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Xiangming Fang, Siddharth Kothari, Mr. Cameron McLoughlin, and Mustafa Yenice
Sub-Saharan Africa has been marred by conflicts during the past several decades. While the intensity of conflicts in recent years is lower than that observed in the 1990s, the region remains prone to conflicts, with around 30 percent of the countries affected in 2019. In addition to immeasurable human suffering, conflicts impose large economic costs. On average, annual growth in countries in intense conflicts is about 2.5 percentage points lower, and the cumulative impact on per capita GDP increases over time. Furthermore, conflicts pose significant strains on countries’ public finances, lowering revenue, raising military spending, and shifting resources away from development and social spending.
Xiangming Fang, Siddharth Kothari, Mr. Cameron McLoughlin, and Mustafa Yenice

of human life; destruction of infrastructure, human capital, and institutions; political instability; and greater uncertainty associated with conflicts can impede investment and economic growth—not only during conflict but also afterward, making it difficult to escape the “conflict trap.” 3 In addition, conflicts tend to complicate public finances, lowering revenue by destroying part of the tax base while raising military expenditures amd public debt. Against this backdrop, this paper explores the economic consequences of conflict in sub-Saharan Africa by

International Monetary Fund. African Dept.

Abstract

The economic recovery in sub-Saharan Africa is expected to continue, but at a slower pace than envisaged in October 2018. This weaker outlook reflects domestic and external challenges. On the external side, the global expansion is losing momentum, including in China and the euro area, trade tensions remain elevated, global financial conditions have tightened, and commodity prices are expected to remain low. On the domestic front, security challenges, climate shocks, and policy uncertainty are hampering investment and weighing on economic prospects in several countries. Under current policies, medium-term average growth for the region is expected to continue to fall well short of what is needed to absorb the new entrants to the labor force and to deliver limited gains in living standards.

Xiangming Fang, Siddharth Kothari, Mr. Cameron McLoughlin, and Mustafa Yenice

Front Matter Page African Department Contents I. INTRODUCTION II. DATA AND MEASUREMENT OF CONFLICT III. CONFLICTS IN SUB-SAHARAN AFRICA : STYLIZED FACTS IV. CONFLICT AND ECONOMIC GROWTH V. FISCAL IMPLICATIONS OF CONFLICT VI. CONCLUSION REFERENCES FIGURES 1. Selected Regions: Share of Countries in Conflict 2. Number of Countries in Conflict 3. Total Conflict-Related Deaths 4. Sub-Saharan Africa: Countries in High-Intensity Conflict 5. Number of Conflict-Related Deaths in Sahel Region 6. Sub-Saharan Africa: Conflict

International Monetary Fund. African Dept.

others 2010 ; Qureshi 2013 ). Against this backdrop, this chapter explores the economic consequences of conflicts in sub-Saharan Africa by focusing on four key questions: How have the prevalence and intensity of conflict evolved over time? What is the impact of conflict on economic growth both directly, and indirectly through spillover effects? What are the key channels through which conflict affects economic growth? What are the fiscal implications of conflict? The analysis, based on country- and state-level data for a sample of 45 sub-Saharan African

International Monetary Fund. External Relations Dept.

be lost. IMF S urvey : What does your study show to be the main causes of conflict and the characteristics of the conflict cycle? Y artey : We examined the causes of conflict using the Collier-Hoeffler model but focusing it only on sub-Saharan Africa and introducing measures of institutional quality and corruption. Our results show that the basic causes of conflict in sub-Saharan Africa are slow growth, weak institutions, corruption, and poverty. Dependence on primary commodities is another major causal factor, but good economic policies and transparent

International Monetary Fund. African Dept.

’. Explaining the risk of conflict in Sub-Saharan Africa A number of factors have been identified as relevant in explaining armed conflict in sub-Saharan Africa (SSA). These factors include the nature of the African states after independence, external intervention in the internal affairs of African countries, human rights abuses by African governments, and ethnic and religious grievances. The economic theory of civil war [ Grossman, 1999 ; Collier and Hoffler, 2002 ], however, sees civil wars in Africa as being caused by poor growth, poverty, and the abundance of natural

International Monetary Fund. African Dept.

persistent adverse growth effects from conflict in sub-Saharan Africa . According to the SSA Regional Economic Outlook ( IMF, 2019 ), annual real GDP growth in the average country with high-intensity conflict is 3.2 percentage points lower than it would have been in the absence of conflict, which translates into a cumulative loss of 15–20 percent in per-capita income for episodes that last five years or longer. Together with the destruction of human and physical capital, conflict reduces growth via lower investment, trade, and productivity. 10 Conflict intensity is the