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Tanzania

Authors : Prosper Charle, Rogers Dhliwayo, Chidozie Emenuga

  • Growth in real GDP is estimated at 7.2% in 2016 with the same rate projected for 2017, driven mainly by strong performance in industry, construction, services, and information and communication sectors.
  • Fiscal position has remained healthy and ongoing efforts by the government to improve revenue mobilisation as well as efficiency in public spending will help in maintaining the good performance.
  • While the level of industrialisation in Tanzania is low, the government’s mediumterm development programme is focused on nurturing industrialisation as a means of achieving economic transformation, and the government has demonstrated a strong commitment to implement the programme successfully.

The 2014 growth rate of 7% was maintained in 2015, with an improvement to an estimated rate of 7.2% in 2016. This record makes Tanzania one of the best performing and most stable economies in Africa. The major sources of growth were the services, industry, construction, and information and communication sectors. External development assistance was one of the main sources of finance for development projects. In the medium term, growth is projected to remain strong, driven by the same sectors. The fall in the international price of oil has had a positive impact, reducing the pump price of gasoline and industrial oil. This has also reduced the price of electricity, thereby boosting industrial production.

Growth is projected to stabilise at around 7% in the medium term as the performance of the major sectors are expected to remain stable and reinforced by increasing government investment in infrastructure. The availability of gas for electricity generation from the Mtwara pipeline, completed in 2015, will supply more regular and cheaper power to industries. Tanzania showed an enviable model of democracy with a peaceful national general election that led to the current government of President John Magufuli and members of the national parliament. The government has launched a five-year development programme that seeks to achieve full industrialisation of the country by 2025.

Tanzania ranks permanently among the top half of countries in Africa on governance. The major strengths of governance in Tanzania are in the areas of safety and rule of law, national security, participation, and human rights and gender; its major weaknesses are in human development (health and education) and infrastructure.

In terms of human development, Tanzania ranks 151 out of 188 countries with the Human Development Index (HDI) value of 0.521, as of 2014. This value is still low and positions the country in the low human development category. Caloric availability at the household level has hardly improved since 1997 and chronic malnutrition is estimated to be an underlying cause of over one third of the deaths of under-five year olds (Tanzania Human Development Report, 2014). A major challenge remains in the education sector, as the quality of education is low and characterised by an increasing number of dropouts as well as a lack of competencies and decline in morale and motivation of teachers.

After a long period of stagnation, the poverty headcount declined from 34.4% in 2007 to 28.2% in 2012, while extreme poverty fell from 11.7% to 9.7% (Household Budget Survey of 2011/12). The reduction in poverty appears more substantial if one uses the international poverty line of USD 1.90 per person per day. Based on this measure, the headcount ratio dropped from 59.9% to 48.8% between 2007 and 2012. The favourable performance in economic growth and poverty reduction was accompanied by narrowing inequality: the Gini index declined from around 0.39 to 0.36 between 2007 and 2012. Evidence on the shared prosperity indicator suggests that inequality reductions were mainly driven by a larger increase in the consumption accruing to the bottom quintiles. The government supports poor households through the Tanzania Social Action Fund (TASAF) Productive Social Safety Net Programme (PSSN), conditional cash transfers and public works programme. These programmes are expected to contribute to a reduction in the level of poverty in the medium term.

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Swaziland

Authors : Peninah Kariuki, Asha P. Kannan

  • Economic growth remains subdued and is estimated to have slowed down in 2016 to -0.6%, mainly due to two factors, severe drought and fiscal pressures; while prospects will be sluggish in 2017 and 2018.
  • The political scene has continued to be relatively stable since the September 2013 elections, but the country’s ranking in participation and human rights remains low.
  • Swaziland possesses a prominent industrial sector with a limited level of entrepreneurship that can be enhanced through a comprehensive industrial policy to develop local entrepreneurs and create productive employment for the citizens.

Swaziland’s economy continues on a declining trajectory with growth projected to have declined to -0.6% in 2016 from 1.7% in 2015. This reflected a slump in the primary sector as agricultural production declined because of the El Ninˇ o-induced drought. Rain-fed crops, particularly maize and cotton, along with irrigated crops, mainly sugar cane, recorded significant declines. In addition, a large decline in revenues from the Southern Africa Customs Union (SACU) put considerable pressure on the fiscal account. Against this backdrop, an expansionary fiscal stance amplified the negative impact of these shocks. Short-term prospects in 2017 and 2018 indicate a sluggish recovery, with growth remaining at 1.4% and 2.3% respectively, mainly predicated on improved agricultural performance due to improved weather conditions, as evidenced by normal to above normal rains in the 2016/17 planting season. The major downside risk emanates from the fiscal front, especially, the trajectory of SACU revenues, underscoring the need to expedite the passing and implementation of the amended Public Finance Management (PFM) bill. Swaziland continues to face major social challenges, such as high poverty and inequality; high unemployment, especially among youth; gender disparities; and a high rate of HIV/AIDS. Despite its classification as a low middle-income country, around 63% of the population live below the poverty line. Moreover, inequality is substantial; this is reflected in the Gini coefficient of 0.51.

Swaziland remains in the low human development category with a Human Development Index (HDI) value unchanging for four straight years of 0.531 from 2011 through 2015, which places it at 150 out of 188 countries. The country’s Millennium Development Goal (MDG) achievement record highlights a lack of progress in both the poverty and health-related MDGs. Future human development plans need to integrate the unmet goals of MDGs into the post-2015 United Nations development agenda, which proposes 17 Sustainable Development Goals (SDGs), with clear targets and indicators.

The industrial sector is Swaziland’s second largest sector in terms of contribution to GDP with an estimated share of 42% in 2014 after the tertiary sector (51%) and far above agriculture (6%). Manufacturing remains the dominant sub-sector accounting for 36% of GDP, with the main activities comprising commercial agro-processing of sugar (particularly Coca-Cola concentrate), wood pulp, citrus fruit, pineapples, meat and clothing and textiles. In recognition of the linkage between industrialisation and entrepreneurship, the government has put in place various initiatives to develop and promote indigenous Swazi entrepreneurship, particularly in small and medium enterprises (SMEs). However, the 2013/14 Integrated Labour Force Survey shows that there is limited entrepreneurship with the share of self-employment in all activities at only 20% of the labour force. Data on characteristics of entrepreneurs in SMEs reveals that 56% and 44% are owned by men and women, respectively. Also, young entrepreneurs – aged between 22 and 35 – own 33% of the country’s small businesses, with the services sector emerging as the leading small business sector. The government recognises that entrepreneurship can help the youth unemployment challenge. Towards this goal, it is focusing on various measures comprising inclusion of entrepreneurship training in the school curriculum, continued support of specific programmes that offer hands-on experience at the secondary and tertiary levels and revamping the Youth Enterprise Revolving Fund initiative. Swaziland needs a comprehensive industrial policy to support diversification, develop local entrepreneurs and to promote industrialisation across the country.

swaziland

 

Sudan

Authors : Suwareh Darbo, Yousif Eltahir

  • Economic growth slowed in 2016 to an estimated 3% as a result of the decline in oil production and macroeconomic imbalances and is projected at 3.4% in 2017 and 3.6% in 2018 on the back of improved performance in the non-oil sector and temporary lifting of US sanctions.
  • The government’s attempts to expand the democratic space in the context of national dialogue augur well for an improved economic performance and political stability.
  • The share of Sudan’s entrepreneurs outside agriculture is sizeable but the limited number of entrepreneurial programmes, scarce technical training and the challenging business environment call for a coherent national strategy to boost and harness entrepreneurial energy and talent for inclusive growth.

Sudan’s economic growth was adversely affected by a number of factors, including the breakdown of correspondent banking relationships during the period 2014-16, declining oil revenues because of low export prices, ageing oil fields and reduced inflows of oil transit fees from South Sudan. Gross domestic product (GDP) growth is estimated at 3% in 2016, compared to 4.9% the previous year and forecast at 3.4% and 3.6%, respectively, for 2017 and 2018. In the short and medium terms, growth will be determined by developments in the agricultural and mineral sectors, skills development and prudent macroeconomic policies and structural reforms aimed at improving the business climate. Significant downside risks include continuing civil wars in some parts of the country and low global commodity export prices.

The macroeconomic imbalances and the consequent widening of the fiscal deficit by 0.2 percentage points in 2016, continue to constrain growth. Although the current account deficit narrowed by 1.1 percentage points in 2016, it is projected at a higher level in 2017 (4.9% of GDP) and expected to further widen to 5.6% in 2018. Closing the fiscal and current account deficits is a major policy priority especially in the face of low tax revenues and shortfalls in oil export receipts as well as difficulties in accessing concessional financing. However, the partial conditional easing of the US trade sanctions in early 2017 is expected to contribute to economic stability and boost foreign direct investment (FDI) and remittances from Gulf countries to the benefit of the most vulnerable.

During the period 2009-11, the share of Sudan’s entrepreneurs outside the agricultural sector declined from 56.8% to 47.3%, whereas the proportion of urban entrepreneurs increased from 46.3% to 49.8% and that of female entrepreneurs rose to 17.3%, up from 14.9%. Thus, there is need to improve the business environment, given that Sudan’s overall score on the World Bank’s distance from frontier rating has worsened from 49.3 in 2009 to 44.8 in 2017. Generally, entrepreneurship is not encouraged as a professional career and this is reflected in the lack of a national plan for developing entrepreneurship and by the small number of technical secondary schools (98) versus academic secondary schools (3 128).

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South Sudan

Authors : Frederick Mugisha, Guy Blaise Nkamleu

  • Macroeconomic performance has continued to deteriorate because of the country’s fragile situation and continuing low worldwide oil prices while growth fell by 0.2% in 2015 and the fiscal and current account deficits have increased sharply.
  • On 14 December 2016 the president announced the launch of a national dialogue initiative with the aim of protecting and preserving the unity of the people of South Sudan, ending their suffering, restoring the economy, and focusing on state and nation building.
  • South Sudan does not have a broad and substantive history of private sector development from which entrepreneurial culture will easily develop.

Economic performance has continued to deteriorate because of the civil war, the sharp fall in oil production, and the collapse of global oil prices. This has meant that the government is unable to raise the resources required to finance peace-related costs. In fact, financing even the normal 2015/16 budget, as approved by the assembly, remains a daunting challenge. South Sudan is the most oil-dependent country in the world, with oil accounting for almost the totality of exports, around 60% of its gross domestic product (GDP), and over 95% of government revenues in previous fiscal years. Global oil prices fell from USD 110 in 2014 to USD 30 before recovering to about USD 50 per barrel in early 2017. Net oil revenues in 2015/16 are expected to be only 17% of those of the previous year. This has had an adverse impact on economic performance. Real GDP growth fell by 0.2% in 2015. The fiscal budget and current account deficits have risen sharply resulting in a huge drop in foreign reserves, an increase in domestic and external debts, depreciation of the parallel domestic currency exchange rate, and acceleration in consumer inflation. GDP is estimated to have fallen drastically by 13.1% in 2016. The country’s economic prospects remain bleak, and will depend on the successful implementation of the peace agreement, a significant recovery in global oil prices, and the implementation of the economic and fiscal measures announced in September 2016.

On 14 December 2016, President Salva Kiir announced the launch of a National Dialogue initiative with the purpose of protecting and preserving the unity of the people of South Sudan, ending their suffering, restoring the economy, and focusing on the state and nation building. It is both a process and a forum through which the people of South Sudan should redefine the basis for their unity as it relates to nationhood, refine citizenship and belonging, restructure the state and renegotiate the social contract, and revitalise their aspirations for development and membership of the world of nations. The national dialogue does not violate the terms of the Agreement on the Resolution of the Conflict in South Sudan (ARCSS). The political situation remains tense. In August 2015 parties to the South Sudan civil conflict signed a peace agreement, led by the Intergovernmental Authority on Development (IGAD). A key step in this peace accord was the formation of a unity government, which was finally announced on 29 April 2016. However, on 7 July 2016 new fighting erupted between the South Sudanese army (SPLA) and the opposition forces of the SPLA-IO. This opened a new wave of violence and since then a precarious calm has prevailed in the country.

The overall humanitarian situation continues to deteriorate sharply. In November 2016 about 1.67 million people remained internally displaced, while over a million had fled to neighbouring countries and 201 997 were seeking United Nations (UN) shelter. UN reports point to a borderline famine situation in many regions, especially in parts of the Unity State. An estimated 4.8 million people are in emergency or crisis level food insecurity. The food crisis and displacement of the populations are expected to worsen if insecurity continues.

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Somalia

Authors : Salome Kimani, Richard Walker

  • Real GDP growth in Somalia, estimated at 3.7% for 2016, is projected to decelerate to about 2.5% in 2017 because of lower agricultural output but will recover to about 3.5-4.5% in 2018-19.
  • Creating jobs for the youth, providing social services such as education and health, and building sustainable livelihoods are the immediate key development challenges in Somalia.
  • Somalia’s entrepreneurial private sector is one of the country’s main assets and an important partner for development actors.

Somalia’s economy remains fragile as it relies heavily on the agriculture and livestock sectors, remittances and telecommunications, with no apparent manufacturing and industrial sector. The small industry that existed before the civil war has completely vanished and the machinery sold as scrap metal. Very little value is added to agricultural and livestock products before they are either exported or consumed. Dependence on primary commodities as a major source of export earnings is a structural bottleneck and reflects the country’s narrow economic base and vulnerability to market dynamics, price fluctuations and environmental shocks.

According to the IMF, real 2017 GDP growth is projected to decelerate to about 2.5%, with inflation forecast at 1-2%. The slower growth rate in 2017 will be a consequence of lower agriculture output due to a weaker rainy season. However, construction, telecommunications and service sectors are projected to continue to register decent growth. The external current account deficit is projected to remain large though remittances and grants are likely to cover this deficit. The Somali Shilling (SOS)/USD exchange rate is expected to remain around 22 200 to 23 000, the range within which it has been since January 2015.

The fiscal framework for 2017 targets a zero-cash balanced budget, underpinned by realistic revenue projections, new revenue measures and prudent expenditures. The World Bank estimates that the poverty levels in Somalia are extremely high, with about half of the population (51.6%) living below the poverty line. Poverty is aggravated by the lack of a functioning government, widespread insecurity, and natural calamities such as floods and droughts.

The World Bank estimates Somalia’s per capita income at USD 435, making it the fifth poorest country in the world. About 70% of its population of roughly 12 million are under the age of 30. Living in a country with an estimated youth unemployment rate of 67%, one of the highest in the world, young Somalis see few prospects for the future. High levels of unemployment have increased their vulnerability to militant groups and criminal activities.

Implementing the new National Development Plan (NDP) 2017-19 requires an environment more conducive to sustainable development and robust improvements in the political, security and governance situation of the country. The NDP will also involve a continuous public-private dialogue between government, citizens and the private sector.

The country’s private sector is a major asset and Somali entrepreneurs have actually flourished in a stateless conflict-ridden economy. Remittances from the diaspora have funded private sector investment in livestock, trade, money transfer services, transport and telecommunications. As outlined in the NDP 2017-19, the Federal Government aims to strengthen the national economy by putting in place the relevant regulatory frameworks that are needed to support entrepreneurship and a vibrant private sector.

South Africa

Authors : Wolassa Lawisso Kumo, Fatou Nyang Leigh, Arthur Minsat

  • Economic growth decelerated to 0.3% in 2016 although it is expected to rebound to 1.1% in 2017 and higher in later years.
  • Growth prospects will be driven by moderately stronger global growth, more favourable weather conditions, reliable electricity supply, less volatile labour relations, recovering business and consumer confidence, and stabilising commodity prices.
  • The industrialisation strategy is geared towards promoting entrepreneurship, which will also help to generate employment.

Economic growth at 0.3% in 2016, is expected to rebound from 2017 onwards as several limiting factors are receding, creating an opportunity for a new growth cycle. Key structural bottlenecks are being addressed including power shortages. Eskom has moved from an electricity shortage of 3 000 MW, which precipitated a series of power outages in 2015, to a surplus of 3 000 MW in 2016. Moreover, the government remains committed to working with the private sector, labour and civil society to promote inclusive growth and economic transformation. Economic growth is expected to increase to 1.1% in 2017.

The real effective exchange rate of the rand appreciated by 23.6% between January and December 2016. Although this resulted in deterioration in the competitiveness of local producers in foreign markets, at its most recent levels the currency was still 9% below its average value of the past 15 years in real terms. Inflation breached the monetary policy target range, reaching 6.4% in 2016. Driven by higher food prices, rising world oil prices, and domestic fuel prices, headline inflation is expected to breach the policy target range again in 2017 reaching 6.1%. Monetary policy has been tightened to curtail inflation and inflationary expectations from rising amid monetary policy tightening by the US Federal Reserve. The monetary authorities increased the policy interest rate to 7% in March 2016. Due to higher interest rates and subdued investor confidence, growth in the demand for credit by the private sector fell to 5.11% in December 2016 from 10.17% in December 2015.

National government revenue increased by 11.6% in fiscal year 2015/16 reaching R1.069 trillion or 26.1% of GDP. The increase was driven by higher receipts in most major tax categories, particularly taxes on property, international trade and transactions, and non-tax revenue.

Unemployment remains a major social challenge with youth unemployment among the highest on the continent. Commendable progress was made in addressing absolute poverty in the past decade primarily through extensive social safety net programmes. Nonetheless, the government continues to face challenges to effectively deliver basic economic and social services in rural areas and the townships.

South Africa’s industrialisation and employment-generation strategy aims to encourage entrepreneurship. Nonetheless, success has been limited due to inadequate technical and business management skills; lack of experienced mentoring of entrepreneurs; barriers to business entry, and lack of access to finance.

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Sierra Leone

Authors : Milton Korseh-Hindowa, Moses Sichei, Jamal Zayid

  • The economy recovered from the after effects of the Ebola epidemic, growing by 4.3% in 2016 from -21.1% the year before.
  • The country has introduced austerity measures in the 2017 budget, and is clearly moving towards a more restrictive trade regime by introducing new tariffs.
  • To overcome the difficulty of accessing credit for SMEs, the National Strategy for Financial Inclusion (2017-20) was launched in late 2016.

Sierra Leone has achieved commendable economic growth rates in the post-war period that peaked at 20.7% in 2013 with the launching of the government’s Agenda for Prosperity 2013-18 (A4P). The continued double-digit gross domestic product (GDP) growth resulted from resumption in iron ore production combined with government investment in infrastructure as well as buoyant activities in agriculture, tourism and services. The impressive growth rates were, however, disrupted by the twin-shocks of: i) unprecedented decline in international ironore prices starting in late 2013; and ii) the outbreak of Ebola Virus Disease (EVD) in 2014, together culminating in GDP contraction of 21.1% in 2015. Sierra Leone is essentially a supply-constrained mono-cultural economy depending on a few commodities for output and export. Following these shocks, the authorities, in very close partnership with donors and other stakeholders, prioritised the country’s immediate strategic interventions in the context of the Post-Ebola Recovery Plan (PERP), which is a refocusing of the A4P as launched in late 2015.

With nominal GDP projected at SLL 22.69 trillion in 2016 (IMF projection of USD 4.289 billion for 2016), Sierra Leone is the 154th economy in the world and 38th in Africa but offering significant business opportunities. The economy is recovering from the twin shocks, and real GDP growth recovered from -21.1% in 2015 to 4.3% in 2016. Much of the recovery comes from the contribution of non-iron ore sectors reflecting improvements in agriculture, construction, electricity and other services. Although there is a modest recovery in iron-ore prices, the impact of the resumption of iron ore mining is yet to become buoyant due to its limited scale.

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Seychelles

Authors : Tilahun Temesgen, Roland Alcindor

  • Growth slowed to 4.8% in 2016 from 5.7% in 2015 after a robust period of growth that allowed Seychelles to reach high-income status in 2015.
  • The medium-term outlook is moderate, with real GDP projected to grow at 3.5% in 2017 and 3.3% in 2018, driven by tourism, ICT and fisheries.
  • Enhanced attention to entrepreneurship, skills development and improved financial inclusion will help Seychelles achieve a more inclusive and sustainable growth performance with greater diversification.

The economy of Seychelles continued to grow in 2016, driven primarily by tourism, but the rate of real gross domestic product (GDP) growth slowed to an estimated 4.8% from 5.7% in 2015. The medium-term growth outlook is moderate, with real GDP projected to grow by 3.5% in 2017 and 3.3% in 2018. The country reached high-income status in 2015. The traditional tourism and fisheries sectors are expected to remain the main drivers of growth, along with information and communications technology (ICT). Prudent fiscal and monetary policies, coupled with continued political stability, have helped consolidate macroeconomic stability, and inflation is expected to remain in single digits in 2017.

Challenges facing the country include insufficient economic diversification and vulnerability to external shocks. Growth needs to be made greener and more inclusive to protect Seychelles’ fragile natural environment against the adverse impacts of climate change and to ensure that growth benefits all members of the society. The development of the private sector is paramount to achieving a more diversified economy, but it requires a more enabling environment to exploit its potential and expand into new business areas.

Greater attention to entrepreneurship, skills development and improved financial inclusion will help Seychelles achieve a more inclusive and sustainable growth performance with better diversification. Despite its small population and short post-independence history, the country’s unique natural resources and the cultural diversity of its immigrant population have provided it with an innovative and entrepreneurial attitude. However, the overall entrepreneurship potential seems to be yet untapped due to a number of challenges, including lack of entrepreneurial drive among youth, lack of training in entrepreneurship and business creation, and a mismatch between the skills level of job seekers and the needs of the private sector. The new government in place since autumn 2016 has created new bodies for entrepreneurship development and industry that aim to support young entrepreneurs in starting businesses.

Seychelles

Senegal

Authors : Khadidiatou Gassama, Toussaint Houeninvo, Isiyaka Sabo

  • The economy grew by an estimated 6.7% in 2016, with 6.8% expansion predicted for 2017 and 7% in 2018.
  • The Mo Ibrahim Index of African Governance (IIAG) ranked Senegal 10th out of 54 countries in 2016 and one of the three that improved their position in the four categories of the index.
  • The country’s industrial sector is 92.5% made up of small and medium-sized enterprises (SMEs) but large firms (7.5%) account for 90% of added value.

Economic growth continues to accelerate and should reach 6.7% in 2016 (up from 6.5% in 2015), mostly driven by agriculture, industry and a revival in the services sector. This expansion should reach 6.8% in 2017 and 7% in 2018, but could be less if reforms are slow to take effect or the weather is a problem, along with security in the sub-region linked to jihadi groups.

The national development plan (Plan Sénégal émergent [PSE]) was in its second year in 2016, with major reforms expected to speed up the public investment involved in the plan’s projects.

Entrepreneurship and industrialisation are seen as chances to create added value and jobs, especially in manufacturing and agri-food. The government has a strategy to boost entrepreneurs as well as an industrial development policy, but they are not being fully implemented so these sectors are still quite small. The number of big firms only rose from 79 in 2009 to 80 in 2013, with the contribution of modern industries just growing from 9.9% of GDP to 10.3%. Individual entrepreneurs were estimated to number 59.5% of the total by the 2014 national survey of SMEs and this proportion can increase if structural obstacles are reduced and the business climate improves, along with better access to funding. The government is revising its 2005-15 industrial redeployment policy (PRI) to boost industrialisation in provinces with big economic potential through substantially upgrading facilities and infrastructure and setting up special economic zones and industrial parks.

Senegal

Sao Tome & Principe

Authors : Idrissa Sanoussi, Flavio Soares Da Gama

  • Sao Tome and Principe’s economy was estimated to have grown by 5% in 2016, led by agricultural investment and tourism, and growth is set to continue in 2017 and 2018 by 5.5% on average.
  • The country has improved on the Mo-Ibrahim Index of African Governance moving to 11th place in 2016 from 13th in 2015 reflecting efforts to improve good governance.
  • The economy depends on inputs and technology from abroad and has a very limited industrial ecosystem, yet the government has no industrialisation strategy.

Real gross domestic product (GDP) growth increased to 5% in 2016, up from 4% in 2015, led by agricultural investment and tourism. Growth is set to reach 5.6% in 2017 and then 5.4% in 2018, driven mainly by foreign direct investment in construction and tourism. The slight projected decline of 0.2 percentage points in 2018 is due to expectations of a slight decrease in funding from donors. The consumer price index (CPI) has continued its downward trend, despite a marginal increase of 0.3% at the end of 2016.

Raising sufficient resources domestically to finance government spending presents a key challenge, underscored by a high stock of public debt, estimated at 75% of GDP in 2015. The government envisages several reforms in 2017 to collect more revenue. The first of these is to establish a 25% tax on locally produced alcoholic beverages. Secondly, the government plans to regulate the billing system. Thirdly, it plans to create a regional taxation tribunal. Finally, the government also plans to update the tax code to include, among other things, a tax on service delivery for non-residents.

The financial sector, meanwhile, faces demand-side constraints. These include capital shortages at the corporate level, a lack of bankable projects, and increasingly restricted foreigncurrency reserves. Moreover, the government’s fiscal policies are proving challenging for the country’s still rather embryonic private sector. Furthermore, the expensiveness of energy, maintenance, and human capital make business costs high. New businesses often find it hard to take off and flourish because of high interest rates, a lack of access to long-term financing, and a weak judicial system.

According to data from the latest census in 2012, unemployment stood at 13.6%, and continued to affect young people and women disproportionately. The problem of unemployment makes new initiatives to foster entrepreneurship all the more desirable.

To foster entrepreneurship, industry, and foreign investment, the government should adopt a range of reforms, including lower taxes, and measures making it easier to get loans.

Sao Tome and Principe

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Unlock the potential of African entrepreneurs for accelerating Africa’s industrial transformation, says the African Economic Outlook 2017

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