Country Economic Memorandum
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Publication
Lake Chad Regional Economic Memorandum: Technical Paper 5. Conflict and Climate Change in the Lake Chad Region
(World Bank, Washington, DC, 2021-11-09)Peace and security are basic conditions for economic and social development. Conflict, on the other hand, can reverse years of economic growth and induce long-term harm on almost all aspects of development. For the past decade, the Lake Chad region has been the setting of conflicts between government forces and armed groups, most notably the Boko Haram. Although the intensity of fighting has petered off in recent years, the conflict has spread from Northern Nigeria and now affects all four countries of the region. Due to the paramount importance of avoiding armed conflict, a large economic literature exists that seeks to find explanations for the onset and prevalence of conflict in developing countries. Blattman and Miguel [2010] list some of the most common theories of conflict including competition for resources, economic grievances, and the possibility of looting. This paper attempts to shed light on the geographical distribution of conflict and its climatic determinants in the Lake Chad region following a sub-national approach where readily available spatial data is employed at two different units of aggregation: Firstly, 90 second level administrative areas, and secondly, around 5,318 grid cells covering the same region. Exposure to conflict is here defined as the intensity (for districts) or incidence (for cells) of conflict in a given unit each year. Parts of the population may not be directly exposed by this definition, but since the units of analysis are relatively small, most will be affected in some ways, for instance by safety concerns when visiting the nearest towns to trade or by the general economic consequences. -
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Mauritius - Through the Eye of a Perfect Storm: Coming Back Stronger from the COVID Crisis
(World Bank, Washington, DC, 2021-04-30)On July 1, 2020, Mauritius officially joined the ranks of High-Income Countries (HIC). It is a cruel historical irony that Mauritius reached the High-Income milestone during one of the worst years in its history. Mauritius delivered a highly successful health response to the global Covid-19 pandemic through a hard lockdown and subsequent quarantine measures, and as a result has effectively been ‘Covid-free’ from April 2020 to March 2021, when a second outbreak occurred. With a total of 1246 cases and 17 deaths, Mauritius has so far been able to avoid the large-scale health crisis observed in many other countries. However, Covid-19 has caused severe economic disruptions in Mauritius. An oil spill in August and Mauritius’ inclusion in the EU list of High Risk Third Countries for Money Laundering in October 2020 added further pressure. While the events of 2020 require dedicated responses in the short term, addressing the underlying challenges cannot be postponed if Mauritius is to make a strong recovery. The best strategy for a solid recovery lies in a combination of temporary support to firms and households affected by the shock with a comprehensive reform program to address pre-existing structural challenges. It is unlikely that a strategy of simply addressing the short-term effects by supporting ailing firms while waiting for global conditions to improve would suffice to put Mauritius’ economic and social development back on track. On the other hand, the crisis affords policy makers with the opportunity to confront long-festering challenges. -
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Mauritania Country Economic Memorandum: Accelerating Growth Through Diversification and Productive Cities
(World Bank, Washington, DC, 2020-05)The Mauritanian economy is at an important crossroad. Despite significant increases in itsnatural resource wealth, economic development in Mauritania remains weak. The over-reliance on natural resources has left the economy undiversified with growth, exports, and fiscal revenues all dependent on extractives. Responding to the 2015 commodity price shock, the authorities implemented a strong fiscal consolidation program that restored macroeconomic stability andsteered the economy onto a recovery path. The new administration—appointed following the election in mid-2019—now has the challenge and opportunity to map out a more sustainable development model and steer the economy onto a path of accelerated and equitable economic growth for the rapidly growing population. The objective of this report is to support policy makers in Mauritania in their reform efforts to accelerate growth as outlined in the National Development Plan (SCAPP).It attempts to answer the following questions: (i) Why Mauritania could not diversify its economy in the past and what are the opportunities to do so in the future? (ii) What are the reasons behind the weak link between urbanization and growth, and is Nouakchott lifting its weight as anurban agglomeration? (iii) Which policy actions could help build those pathways? By answering these questions, the report aims to contribute to the economic discussion and provide policy recommendations for the choices that Mauritania is facing to accelerate growth and improve theliving standards of its population. The report is organized around five chapters. Chapter 1starts with a brief introduction. Chapter 2 analyzes the key characteristics of Mauritania’s past growth performance. Chapter 3 evaluates the current and future potential for economic and export diversification. Chapter 4 examines the challenges that are preventing urbanization from contributing to growth, with a focus on Nouakchott. Chapter 5 concludes by proposing a menu of policy recommendations that could help Mauritania achieve faster and more sustainable economic growth. -
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Madagascar Country Economic Memorandum: Scaling Success - Building a Resilient Economy
(World Bank, Washington, DC, 2020-02)Madagascar is characterized by an expanding economy and a peaceful transition of power, providing a solid basis for achieving a more productive, inclusive, and sustainable growth trajectory. Given the vast opportunities, but also substantial challenges, the objective of the Madagascar country economic memorandum is to inform the policy dialogue on how the country’s inclusive growth potential can be harnessed. The country economic memorandum takes an evidence-based approach to informing policy on how opportunities for achieving productive, inclusive, and sustainable growth can be realized. Accelerating the current pace of growth requires further expanding the bright spots of the economy, which are focused on exports and investment related activities. The bright spots are creating jobs at the fastest pace, are resilient to shocks and have linkages with other sectors of the economy. Scaling success requires addressing constraints related to connectivity, human capital, and the business environment, while incentivizing the uptake of improved technologies to enable other sectors, such as agriculture, to realize their potential. -
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Turning Smallness into Uniqueness: Six Key Challenges to Unlock Sao Tome and Principe Growth’s Potential
(World Bank, Washington, DC, 2019-07-24)Economic growth in Sao Tome and Príncipe (STP) has long been driven by an unsustainable reliance on public expenditures, especially grant- and loan-financed public investment. STP needs to turn its smallness into uniqueness to unlock its growth potential. To accomplish this transformation, this image must be matched by a more balanced growth in which the private sector plays a larger role and with a more effective government. Tourism, agriculture, and fisheries could drive the country’s transition to a more balanced growth pattern. This Country Economic Memorandum (CEM) highlights six key challenges that STP must overcome as it transitions to a more balanced growth pattern and it offers policy recommendations for addressing each challenge. Accomplishing this rebalancing will require STP to address six key challenges at the macroeconomic, structural, and sectoral level. These include: (i) The twin budget and current-account deficits; (ii) Weak trade connectivity by both air and sea; (iii) Credit constraints caused by a high level of non-performing loans and difficulties enforcing commercial contracts; (iv) Uncertainty surrounding property rights and land tenure; (v) Poor-quality infrastructure, especially in the energy and transportation sector; and (vi) The overexploitation of marine resources. -
Publication
Country Economic Memorandum for Sao Tome and Principe - Background Note 6: Stock Take on Business Environment Reform in São Tomé and Príncipe
(World Bank, Washington, DC, 2019-06-26)The importance of a good regulatory and institutional environment for business creation and growth is well established. Good regulations and a level playing field are particularly important to maximize opportunities for private investment in small island states like São Tomé and Príncipe, which tends to be constrained by the lack of economies of scale and distance to markets. Burdensome regulations can hamper the competitiveness of export-oriented sectors, which are essential for São Tomé and Príncipe’s sustainable growth and job creation. Moreover, sectors that depend on natural or cultural assets, such as tourism, require good quality regulations and planning to protect those assets. Improving the regulatory environment is an important factor, together with better skills, connectivity, and infrastructure, to strengthen the competitiveness of São Tomé and Príncipe’s economy. Accurate data on the size and composition of the private sector in Sao Tome and Príncipe is lacking, but existing information shows that it is dominated by microenterprises in commerce and services. The ongoing enterprise survey will provide insights on the characteristics and main challenges of São Tomé and Príncipe’s firms, while an updated business census, which is planned with support from the World Bank, will give a broader view of the private sector. Data from the National Statistics Institute (INE) shows that there are only 14 companies with more than 100 employees, including the utilities and transport sector SOEs, and 80 percent of firms for which data is available have less than five employees. Most firms are concentrated in the commerce, construction, and tourism sectors. While additional analysis will be necessary to identify the factors contributing to the small size and sophistication of SãoTomé and Príncipe’s firms, the regulatory environment may be among them as it affects entry and operating costs, access to finance, and ability to resolve commercial disputes. -
Publication
Country Economic Memorandum for Sao Tome and Principe - Background Note 10: What are the Obstacles to Agricultural Development in STP? A Review of Current Agriculture Production Structure and Potential
(World Bank, Washington, DC, 2019-06-26)This note presents an analysis of the obstacles and opportunities for STP’s agriculture value chains, assesses the main sector risks, and provides a series of public sector recommendations for increased private sector investment. While the country will remain a net importer of food and agricultural products for the foreseeable future, a series of opportunities exist, some to increase import-substitution, others to expand exports. Given STP’s land constraints and climate variability, importing food will continue to occur in the near to medium-term future to satisfy local demand. However, import-substitution opportunities will continue to offer prospects centered on the feedstuff-livestock chain and the horticultural sector, as well as some additional expansion of the palm oil industry. Export opportunities lie primarily in cocoa products as well as in emerging non-traditional agricultural exports, some strategically linked to tourism, especially eco-tourism already embraced by the government and by high end tourist developments established in the past few years. Analysis of the competitiveness of existing and emerging rural supply chains in STP reveals a series of characteristics that allow to overcome the structural diseconomies of scale of a small island state. These characteristics include among others: (i) high value-to-weight products, (ii) agricultural products that can be taken with tourists, (iii) low perishability and products that can be stored, (iv) climate change resilience; and (v) explore the country’s uniqueness. Value chains that possess some of these key characteristics discerned from the analysis offer private sector opportunities, provided the enabling environment allows them to reach their potential. -
Publication
Country Economic Memorandum for Sao Tome and Principe - Background Note 3: Where has Trade Growth Come from in São Tomé and Príncipe
(World Bank, Washington, DC, 2019-06-26)This note examines the competitiveness of the export sector in São Tomé and Príncipe. It relies on the framework developed by Reis and Farole (2012) and examines the export competitiveness along four complementary dimensions: export growth and market shares, diversification in terms of product and destinations, quality of exports, and the survival or persistence of export flows. It uses export product level data for the period 2000-2017, as available, from international trade databases that help in benchmarking the performance of São Tomé and Príncipe with that of peer countries. Peer countries include, as data is available, Belize, Cabo Verde, Comoros, Dominica, Fiji, Mauritius, Maldives, Seychelles, St. Lucia and Vanuatu. While this note focuses on export outcomes, it also provides a brief picture on imports into São Tomé and Príncipe. The main findings of this note are as follows: Trade remains important for São Tomé and Príncipe, especially imports to satisfy local demand. Total exports have been increasing, both for goods and services. Goods exports, however, remain highly concentrated in cocoa exports to the EU market. Export trends for goods have tended to sustain this dependence, with very little expansion in the extensive margin, and thus with limited diversification of goods exports. This is despite relative comparative advantages in other agricultural products, such as coconuts, dried fruits, and seafood and preferential duty-free and quota-free access into the EU and other developed countries’ markets. Meanwhile, exports of services have increased rapidly, led by travel services. São Tomé and Príncipe exports more services than goods and it has become a net exporter of services. Creating strong (backward) linkages between the tourist industry and the rest of the economy could sustain growth in other industries that, in turn, can support export diversification. -
Publication
Angola Country Economic Memorandum: Towards Economic Diversification
(World Bank, Washington, DC, 2018-12-01)The Angolan economy is at a significant juncture. The current growth model based on oil wealth is nearly exhausted and has not delivered inclusive growth and shared prosperity. Angola faces two broad policy challenges that need to be addressed urgently: macroeconomic stabilization and a more inclusive economic growth. The internal and external imbalances following the adjustment to lower oil prices pose a challenge to macro-stabilization. The prospect of volatile oil prices and potentially diminishing oil reserves over the medium and long-term call for a new sustainable and inclusive growth model that promotes economic diversification, a model that is less dependent on natural resource exports. The new administration is aware of these challenges and has started to implement much needed reforms. Angola is right to focus on reforms that lay the foundation for long-term macroeconomic stability and economic diversification. Analyses conducted as part of this report indicate that there are significant gains to be had from such reforms. The objective of this report on Angola is to support policy makers in their reform efforts. The report is organized as follows: Chapter 1 takes stock of recent trends and determinants of growth in Angola, highlighting the importance of natural resource wealth and volatility for growth outcomes. Chapter 2 presents the findings of a growth diagnostic for Angola, and highlights low human capital, access to finance, weak institutions and macroeconomic instability as critical and binding constraints for the non-oil economy. Chapter 3 uses product space analysis to evaluate Angola’s current and future potential for economic and export diversification, drawing attention to products and services sectors in which there is potential for export upgrading and/or product innovation. Chapter 4 provides an overview of the agriculture sector and assesses its potential for economic diversification. Chapter 5 sets out the way forward, identifying: critical reforms for macroeconomic stability; a fiscal framework for natural-resource wealth management; and macro-financial stability. -
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Cameroon Country Economic Memorandum: Markets, Public Administration, and Growth
(World Bank, Washington, DC, 2016-12)To become an upper-middle income country by 2035, as targeted in its Vision 2035 document, Cameroon will have to increase productivity and unleash the potential of its private sector. Specifically, Cameroon’s real GDP must grow by around 8 percent and 5.7 percent in per capita terms over 2015–2035, which in turn will require the investment share of GDP to increase from around 20 percent of GDP in 2015 to 30 percent of GDP in 2035 and productivity growth to reach 2 percent over the same period, from its average rate of zero growth over the past decade. These are daunting yet doable challenges. To make it happen the public sector would need to reinvent itself and change its nature: reduce distortion, promote innovation and increase allocative efficiency; and more competitive markets would be needed to promote productivity gains. Based on the rigorous analysis of the Cameroonian economy using five main sources of data,1 the report will address the following topics: Chapter 1 analyzes constraints to growth, Chapter 2 explores constraints to enhance competitiveness, Chapter 3 examines the role played by the Cameroonian state on these constraints, and Chapter 4 derives from these analyses a set of actionable policy recommendations. The abstract contains the following structure: 1. Underpinnings of Cameroonian economy affecting growth potential 2. Recommendations on nine major areas of collaboration between the government and the private sector.