Sub-Saharan Africa
External debt and resource flows 

Debt and indicators
Aggregate resource flows
Key indicators

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Owing to its low level of private capital flows, Sub-Saharan Africa was less affected by the East Asian financial crisis than most other regions. Net resource flows rose despite a slight decline in official development assistance (ODA) as private flows to a few countries increased. The decline in ODA was due to budget cuts among the region’s main donors and political conflicts in some countries. Net long-term private capital flows reached $8 billion in 1997 (compared with an annual average of less than $3 billion in 1990–95). Market confidence in South Africa, which attracts about half of private capital flows, appears to be increasing (although secondary market spreads on South African bonds rose along with those for other borrowers in late October). Though the region’s average debt to exports ratio fell significantly in 1997, many countries continue to have debt stocks well in excess of sustainable levels. GDP growth in Sub-Saharan Africa is estimated at 3.5 percent in 1997, about the same as in 1996 and well above the average of 1.4 percent from 1990–95

Debt and indicators

DEBT INDICATORS IMPROVE MODERATELY. Total debt fell from $227 billion in 1996 to $223 billion in 1997, as interest arrears on long-term debt dropped by $5 billion. The aggregate debt to exports ratio fell from 222 percent in 1996 to 202 percent in 1997, as the decline in debt outstanding was accompanied by an 8 percent rise in export receipts, boosted by a sharp rise in commodity prices during the first half of the year. In 1997 progress was made on the HIPC Debt Initiative, as the boards of the World Bank and the IMF evaluated the eligibility of Benin, Burkina Faso, and Uganda. It was determined that Benin should be able to reach sustainable levels of debt without assistance under the initiative. Uganda and Burkina Faso were judged to be eligible for assistance, and additional resources to be provided under the initiative could reach $900 million in nominal terms.

PRIVATE DEBT INCREASES BUT REMAINS CONCENTRATED. Private long-term debt, including that guaranteed by African governments, rose 4 percent in 1997 to $46 billion, with flows to South Africa increasing substantially. Debt from official sources declined by $2 billion, as net flows from bilateral donors were slightly negative.

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Aggregate resource flows

Aggregate net resource flows to Sub-Saharan Africa increased from $17 billion in 1996 to an estimated $21 billion in 1997, with private lending rising from –$1 billion in 1996 to $3 billion in 1997. Net official development finance remained at $13 billion, the same as in 1996, as a slight decline in ODA was balanced by a slightly smaller outflow of official nonconcessional loans.

OFFICIAL FLOWS FALL FOR THE THIRD CONSECUTIVE YEAR. ODA continued to be the most important source of financing for the region, accounting for $14 billion of the $21 billion in net flows. Yet, since 1990 net ODA has declined by $3 billion in nominal terms (and by 25 percent in real terms), reflecting a fall in grants and net lending from bilateral sources, that has been only partly offset by an increase in lending from multilateral sources. Three-quarters of aid is in the form of grants and is directed toward the poorest countries under the aegis of the Special Program of Assistance for Africa (SPA). The SPA has helped improve aid coordination among bilateral and multilateral donors by identifying funding gaps in performing countries (which facilitates the reallocation of assistance to them) and by providing timely information on the implementation of reforms, so that donor funds can be adjusted accordingly.

NET PRIVATE FLOWS RISE. Private flows, which account for about 40 percent of net flows to the region, increased from $4 billion in 1996 to an estimated $8 billion in 1997, largely because of a sharp rise in net lending from commercial banks. These flows are concentrated in a few countries, with South Africa being by far the largest recipient. South Africa was the only country in the region to issue on international bond or equity markets in 1997. While 13 countries from Sub-Saharan Africa borrowed on the syndicated loan market, commitments to South Africa accounted for 73 percent of the total (and increased from $5 billion in 1996 to $7 billion in 1997).

FOREIGN DIRECT INVESTMENT IS STABLE. Net inflows of FDI are estimated at $3 billion in 1997, roughly the same as in 1996 and twice the annual level in the early 1990s. Despite this increase, FDI flows to Sub-Saharan Africa remain at 1.0 percent of GDP, compared with 2 percent for developing countries as a group. FDI flows to Sub-Saharan Africa also are highly concentrated, with about 70 percent of total FDI flows going to Angola, Ghana Nigeria, South Africa, and Uganda. In Angola and Nigeria FDI is almost exclusively directed to oil and mining projects.

Key indicators
Billions of U.S. dollars

a. Preliminary.

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GNP per capita, 1996: $490

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