Exchange Rates and the Management of the External Sector in Sub-Saharan Africa

Abstract

The performance of Africa's external sector during the 1970s has been described in a number of important publications. According to the United Nations Economic Commission for Africa, the continent's share of world exports declined from 3·9 per cent in 1970 to 3·4 per cent in 1979. The performance of the region's export sector had been sluggish throughout this period, growing at an annual rate of only 0·6 per cent in volume compared to 6 per cent during the last five years of the previous decade. The World Bank report on sub-Saharan Africa described the 1970s as having been characterised by growing balance-of-payments deficits, attributable partly to external factors — notably the two large oil-price shocks, the slow growth in world trade in primary commodities, and the persistently rising price of imported manufactured goods — but partly caused also by domestic factors. Even within the group of developing countries, Africa's share of non-fuel exports is estimated to have declined from over 18 per cent in 1970 to about 9 per cent in 1978. During this decade the volume of imports expanded by an estimated 58 per cent annually — although for the sub-Saharan region the growth rate was only 3 per cent — while the terms of trade worsened significantly. Official development assistance rose substantially as a whole, but offset only a part of the growing deficit.