2.3.1: Patterns of Fiscal Policy
The patterns of government expenditure as a percentage of GDP in SSA countries are not homogeneous, although, some countries exhibited some similarities in their patterns. The evolution of government expenditure as percentage of GDP in SSA is depicted in Figure 2.7. The government expenditure as percentage of GDP in some countries was stable. This implies that, as government expenditure increased, output also increased, such that the rates of increase in both were roughly the same. Countries that experienced this kind of pattern include Mauritius, South Africa, Kenya, Madagascar, Cameroon and Senegal. Although there were some mild divergences in the rate of increase in output and government expenditure, the trend was approximately stable in some countries like Benin, Mozambique and The Gambia, among others. On the other end of the spectrum are those countries that experienced unsteady pattern in the ratio of government expenditure to GDP. Examples of such countries include Cape Verde, Congo Republic and Malawi.
The extent of increase in the size of government expenditure in some SSA countries outpaced that of GDP. Good examples of such countries are Burundi and Lesotho. The plausible explanation for this experience in Burundi includes the need for reconciliation, rehabilitation and reconstruction of the nation as a result of the aftermath of civil unrest.
Furthermore, natural disasters experienced in the period also explained the development in Burundi. According to the statistics from The United Nations Office for Disaster Risk Reduction (UNISDR) in 2013, between 1980 and 2010, Burundi witnessed forty two (42)
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26
natural disasters that resulted in no less than 908 deaths. About 4,568,742 people were affected by the disasters, which amount to average of 147,379 per year.
The case of Lesotho can be explained by the persistent natural disasters that the nation is prone to, which necessitate rehabilitation, development of infrastructure and disaster relief for flood victims. For instance, between 1980 and 2010, not less than fifteen natural disasters were witnessed resulting in the death of about ninety seven, but not less than 2 million people were affected by the disasters. Specifically, on average, about 64,418 people were affected by natural disasters on a yearly basis between 1980 and 2010 (UNISDR, 2013) in Lesotho. According to World Bank (2012), Lesotho is prone to natural disasters such as rockslides and flooding because of rugged mountain terrain, steep slopes abundance of water and high elevation. In addition to this, there is pressure on the government to focus on issues of income equality, Human Immunodeficiency Virus/Acquired Immunodeficiency Syndrome (HIV/AIDS), water resource management, transportation, and education.
The reverse was the case in some countries where the rate of increase in GDP outpaced that of government expenditure over the years, implying a downward trend in the curve of the government expenditure as percentage of GDP. Examples of such countries include Seychelles and Togo.
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27Source: Drawn with data from WDI (2010)
Figure 2. 7: The Trend of Government Expenditure (% of GDP) in the Selected Countries between 1985 and 2009
8 10 12 14 16
1985 1990 1995 2000 2005
Be n in
16 20 24 28 32
1985 1990 1995 2000 2005
Bo ts w a n a
16 18 20 22 24 26 28
1985 1990 1995 2000 2005
Bu r k in a Fa s o
5 10 15 20 25 30
1985 1990 1995 2000 2005
Bu r u n d i
8 10 12 14
1985 1990 1995 2000 2005
C a me r o o n
8 12 16 20 24
1985 1990 1995 2000 2005
C a p e Ve r d e
0 5 10 15 20
1985 1990 1995 2000 2005
C e n tr a l Afr ic a n R e p u b lic
8 12 16 20 24 28
1985 1990 1995 2000 2005
C o n g o R e p u b lic
4 8 12 16 20
1985 1990 1995 2000 2005
C o r e d 'Iv o ir e
4 8 12 16 20
1985 1990 1995 2000 2005
Eth io p ia
8 12 16 20 24 28
1985 1990 1995 2000 2005
G a b o n
8 12 16 20 24
1985 1990 1995 2000 2005
Th e G a mb ia
8 10 12 14 16
1985 1990 1995 2000 2005
G h a n a
4 8 12 16 20
1985 1990 1995 2000 2005
G u in e a - Bis s a u
14 15 16 17 18 19
1985 1990 1995 2000 2005
Ke n y a
20 30 40 50
1985 1990 1995 2000 2005
L e s o th o
6 8 10 12 14
1985 1990 1995 2000 2005
Ma d a g a s c a r
10 15 20 25 30 35
1985 1990 1995 2000 2005
Ma la w i
8 10 12 14 16 18
1985 1990 1995 2000 2005
Ma li
10 11 12 13 14 15
1985 1990 1995 2000 2005
Ma u r itiu s
6 8 10 12 14
1985 1990 1995 2000 2005
Mo z a mb iq u e
16 20 24 28 32 36
1985 1990 1995 2000 2005
N a mib ia
10 12 14 16 18
1985 1990 1995 2000 2005
N ig e r
2 4 6 8 10 12
1985 1990 1995 2000 2005
N ig e r ia
8 10 12 14 16 18 20
1985 1990 1995 2000 2005
R w a n d a
8 12 16 20
1985 1990 1995 2000 2005
Se n e g a l
10 20 30 40
1985 1990 1995 2000 2005
Se y c h e lle s
18 19 20 21 22
1985 1990 1995 2000 2005
So u th Afr ic a
4 8 12 16 20
1985 1990 1995 2000 2005
Su d a n
12 16 20 24 28
1985 1990 1995 2000 2005
Sw a z ila n d
8 12 16 20 24
1985 1990 1995 2000 2005
Ta n z a n ia
8 12 16 20
1985 1990 1995 2000 2005
To g o
4 8 12 16 20
1985 1990 1995 2000 2005
U g a n d a
5 10 15 20 25 30 35
1985 1990 1995 2000 2005
Za mb ia
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28 2.3.2: Patterns of the Current Account Balance6
Sub-Saharan African countries as a whole ran relatively persistent current account deficits over the period covered by this analysis. However, there are some similarities, as well as differences among countries, in the pattern exhibited by the current account balance in the region. Hence, it becomes imperative to observe these similarities and differences in the selected economies. The first to consider is Figure 2.8, which presents the current account balance as a percentage of each economy’s GDP for the selected countries in SSA over the period 1985-2009. A glance at Figure 2.9 brings some features to the fore. Since the advent of Structural Adjustment Programmes (SAP), the SSA economies’ current account balance has exhibited quite heterogeneous characteristics till date. Over the sample period, some countries ran a relatively stable and balanced current account for most of the period. Such countries include Benin, Burundi, Cameroon, Namibia and South Africa, to mention a few.
On the other hand, some countries experienced diverse spikes in their current account balance over the sample period. Democratic Republic of Congo, The Gambia, Nigeria, Guinea-Bissau and Zambia, to mention a few, are good examples of such countries.
6 See Appendix B8 to B13 for the pictorial representations of other determinants of the current account balance in sub-Saharan African countries. The determinants include trade openness, external debt, aid, real exchange rate, savings and growth rate of GDP.
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29Source: Drawn with data from WDI (2010)
Figure 2. 8: The Trend of Current Account Balance (% of GDP) in the Selected Countries between 1985 and 2009
-12 -8 -4 0 4
1985 1990 1995 2000 2005
Be n in
-10 0 10 20 30 40
1985 1990 1995 2000 2005
Bo ts w a n a
-30 -20 -10 0 10
1985 1990 1995 2000 2005
Bu r k in a Fa s o
-25 -20 -15 -10 -5 0 5
1985 1990 1995 2000 2005
Bu r u n d i
-8 -6 -4 -2 0 2
1985 1990 1995 2000 2005
C a me r o o n
-16 -12 -8 -4 0 4
1985 1990 1995 2000 2005
C a p e Ve r d e
-8 -6 -4 -2 0
1985 1990 1995 2000 2005
C e n tr a l Afr ic a n R e p u b lic
-60 -40 -20 0 20 40
1985 1990 1995 2000 2005
C o n g o R e p u b lic
-15 -10 -5 0 5 10
1985 1990 1995 2000 2005
C o te d 'Iv o ir e
-16 -12 -8 -4 0 4
1985 1990 1995 2000 2005
Eth io p ia
-40 -20 0 20 40
1985 1990 1995 2000 2005
G a b o n
-20 -10 0 10 20
1985 1990 1995 2000 2005
Th e G a mb ia
-16 -12 -8 -4 0 4
1985 1990 1995 2000 2005
G h a n a
-60 -40 -20 0 20
1985 1990 1995 2000 2005
G u in e a - Bis s a u
-20 -15 -10 -5 0 5
1985 1990 1995 2000 2005
Ke n y a
-60 -40 -20 0 20
1985 1990 1995 2000 2005
L e s o th o
-12 -10 -8 -6 -4 -2
1985 1990 1995 2000 2005
Ma d a g a s c a r
-16 -12 -8 -4 0
1985 1990 1995 2000 2005
Ma la w i
-20 -16 -12 -8 -4 0
1985 1990 1995 2000 2005
Ma li
-12 -8 -4 0 4 8
1985 1990 1995 2000 2005
Ma u r itiu s
-25 -20 -15 -10 -5
1985 1990 1995 2000 2005
Mo z a mb iq u e
-4 0 4 8 12 16
1985 1990 1995 2000 2005
N a mib ia
-14 -12 -10 -8 -6 -4
1985 1990 1995 2000 2005
N ig e r
-20 0 20 40
1985 1990 1995 2000 2005
N ig e r ia
-10 -5 0 5 10 15
1985 1990 1995 2000 2005
R w a n d a
-16 -12 -8 -4 0
1985 1990 1995 2000 2005
Se n e g a l
-60 -40 -20 0 20
1985 1990 1995 2000 2005
Se y c h e lle s
-8 -4 0 4 8
1985 1990 1995 2000 2005
So u th Afr ic a
-15 -10 -5 0 5
1985 1990 1995 2000 2005
Su d a n
-20 -10 0 10 20
1985 1990 1995 2000 2005
Sw a z ila n d
-25 -20 -15 -10 -5 0
1985 1990 1995 2000 2005
Ta n z a n ia
-14 -12 -10 -8 -6 -4 -2
1985 1990 1995 2000 2005
To g o
-12 -8 -4 0 4
1985 1990 1995 2000 2005
U g a n d a
-30 -20 -10 0 10
1985 1990 1995 2000 2005
Za mb ia
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30
Countries like the Democratic Republic of Congo, Mali, Togo, Guinea, Senegal, Seychelles and Madagascar are good examples of economies that had a persistent current account deficit. The cases of the Democratic Republic of Congo and Seychelles are of particular interest among this class, they experienced diverse perturbations in the evolution of their current account balance. Only a few a countries experienced current account surplus for most of the years considered in this study. Such countries include Botswana, Gabon, Nigeria, South Africa and Namibia. In Lesotho, the current account balance plunged in 1995 and the deficit persisted till 2000. Over the years, Guinea-Bissau and Gabon have been able to improve on their current account balance positions that were in deficit during the early period covered by this study.
2.4: Specific Experience of Fiscal Policy and the Current Account Balance in SSA