetaryandfiscalpolicyinterventionstorestoreoverall

balance(recentlyadoptedbytheCentralBankofNigeria).

Therearesignificantspilloversbetweenthefiscal,monetaryandexternalsectors.Afiscaldeficitthatisdebtfinancedwillincreasenetdomesticcreditand/ornetforeignassetsunlessusedfor

consumptionthatcrowdsoutprivatespendingratherthaninvestment,whichcancrowditin.

Governmentdebtusedforinvestment,however,islikelytoinducedeficitpressuresonthecurrentaccountwiththeimportationofcapitalequipment.

Achievingfiscalbalanceisconsideredthemostpowerfultoolforcounteringinternalimbalancesbecauseofitsdirectimpactonincomes,especiallyinfixedpegandmoretightlymanaged

currencyfloatregimes,wheredegreesoffreedominthechoiceofpolicyinstrumentsaremore

limited.Theuseofmonetarypolicyinstrumentstocontroldeficitinducedinflationisless

impactfulinthisregardbecauseitstransmissionismorediffuseacrossbothprivateandpublicsectors.However,totheextentthatexternalimbalanceinbothcurrentandfinancialaccountsispromptedbyinterestratedifferentials,monetarypolicyismoreappropriate.Wherecurrentaccountdeficitsarethedominantimbalanceandfinancial(moneyandcredit)marketsare

shallow,exchangeratepolicyisthemoreappropriateinstrumentwithadecisiontodevalueinmorepeggedortightlymanagedcurrencyregimes,orpassivelyacceptdepreciationinfreer-floatingcurrencyregimes.Exchangeratepoliciesarepreferredasshort-runmeasuresandfortheircomplementaritywiththeappropriatemonetaryandfiscalcontractionsorexpansions.

Thispolicycontinuumofshort-run,diffusetomedium-run,focussedimpact(ie,fromexchangeratethroughmonetarytofiscalpolicy)informstheinternalstructureandrelativefocusofthisreport.WiththeexceptionofSouthAfrica,lackofinternationallycomparabledatamakesan

analysisoftheimpactofexchangeratepoliciesandfinancialmarkettransmissionmechanismsinfeasible.Laganalysisofpolicyimpactsintothemediumtermistoocomplextoundertakeincaseswhereoutputandinflationcyclesdonotcoincideasimplicitlyassumedinthetheoreticalframework,andwhichmaybetheresultofinappropriateordelayedpolicyresponses.

Nonetheless,exploringthemacro-economicresilienceofthe12AfricancohortcountriesofthisstudythroughtheabovetheoreticalprismoffersvaluablelessonsonhowAfricanpolicymakers

10Wong,“AdjustmentandInternal-ExternalBalance”.

9BuildingMacroeconomicResiliencethroughCountercyclicalPolicyinsub-SaharanAfrica

couldsystematicallyimprovetheirstructuralresiliencetotherapidlyincreasingexogenousandendogenousshocksthatAfricansocietyfacesandwillincreasinglyfaceinthefuture.

Structuralcontextandtrends

Drawingonthisapproach,Tables2aand2bcomparethemacroeconomicperformanceofthesixcasestudycountriesandtheirsixregionalandincomepeersoverthegenerationalperiod

2000–2023.Thiscohortcoversarepresentativerangeoflow-income,lower-middle-incomeandupper-middle-incomenationsinsub-SaharanAfrica,displayingdivergenttrendsinGDPgrowth,inflationandrelativecurrencyvaluations.InlinewiththeagendaoftheAU’smulti-

generationalobjectiveofprogressivecurrency,monetaryandfiscalunion,asmuchintra-regionalco-movementofindicatorswasincorporatedintothesampleaspossiblewithwhichtoidentify

commonregionalorcontinentaltrends.

Table2aComparativelong-termmacroeconomicindicatorsfor12Africancountries

Regionaleconomic

community

(andexchange

rateregime)11

Country

GDPper

capita

(constant

2015$),

2023

Income

status

Average

annual

real

growthof

GDPper

capita,

2000to

2023

Structural

growth

path,2000

to2023

Average

inflation

rate,

2000to

2023

Average

exchangerateappreciation,2000to2023

ECOWAS

(managedfloat)

Nigeria

$2,487

lower-

middle

2.50%

moderate,

decelerating

11.51%

-7.30%

ECOWAS

(independentfloat)12

Ghana

$2,048

lower-

middle

3.23%

moderate,

deceleratingslightly

21.83%

-16.79%

SACU

(independentfloat)

South

Africa

$5,956

upper-

middle

1.22%

low,

decelerating

6.55%

-5.02%

SACU

(fixedadjustablepeg)

Botswana

$6,614

upper-

middle

1.36%

low,constant

6.49%

-4.42%

EAC

(managedfloat)

Tanzania

$1,183

lower-

middle

3.43%

moderate,

deceleratingslightly

7.06%

-5.41%

EAC

(managedfloat)

Kenya

$1,926

lower-

middle

1.67%

low,

accelerating

8.12%

-2.17%

EAC

(managedfloat)

Uganda

$959

low

2.75%

moderate,

decelerating

8.66%

-4.86%

11SeeInternationalMonetaryFund,“ClassificationofExchangeRateArrangementsandMonetaryPolicyFrameworks”,June2004.

12“BoGreiteratesCommitmenttoFlexibleFXRegime”,TheB&FTOnline,June26,2023.

10BuildingMacroeconomicResiliencethroughCountercyclicalPolicyinsub-SaharanAfrica

Table2bComparativelong-termmacroeconomicindicatorsfor12Africancountries

Regionaleconomic

community

(andexchange

rateregime)13

Country

GDPper

capita

(constant

2015$),

2023

Income

status

Average

annual

real

growthof

GDPper

capita,

2000to

2023

Structural

growth

path,2000

to2023

Average

inflation

rate,

2000to

2023

Average

exchangerateappreciation,2000to2023

EAC

(Crawlingpeg)

Rwanda

$962

low

4.89%

high,

decelerating

5.58%

-5.16%

ECOWAS-WAEMU

(fixedregionalpeg)

Senegal

$1,541

lower-

middle

1.40%

low,

accelerating

2.09%

0.17%

ECOWAS-WAEMU

(fixedregionalpeg)

Mali

$758

low

1.25%

low,

decelerating

3.08%

0.17%

ECOWAS-WAEMU

(fixedregionalpeg)

Benin

$1,096

lower-

middle

1.56%

low,

accelerating

2.08%

0.17%

ECOWAS-WAEMU

(fixedregionalpeg)

Togo

$580

low

0.98%

low,

accelerating

3.93%

0.17%

Worstperformer

Bestperformer

Source:CompiledbyauthorfromWorldBank,“WorldDevelopmentIndicators”,

/source/world-development-indicators

Themoststrikingexampleoftheroleofcurrencyregimesininfluencingstructuralgrowth,

inflation,andexchangeratetrendsisfoundinacomparisonofthefourmembersoftheWestAfricanEconomicandMonetaryUnion(WAEMU)andtheremainderofthecohort.Members

ofWAEMUhavelongfixedtheircommoncurrency,theWestandCentralAfricanfranc(CFA),totheeuro,whichhasslowlyappreciatedagainstthedollarsince2000.Withmonetarypolicyeffectivelyexternalised,theregionalcentralbankhaslittlescopeforindependentmonetary

managementotherthancontrolsonexternalcapitalflows,reserveandliquiditymanagement.

TheCFAisconsideredstructurallyover-valued,suchthatitincentivisesimportationover

domesticproduction.ThisisconsideredadragonGDPgrowth,andtheevidencebelowclearlyimpliesthatpercapitaGDPgrowthhasbeensuppressedintheWAEMUcountriesrelative

totherestofthecohort.Morebeneficially,andwiththenotableexceptionofMaliwithits

primarycommoditydependenceanddeterioratinggovernance,growthisacceleratingintheotherWAEMUmembers.Proponentsofpeggedexchangeratesarguethatexchangerateandpricestabilityencouragestructuralresiliencethroughgrossfixedcapitalformationandtradediversification.14

13IMF,“ClassificationofExchangeRateArrangements”.

14IMF,“ExchangeRateRegimesinSub-SaharanAfrica:ExperiencesandLessons”,inRegionalEconomicOutlook:Sub-SaharanAfrica,Report(WashingtonDC:IMF,October2016).

11BuildingMacroeconomicResiliencethroughCountercyclicalPolicyinsub-SaharanAfrica

ThefourmembersoftheEastAfricanCommunity(EAC)areatvariousstagesofliberalising

theirmanagedfloatregimesinpreparationfortheireventualharmonisationunderacommoncurrency.KenyaandUgandahaveprogressedfurthestandlongestinindependentlyfloating

theircurrencies,whileTanzaniahasbeenslowertorelinquishitscontrolsovercapitalflows.Rwandaoperatesacrawling-pegtypearrangement,adjustingitsbandsaccordingtotheinflationdifferentialswithitsmajorregionaltradingpartners.15

WithintheSouthernAfricanCustomsUnio