The Economic Commission for Africa (ECA) report on the socioeconomic profile for West Africa is submitted to the Intergovernmental Committee of Experts for its recommendations on development strategies and policies likely to contribute to the economic and social development of the countries in the subregion.

The present report analyses the economic situation in 2015 and the prospects for 2016 for the West Africa region. It includes a thematic section on ECA country profiles, which is a new reference publication designed to support West African countries embarking on the structural transformation of their economies.

According to the October 2015 projections of the Department of Economic and Social Affairs (UN-DESA), global economic activity is expected to dip slightly in 2015, with an expected growth rate of 2.3 per cent, down from 2.6 per cent, in 2014. It is likely that this trend stemmed from the growth rate of the top two economies in the world in 2015, namely the United States of America (2.4 per cent) and China (6.8 per cent), as well as the continued upswing in the euro zone (1.7 per cent). The year 2015 was characterized by expected poor performance by some transition and emerging economies, such as Russia (- 3.8 per cent) and Brazil (-1.1 per cent).

On the African continent, economic activity is likely to firm up, with an expected growth rate of 3.7 per cent in 2015, up from to 3.1 per cent in 2014.

Growth declined steadily in the West Africa region, at an expected rate of 4.4% in 2015, compared to 5.7 per cent in 2014. The subregion came second, behind East Africa, expected to post a growth rate of 6.2 per cent in 2015, down from 7 per cent in 2014.

DESA projections for 2016 show a more sustained activity, globally (3 per cent), and for the United States (2.6 cent), the euro zone (2.2 per cent) and Africa (4.4 per cent). The ECOWAS subregion experienced the same trend, with a more sustained growth rate of 5.2 per cent. While growth estimates and projections for the subregion continue to be favourable, things will slow down, with the growth rate averaging 4.8 per cent over the period 2015-2016, compared to nearly 6 per cent over the period 2010-2014.

This situation partly stems from downward fluctuations of primary commodity and oil prices, which, in early December 2015 reached an all-time low of $40 per barrel. With the end of the embargo on Iran, the country is expected to add over 500,000 barrels per day to the already excess supply. These fluctuations are also due to the slowdown in the economy of China, one of the subregion’s major clients and suppliers, with an expected growth rate of 6.8 per cent in 2015, a first, in nearly 10 years. The other factors likely to affect economic performance in the region include risks of sociopolitical instability and terrorism.

Added to these constraints are structural trends of growth sustained by the performances of low-skilled, labour-intensive sectors, such as primary commodities and services. Despite the positive movements noted in several countries, the agricultural sector, which engages nearly 60 per cent of the working population of the subregion, continues to be characterized by low productivity and high dependence on the weather. For the secondary sector, the poor performance of the manufacturing sector, evaluated at less than 10 per cent of the subregion’s GDP, has led to limited generation of value added and productive employment.

This configuration, which reflects the dire need for the economies of the subregion to move toward structural transformation, justifies the choice of the theme of the present report on the ECA country profiles. Indeed, this new publication aims to provide the countries of the West Africa subregion with an analysis of its economic and social situation, with indices, such as the African Social Development Index (ASDI), the African Gender Development Index (AGDI) and the Africa Regional Integration Index. This diagnosis will rely on comparative priority national data sources to meet the needs of decision-makers and other users of the research sector and non-State stakeholders. The approach recommended will entail introducing mechanisms for data sharing, knowledge exchange and policy dialogue and capacity building, in particular in the areas of statistics and development planning.

This report has been prepared against this backdrop on the economic profile of West Africa in 2015 and prospects for 2016. The current edition is divided into two parts. The first provides a review of the international economic environment, a subregional situation analysis and risks and prospects for 2016. The second part of the report provides the theme for the ECA country profiles. Lastly, the report makes recommendations on policies likely to accelerate the dynamics of the economic and social development of the subregion.

Economic situation of West Africa in 2015 and prospects for 2016

Growth

In 2015, growth in West Africa was 4.2 per cent, down from 6.1 per cent in 2014. This drop in regional growth resulted mainly from the fall in primary commodity prices, in particular oil. The sharp drop in the price of oil, which lost over half of its value in under a year, has highlighted the fragile nature of the foundations of West Africa’s growth, which is highly dependent on primary commodity exports. A slowdown in the pace of activity is observed in most ECOWAS countries.

Economic growth disparities do exist, however, among the countries. Côte d’Ivoire (9.5 per cent), the Gambia (7 per cent), Senegal (5.4 per cent), Guinea Bissau (4.7 per cent) and Burkina Faso (4.4 per cent) are expected experience higher economic growth in 2015, compared to 8.5 per cent, 0.5 per cent, 4.7 per cent, 2.9 per cent and 4 per cent respectively in 2014. Togo (5.8 per cent) and Benin (5.2 per cent) recorded a slight downturn in economic activity compared to 2014, and to a lesser extent, Mali (4.9 per cent) and Niger (4.4 per cent), which experienced relatively solid growth in 2015.

The negative effects of the decline in oil prices should affect oil-exporting countries such as Nigeria, and to a lesser extent, Ghana. The GDP growth rate of Nigeria is expected to drop to 4 per cent in 2015, down from 6.3 per cent in 2014. For Ghana, subdued economic activity led to a 0.5 percentage point drop from 2014, to 3.5 per cent.

The countries affected by the Ebola epidemic did not fare very well. Guinea and Liberia were finding it difficult to rise from the ashes in the aftermath of the serious health crisis, which affected the social and production systems of the two countries. Their growth rate in 2015 was 0.9 per cent for each country, down from 1.1 per cent and 0.7 per cent respectively in 2014. For Sierra Leone, the effect of the Ebola epidemic on economic activity was even more intense. The GDP growth rate was -21.5 per cent in 2015, compared to 4.6 per cent in 2014. This decline stemmed from the closing down of two iron and ore manufacturing plants, following the Ebola epidemic.

Outlook and risks in 2016

Outlook

Despite the Ebola epidemic, West Africa maintained a relatively steady growth rate of 4.2 per cent in 2015. In 2016, this growth is expected to firm up to 5.2 per cent (UN-DESA 2015), despite a downturn in economic activity in Nigeria in the first half of 2015, because of uncertainties surrounding the elections and the subsequent political transition, fuel and power shortages, rise in import costs and consolidation of public finance, which hampered the non-oil sectors. That said, while the fall in oil prices eased their energy import bills, other low-income countries, such as Burkina Faso and Sierra Leone were hard hit by the decline in the prices of their major export products. The economy of Sierra Leone is expected to decline by 20 per cent, as the closing down of the two major ore manufacturing companies has exacerbated the impact of the Ebola crisis.

The average inflation rate in the ECOWAS area should increase slightly to 8.4 per cent in 2016, up from 8.3 per cent in 2015. The lowest levels of inflation should be observed in the UEMOA area, where the average inflation rate could be 1.63 per cent in 2016, partly because of the drop in oil prices. Ghana, for its part, is expected to maintain double-digit inflation at 12.5 per cent, mainly under the effect of past currency depreciations and fuel price adjustments.

The situation of public finances in 2016 would remain fragile because of the priority given to public investment and security expenditure for the social sectors and infrastructures, in a context where little can be done to contain the fiscal pressure. The overall budget balance, including grants, and the non-grant overall balance should settle at 3.3 per cent of GDP and 3.9 per cent of GDP for the entire Community in 2016 (IMF, 2015). For UEMOA, the deficits of the two balances are expected to be 3.7 per cent of GDP and 6.6 per cent of GDP respectively.

Security conditions, which are still difficult in some countries of the Sahel (especially Mali and Niger) and the north of Nigeria, will continue to be major risks for the economic outlook for 2016.

Risk analysis

The present analysis is on the performances of West Africa, in terms of the indicators and rankings for the business environment, good governance and human development.

Among the 10 economies, which have significantly improved their business climate after embarking on three reforms at least are Senegal (153rd) and Benin (158th). Significant improvements have been observed in Côte d’Ivoire (142nd), Togo (150th) and Niger (160th) (World Bank, Doing Business 2016: Measuring Regulatory Quality and Efficiency).

Despite the clear improvements, the governments of West Africa should continue to reduce the chasm separating them from best practices in many major dimensions, such as the ease of doing business, by increasing reliable access to electricity and setting up an efficient trade dispute settlement system.

With regard to governance assessments in 2015, according to the Mo Ibrahim Foundation, West Africa ranked second, after Southern Africa, with a score of 52.4 on a scale of 100, and was the area, which progressed the most. Again in 2015, three countries, which performed well in the region featured among the top 10. They are Côte d’Ivoire, Senegal and Togo. However, good governance remains a challenge in the area, where several countries are poorly ranked for overall governance.

In terms of human development, with an average development index of 0.46 for West Africa, most of the countries of the zone are in the category of countries with “low human development”. Only Cabo Verde and Ghana are ranked in the category of countries with “average human development” (UNDP, 2015).

The fight against corruption is of major concern to the West Africa subregion and has had mixed outcomes. According to Transparency International, Cabo Verde occupies a major place in West Africa, ranking 42nd, with a score of 57 against an average of 34.73 for West Africa, out of a total of 175 countries in 2014. Ghana and Senegal, which ranked 61st and 69th respectively out of 175 in 2014, improved their scores by 3 and 7 points respectively from 2012 to 2014.

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ECA country profiles

Background and rationale

As part of the implementation of its repositioning strategy, started in 2012, which, among others, highlights Africa’s quest for growth that takes the continent’s priorities into account, and leads to structural transformation of its economies, ECA has included the country profiles in its new flagship publications.

This orientation aims at helping countries to refocus their efforts on macroeconomic and social policy, to achieve the structural transformation of Africa. It also aims at strengthening regional integration, development planning and economic governance; as well as mitigating the potential risks.

The ECA country profiles should provide periodic macroeconomic and social assessments of member States, with a view to making relevant and strategic recommendations to governments and regional organizations. They will also be a useful and unique source of comparative data for universities, investors, development practitioners, civil society and analysts.

One specific contribution of this knowledge tool is its solid methodology, based on joint data collection from credible national sources (including national statistics institutes, ministries of finance, economy and planning and central banks) and other stakeholders, as well as its periodic publication.

In addition to providing updated sectoral analysis, the ECA country profiles will monitor progress made under the Sustainable Development Goals, with the ultimate aim of supporting country efforts, to achieve the Africa Union 2063 vision on the socioeconomic transformation of Africa.

Following the adoption by the Conference of African Ministers of Finance, Planning and Economic Development, held in March 2013, in Abidjan, of the reference model to serve as basis for preparing the ECA country profiles, the pilot phase, with five country profiles, including that of Nigeria, was launched at the Conference of Ministers held in March 2015 in Addis Ababa.

By March 2016, 20 country profiles, including four from West Africa, are expected to be published. By 2017, the country profile exercise will be scaled up to cover the entire continent.

In that connection, and on account of the priority given to policy dialogue and the use of statistical data from national sources to feed the country profile analyses, ECA embarked on a process to strengthen cooperation with member countries, by building their development planning and national statistics systems capacities.

Value added of ECA profiles

The issue of value added of the ECA country profiles is relevant, because of the many country profiles developed by the international institutions, in addition to those produced regularly by the countries themselves and subregional organizations.

In this regard, the ECA profiles include all the indicators reviewed and most of the development carried out by these different profiles. They present analysis extended to the economic, social and environmental sectors. The profiles focus on a process and close collaboration of dialogue with countries.

The profiles will be based mainly on the need for information on their potential users and will take into account the basic data collected in conjunction with national and subregional statistics institutions. They will increasingly focus on essential areas for the development of the continent. These include regional integration, structural transformation processes, risk analyses and gender-related issues, and the quality of economic aggregate estimates and forecasts. These profiles have introduced comparative country performance analyses based on assessment indices for subregional integration, social development and gender.

Lastly, as the countries and organizations will continue working together on policies and statistics, the country profiles will help ECA and Africa to have a database and be up to date on relevant analysis indicators and independent and comparative technical assessments likely to better inform the actions of decision-makers.

Overall, the country profiles provide value added through:

• A more collaborative dialogue and process on statistics and policies, making way for a data-sharing mechanism and capacity building of statistics systems and national and subregional planning

• Use of reference indicators to address key issues related to regional integration and gender and social development

• Assessment of forecasts on major economic analysis aggregates

• Specific development on the dynamics of structural transformation in countries

• Monitoring progress toward achievement of the Sustainable Development Goals for the purpose of drafting a subregional and continental comparative report

Format, structure and model of profile data

The format of the country profile incorporates the structure of major analysis indicators. It articulates the various parts of the document and specifies the standard graphs and tables. It is structured in five main parts:

1. Overview/Abstract

2. National and subregional context

3. Economic performance: Economic growth; Fiscal policy; Monetary policy; Current account; Capital and financial account

4. Social development: Population; Poverty and employment; Health; Education; Gender equality and policy

5. Thematic analysis/major policy challenges

The analysis carried out for the country profiles is based on data and empirical evidence from national sources. Exceptionally, data from international sources will be used if national statistics are not available. The main indicators to be reported and tables to be included in the documents are listed in the annex. On the introductory page of the document, there is also a brief table, which provides an introductory portrait on the characteristics and key indicators of the country at the institutional, economic, social and environmental level. The portrait also includes the ranking and position of the country in terms of international benchmarks.

Characteristics and value added of ECA country profiles

The overall content of the ECA country profiles is similar to the format and structures of the classic economic profiles prepared at the national level, as well as by subregional and international institutions. They do, however, have their peculiar features, as they include relevant indices for analysing the dynamics of social development, gender and regional integration. They include an analysis of the quality of economic forecasts. Lastly, the country profiles are innovative as they introduce a thematic analysis on the dynamics of structural transformation of African economies.

Analysis based on relevant indices

The analyses in the profile documents are often constrained by lack of relevant data to help capture some specific dimensions, such as regional integration, inclusive growth and social development, as well as gender development.

The ECA country profiles therefore include country assessments on these dimensions, based on empirical indices, prepared on the basis of dialogue and data gathered mainly in countries and from subregional organizations.

• Africa Regional Integration Index

The Africa Regional Integration Index is designed to determine how each African country is meeting its commitments to pan-African integration mechanisms such as Agenda 2063 and the Abuja Treaty. The index is prepared jointly by AfDB, the African Union Commission (AUC) and ECA. In the country profile analysis, the following dimensions have been covered: free movement of persons, trade integration, productive integration, (development of regional value chains), interconnections and regional infrastructures and convergence of macroeconomic policies.

More generally, the final version of the index will cover seven dimensions, through 43 indicators: (a) regional migration and job market; (b) trade integration; (c) economic policy; (d) productive integration; (e) financial integration and macroeconomic policy; (f) regional infrastructure and interconnection; and (g) social and cultural integration.

• Africa Social Development Index

One of the major challenges of the development and structural transformation policies underway in Africa is making growth more inclusive and equitable. In this respect, ECA has developed a specific monitoring mechanism to help identify the “causes” of exclusion in each country, map and assess the efficiency of the social policies and improve the quality, collection and disaggregation of data in the social sectors. The index assesses the exclusion factors related to health and nutrition, access to education, employment, revenue and life expectancy, according to six indicators: Neonatal mortality rate, percentage of malnourished under-five children, literacy rate of 15 to 24 year olds, poverty rate and life expectancy at birth.

Apart from focalizing on human exclusion, the index also has a disaggregated feature, as it takes the regional, national and local levels into account. It develops an approach based on the life cycle (birth, early childhood, formative years, access to employment, productive years and advanced years.

In terms of implementation, in December 2014, a first pilot phase for data collection and index calculation was finalized for five countries, including Senegal, for the West Africa subregion. Capacity building and extension workshops were organized for the countries of the five subregions from 2014 to 2015. Likewise, initiatives were undertaken among subregional organizations for ownership and implementation of the index. To that end, a session on capacity building was held for the UEMOA region in October 2015.

• African Gender and Development Index

The African Gender and Development Index (AGDI) was developed by ECA in 2004, as a monitoring and evaluation tool to measure the progress made by African countries in implementing regional and international instruments on gender equality and women’s empowerment. These instruments include the Dakar and Beijing platforms for action, the Convention on the Elimination of all Forms of Discrimination Against Women, and the Protocol to the African Charter on Women’s Rights.

Following its adoption, a first implementation phase of the index covered 12 African countries. The pilot phase was then scaled up to 14 other countries. In 2012, ECA started implementation of a third phase, extended to 13 African countries. AGDI is a composite index comprising two parts: The Gender Status Index (GSI) and the African Women’s Progress Scoreboard (AWPS). GSI measures relative gender inequalities, based on readily available quantitative indicators on education and health; incomes, time use, employment and access to resources; and formal and informal political representation. AWPS measures progress made in women’s empowerment and advancement.

In terms of prospects, by 2017, AGDI should be implemented in all African countries.