1. Fiscal Impacts of Climate Disasters in Emerging and Developing Countries

Climate change-induced shocks inflict greater economic damages with increasing frequency and intensity, and systematically affecting EMDEs more than AEs. The extent to which they impact growth and fiscal position is understudied, especially in sub-Saharan Africa (SSA), and this research analyzes the macro-fiscal implications of three common climate disasters by combining macroeconomic data with comprehensive ground and satellite disaster indicators over the last 3 decades across 164 countries. We find that the fiscal impact varies across countries and depends on the types of disaster, structure of the economy, and availability of fiscal space to respond. The impact is limited in AEs. As these climate disasters systematically undermine growth and fiscal positions of developing countries, international support for disaster preparedness and climate change adaptation is instrumental to attenuate their effects  Read More

2. Has the DSSI Helped Lower Sovereign Spreads of Participating SSA Countries?

The DSSI has provided valuable liquidity support to SSA. This note assesses whether it has also helped lower sovereign bond spreads. The results show that the DSSI has lowered spreads of participating SSA frontier markets. Read More

3. Digital currency innovations in Africa: What should policy makers take into consideration?

Policymakers in sub-Saharan Africa are looking to improve financial inclusion and efficiency of payments through digital currencies. Privately issued mobile money such as M-Pesa has long played a momentous role in the region, particularly in East Africa. More recently, fourteen central banks are considering central bank digital currencies.  The latest International Monetary Fund’s Regional Economic Outlook for sub-Saharan Africa outlines the promises of digital currencies for the continent and the potential risks.  Read More

4. Africa’s Growing Crypto Market Needs Better Regulations

The collapse of the world’s third largest crypto exchange FTX, and subsequent plunge in the prices of Bitcoin, Ethereum, and other major crypto assets, is prompting renewed calls for greater consumer protection and regulation of the crypto industry. Read More

5. Digital Currency Innovations in Sub-Saharan Africa

Sub-Saharan Africa is witnessing a rapid development of digital currencies, and policymakers are weighing the benefits and risks of using these products to deliver financial services. This note discusses three instruments—mobile money, central bank digital currencies (CBDCs), and cryptocurrency. Read More

6. The promise of digital currencies for sub-Saharan Africa

The outlook for sub-Saharan Africa is hostage to a shifting and tumultuous global environment: tighter global financial conditions, a slowdown in advanced and emerging market economies, and volatile food and energy prices. Macroeconomic imbalances including high debt and weak external and fiscal positions are of serious concern for many countries. On the upside, however, a digital revolution is under way across the region, with the potential to propel the region towards a more prosperous and resilient future. Policymakers are considering a number of innovations in the realm of digital currency to bolster payment efficiency.  Read More

7. Building a More Food-Secure Sub-Saharan Africa

Sub-Saharan Africa is the most food-insecure region in the world. This note examines the drivers of food insecurity in the region and how countries have responded to the recent food and fuel price shocks. It also outlines short and medium-term policies that are needed to build a more food-secure region in future. Read More

8. Jobs in Lockdown: Insights from Sub-Saharan Africa

Pandemic-induced lockdowns led to sharp drops in formal employment in SSA, with likely even greater losses in the large informal economy. This note uses data on online job vacancies in Ethiopia, Kenya, and Uganda to understand job dynamics during the first lockdown. Read More

9. Seven Charts that Show Sub-Saharan Africa at a Crucial Point

After an unparalleled contraction in 2020, sub-Saharan Africa is set to grow by 3.7 percent in 2021 and 3.8 percent in 2022. The recovery is supported by rising commodity prices, improving global trade and financial conditions. But this welcomed rebound is relatively modest by global standards, leading to a widening income disparity with developed economies. Read More

10. Regional Economic Outlook for SSA: One Planet, Two Worlds, Three Stories (October 2021)

The world remains in the grip of the COVID-19 pandemic and a seemingly accelerating pace of climate change, both of which underscore the need for increased global cooperation and dialogue. Solutions to these global problems must involve all countries and all regions, especially sub-Saharan Africa, with the world’s least vaccinated population, most promising renewable energy potential, and critical ecosystems. Read More

11. Regional Economic Outlook for SSA: Navigating a Long Pandemic (April 2021)

Despite turning out better than expected, growth in 2020 is estimated to be the worst on record, at –1.9 percent, leading to a large increase in poverty. In 2021, the region’s economy is expected to resume expansion at 3.4 percent, weaker than the 6 percent for the rest of the world, amid a continued lack of access to vaccines and limited policy space to support the crisis response and recovery. Read More

12. Regional Economic Outlook for SSA: A New Shock and Little Room to Maneuver (April 2022)

The economic recovery in sub-Saharan Africa surprised on the upside in the second half of 2021, prompting a significant upward revision in last year’s estimated growth, from 3.7 to 4.5 percent. This year, however, that progress has been jeopardized by the Russian invasion of Ukraine which has triggered a global economic shock that is hitting the region at a time when countries’ policy space to respond to it is minimal to nonexistent.  Read More

13. More African Central Banks Are Exploring Digital Currencies

Several sub-Saharan African central banks are exploring or in the pilot phase of a digital currency, following Nigeria’s October introduction of e-Naira. Nigeria was the second country after the Bahamas to roll out a CBDC.  CBDCs are digital versions of cash that are more secure and less volatile than crypto assets because they are issued and regulated by central banks. As the Chart of the Week shows, South Africa and Ghana are running pilots while other countries are in the research phase. Read More

14. Kingdom of Lesotho: 2022 Article IV Consultation Report

Lesotho has been simultaneously hit by the pandemic, declining transfers from the Southern African Customs Union (SACU), and the impact of the war in Ukraine. The pandemic exacerbated the impact of sluggish regional performance, climate shocks, and longstanding structural issues such as regulation, governance, political stability, financial inclusion, and diversification. Public expenditure has continued to increase, such that the decline in external transfers precipitated significant financing pressures and growing domestic arrears. With limited inflows to the private sector, the resulting public sector-driven external imbalances have continued to put pressure on international reserves needed to maintain the exchange rate peg. Read More

15. Africa’s Rapid Economic Growth Hasn’t Fully Closed Income Gaps

Many economies in sub-Saharan Africa grew at a record pace before the pandemic. Ethiopia and Rwanda, for example, saw some of the fastest expansions in the world—an average of more than 7.5 percent per year over the past two decades. However, it is less clear whether the gains in economic growth have been shared equally across regions within countries because income data at the subnational level are not always available. Read More

16. Regional Inequalities in Sub-Saharan Africa

This study analyzes inequalities across subnational regions within sub-Saharan African countries, documenting a marked decline before 2010, a slowdown afterward and a partial reversal during the COVID-19 pandemic. It also finds persistently large disparities in crucial socioeconomic aspects. It outlines policies and strategies to support lagging regions catch up. Read More