Raising growth and investment in sub-saharan Africa: What can be done?

Abstract

Sub-Saharan Africa must increase economic growth to reduce poverty and improve living standards. This article discusses some obstacles to growth in the region, as well as some policy actions that would improve its prospects. Raising growth and reducing poverty will be a difficult task, but one that can be accomplished, provided that policy-makers in Africa and the international community are ready to do their part. As part of that effort, the IMF will continue to encourage countries to • pursue strong macroeconomic policies: no one benefits from high inflation, particularly not the poor; large budget deficits crowd out private investment and discourage exports; and arrears deter investors; • improve economic efficiency by liberalizing trade and maintaining competitive exchange rates, removing the state from direct involvement in the production of marketable goods and services, and enhancing domestic competition in all sectors, especially agriculture; • support regional integration efforts that contribute to trade liberalization, strong macroeconomic policies, and the building of institutions that promote good policies; • improve infrastructure, particularly ports and communications, to encourage trade and investment; • increase the share of government spending directed to education and health and improve the delivery of services in these areas; • intensify efforts to root out corruption; and • reduce investors' risks by improving the quality and the integrity of the legal system.