"How to Spur Economic Growth in Africa\u2019s Fragile and Conflict-Affected States"

" How to Spur Economic Growth in Africa\u2019s Fragile and Conflict-Affected States \r\n\r\n \r\n \r\n \r\n \r\n \r\n\r\nMore than half of sub-Saharan Africa\u2019s population lives in fragile and conflict-affected states (FCS)\u2014economies that face profound challenges such as stagnant economic growth, weak institutions, inadequate public services, extreme poverty, war, and forced internal displacement.\r\n\r\n \r\n\r\nSome countries have transitioned out of extreme fragility by implementing sound macroeconomic policies, diversifying the economy, and strengthening institutions. However, as we explain in our\u00a0<a title=\"https:\/\/www.imf.org\/en\/Publications\/IMF-Notes\/Issues\/2025\/04\/25\/Pushed-to-the-Brink-Fragility-and-Conflict-in-Sub-Saharan-Africa-566187\" href=\"https:\/\/imf.sitecoresend.io\/tracking\/lc\/912af7de-14e5-4e6e-8fe0-c93cd456785a\/c6837945-e466-4a16-a0f0-5a64e879725b\/808fd358-ce87-52f2-f450-9590708970f6\/\" target=\"_blank\" rel=\"noopener noreferrer\" data-saferedirecturl=\"https:\/\/www.google.com\/url?q=https:\/\/imf.sitecoresend.io\/tracking\/lc\/912af7de-14e5-4e6e-8fe0-c93cd456785a\/c6837945-e466-4a16-a0f0-5a64e879725b\/808fd358-ce87-52f2-f450-9590708970f6\/&source=gmail&ust=1749282652992000&usg=AOvVaw0NujuFxmiV0OOyyyXThk7A\">analytical note \u00a0in the IMF\u2019s\u00a0<a title=\"https:\/\/www.imf.org\/en\/Publications\/REO\/SSA\/Issues\/2025\/04\/25\/regional-economic-outlook-for-sub-saharan-africa-april-2025\" href=\"https:\/\/imf.sitecoresend.io\/tracking\/lc\/912af7de-14e5-4e6e-8fe0-c93cd456785a\/fbd2ae61-0efd-4bda-9c80-39519c68673f\/808fd358-ce87-52f2-f450-9590708970f6\/\" target=\"_blank\" rel=\"noopener noreferrer\" data-saferedirecturl=\"https:\/\/www.google.com\/url?q=https:\/\/imf.sitecoresend.io\/tracking\/lc\/912af7de-14e5-4e6e-8fe0-c93cd456785a\/fbd2ae61-0efd-4bda-9c80-39519c68673f\/808fd358-ce87-52f2-f450-9590708970f6\/&source=gmail&ust=1749282652992000&usg=AOvVaw2pwNJ2_4Ej4VlTVq4gD8nW\">Regional Economic Outlook for sub-Saharan Africa , recovering from the successive shocks of recent years is likely to be difficult for many FCS, faced with erratic growth, political instability, exposure to natural disasters, and heavy resource dependency.\r\n\r\n \r\n\r\nFragility carries a stark human cost. With strained budgets, vast development needs, and insufficient funding, fragile states in the region consistently rank at the bottom of global development indicators. Life expectancy lingers at 60 years, poverty rates are twice as high as in non-FCS in the region, and elementary school completion rates remain among the lowest globally. If current trends continue, by 2030 two-thirds of the world\u2019s extreme poor will live in fragile states, with sub-Saharan Africa at the epicenter.\r\n\r\n \r\n\r\nMany fragile states struggle to sustain the bursts of faster growth needed to escape poverty. As the\u00a0<a href=\"https:\/\/imf.sitecoresend.io\/tracking\/lc\/912af7de-14e5-4e6e-8fe0-c93cd456785a\/9404401d-2e76-4560-9dd3-c6d011ba2fef\/808fd358-ce87-52f2-f450-9590708970f6\/\" target=\"_blank\" rel=\"noopener\" data-saferedirecturl=\"https:\/\/www.google.com\/url?q=https:\/\/imf.sitecoresend.io\/tracking\/lc\/912af7de-14e5-4e6e-8fe0-c93cd456785a\/9404401d-2e76-4560-9dd3-c6d011ba2fef\/808fd358-ce87-52f2-f450-9590708970f6\/&source=gmail&ust=1749282652992000&usg=AOvVaw3zg37ciHiAbO_G4ZsmFHm8\">Chart of the Week \u00a0shows, while non-FCS economies in sub-Saharan Africa managed to keep growing after the pandemic\u2014albeit more slowly than previously forecast\u2014fragile states in the region haven\u2019t been able to regain lost ground, with inflation-adjusted income per person still, on average, below its 2019 level. When FCS suffer a downturn, they lose revenue and have limited access to affordable financing, forcing them to cut expenditures more sharply than in non-FCS. This results in a relatively longer and deeper fiscal contraction, exacerbating the initial shock, as shown in a recent\u00a0<a title=\"https:\/\/www.imf.org\/en\/Publications\/WP\/Issues\/2024\/10\/04\/Global-Shocks-Unfolding-Lessons-from-Fragile-and-Conflict-affected-States-555906\" href=\"https:\/\/imf.sitecoresend.io\/tracking\/lc\/912af7de-14e5-4e6e-8fe0-c93cd456785a\/3f177475-45a6-438c-98e9-ee6f55f7cb21\/808fd358-ce87-52f2-f450-9590708970f6\/\" target=\"_blank\" rel=\"noopener noreferrer\" data-saferedirecturl=\"https:\/\/www.google.com\/url?q=https:\/\/imf.sitecoresend.io\/tracking\/lc\/912af7de-14e5-4e6e-8fe0-c93cd456785a\/3f177475-45a6-438c-98e9-ee6f55f7cb21\/808fd358-ce87-52f2-f450-9590708970f6\/&source=gmail&ust=1749282652992000&usg=AOvVaw36PtgHfPb-EwX_2Ica6Rth\">IMF working paper .\r\n\r\n \r\n\r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n \r\n\r\nFragility is more than a lack of institutional capability and armed conflict: it often reflects deeper political and economic forces that make recovery elusive. Restricted access to international financial markets, weaker institutions, and limited entrepreneurship in fragile states result in significantly smaller private sector contributions to the economy and fewer employment opportunities compared with other countries.\r\n\r\n \r\n\r\nHowever, some fragile states have managed to break free by focusing on participatory governance, institutional reform, and economic diversification. Countries that curb corruption, strengthen institutions, and promote political participation are more likely to mitigate fragility, according to our analysis of past cases based on a machine learning approach.\r\n\r\n \r\n\r\nIndeed, past lessons offer hope. After its 2002 civil war, Sierra Leone sought to prioritize rebuilding infrastructure and public services in education and health care, while Liberia, after four years of civil war ended in 2003, strengthened core institutions and reduced reliance on extractive industries. Both nations used pivotal moments to reset societal expectations, rebuild trust, and set a new course.\r\n\r\n \r\n\r\n Employment and income \r\n\r\n \r\n\r\nFCS in the region are simultaneously major sources of refugees and key hosts. Despite the acute challenges and constraints, several FCS (Cameroon, Chad, Ethiopia, Niger, among others) have implemented innovative refugee policies, such as granting refugees free movement, work permits, and access to public services. While these measures require up-front investments and administrative capacity, well-designed refugee integration strategies can boost employment and income for both the host country and the refugees.\r\n\r\n \r\n\r\nThe transition toward sustained growth and resilience is a long-term process requiring perseverance and adaptability, not a quick fix. No single policy guarantees success. Instead, states that focus on a package of measures to build inclusive institutions, maintain economic stability, and seize key opportunities for reform are far more likely to succeed.\u00a0In line with the Fund\u2019s Strategy for Fragile and Conflict-Affected States (FCS), our\u00a0policy recommendations include:\r\n \r\n \t Restoring macroeconomic stability by strengthening fiscal institutions and improving public financial management. \r\n \r\n \r\n \t Rebuilding trust by improving governance and ensuring that revenues\u2014particularly from natural resources\u2014are managed responsibly. \r\n \r\n \r\n \t Creating opportunities for broader public engagement and ensuring a fairer allocation of resources to ultimately strengthen social unity and resilience. \r\n \r\n \r\n \t Forming long-term partnerships with international partners, including donors, can help support capacity building, financing social programs, and mitigating the impact of economic shocks\u2014 ensuring that fragility does not escalate into a global crisis. \r\n \r\n \r\n \r\n \r\n \r\n "

"How to Spur Economic Growth in Africa\u2019s Fragile and Conflict-Affected States"

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