Macroeconomic Situation and Outlook

The depth of the global financial crisis that started in late 2008 negatively impacted the African economy differentially across subregions and countries. Overall, Africa’s growth in 2009 was estimated at 2.5  percent, which is less than half the pre-crisis rate, resulting in a decline in real GDP per capita for the  first time in a decade. Africa lost between 30 to 50 percent of its 2008 export revenues during the year.  Despite some relief on import bills due to falling food and oil prices, the overall trade balance  deteriorated sharply. The continent shifted from a current account surplus of 3.8 percent of GDP in 2008  to a deficit of 2.9 percent in 2009. The decline in export revenues, and in a few instances in the  levels of aid and remittances, exerted a downward pressure on exchange rates. Similarly, the fiscal  balance deteriorated; from a surplus of 2.2 percent to a deficit of 4.4 percent of GDP from 2008 to 2009. The debt service as a percentage of exports also deteriorated, from 5.2 percent in 2008 to 7.5 percent  in 2009.

The worst-affected countries proved to be the emerging Regional Member Countries (RMCs), including  frontier markets such as South Africa and the Seychelles, and resource-rich countries such as Angola  and Botswana. In contrast, resource-poor and landlocked countries such as those in East and West  Africa have weathered the global downturn better.

Although the global economic and financial crisis resulted in a pronounced decline in GDP growth in  2009, the outlook for Africa in 2010 has improved substantially. With the anticipated global recovery  and sound domestic policy responses, Africa’s GDP growth is projected to reach 4.5 percent in 2010,  and 5.2 percent in 2011, although this is still below the growth rate of the precrisis years. The Bank’s  continued support to African countries is essential to overcome the crisis and bring the economies back  to high-growth paths. For example, the Bank adopted a flexible approach of frontloading resources and  restructuring projects to deliver support where it was most needed in response to the crisis. The Bank  established an Emergency Liquidity Facility (ELF) of US$ 1.5 billion (UA 0.96 billion) and the Trade Finance Initiative (TFI) of US$ 1.0 billion (UA 0.64 billion) in March 2009, to meet the increased demand  for resources from its RMCs. In addition, the Boards of Directors approved the US$ 0.5 billion (UA 0.32  billion) Global Trade Liquidity Program (GTLP) with other cooperating partners to channel dedicated  Lines of Credit (LOCs) or trade finance to those African local banks with regional coverage. Notwithstanding these contributions, the increasing demand for financing from RMCs has demonstrated  the inadequacy of the Bank’s current resources envelope. In response, in 2009 the Bank began to take  measures for an early General Capital Increase (GCI-VI) to help meet future demand from its RMCs.  Furthermore, the Mid-Term Review of the ADF-XI paved the way for launching discussions on the ADFXIIreplenishment .