The International Monetary Fund (IMF) has highlighted a troubling trend for sub-Saharan Africa’s resource-intensive countries (RICs), including Nigeria, Angola, and Chad, where income levels have stagnated as growth has slowed considerably over the last decade.
This stagnation, the IMF says, marks a sharp contrast with the decade before 2014, during which these nations, rich in natural resources, saw rapid economic growth.
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The IMF’s recent regional economic outlook points out that while resource-intensive countries in sub-Saharan Africa experienced significant growth in the years leading up to 2014, the past decade has told a different story. Since 2014, growth in RICs—especially among fuel exporters like Nigeria, Chad, and Angola—has not only slowed but has fallen substantially below growth levels in countries that are not resource-intensive, such as Ethiopia, Rwanda, and Senegal.
According to the IMF, the post-2014 growth divergence between RICs and non-RICs has largely been driven by two factors: the sharp decline in commodity export prices around 2014-15 and deep-rooted structural vulnerabilities in RIC economies.
Firstly, in 2014, global commodity prices plummeted, effectively ending a “super-cycle” period of soaring prices that had previously driven strong economic growth. The IMF notes that while there has been a partial recovery, the terms-of-trade decline has not fully reversed, impacting these economies’ revenue and growth.
Secondly, the IMF stresses that poor business environments, limited human capital, weak governance, and mismanagement of resource revenues in RICs have magnified the effects of this terms-of-trade shock. Weak governance and systemic corruption, particularly, have weighed heavily on productivity and economic output.
“Fuel exporters outside the region, with generally stronger governance structures, have weathered the commodity price slump far better,” the IMF report notes, indicating that a stable regulatory environment could significantly mitigate the adverse effects of fluctuating commodity prices.
IMF analysis suggests that governance plays a crucial role in determining the resilience of economies. The report estimates that for every one percent decline in a country’s terms of trade, the resulting impact on medium-term growth is about 0.25 percentage points greater in nations with substantial governance challenges. Poor governance in these countries can impede the diversification of their economies, making it harder to attract private investment outside the resource sector.
Furthermore, the IMF report highlights how poor resource management practices have compounded the original economic shock. In many resource-intensive economies, government spending tends to be highly pro-cyclical—meaning spending rises during commodity booms but contracts sharply when prices fall. This approach has often led to unplanned, costly capital projects during boom periods, followed by drastic spending cuts when prices drop. Additionally, many fuel-exporting countries heavily subsidise fuel, which limits their fiscal flexibility during periods of high oil prices and crowds out spending on other critical development projects.
Addressing these growth challenges is a priority for sub-Saharan Africa, where RICs account for about two-thirds of the region’s GDP and population. The IMF report underscores that the lack of growth in RICs has stunted progress in poverty alleviation, especially since 2014. Development indicators have suffered, with a child born in a RIC country today expected to live four years less on average than those in non-RIC countries. Moreover, children in RICs are 25 percent more likely to live in poverty.
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The IMF advocates for stable macroeconomic frameworks as essential for reversing this trend. Prudent and consistently implemented fiscal policies, combined with broad-based structural reforms, are necessary steps. Strengthening governance, improving business environments, investing in human capital, and addressing infrastructure issues could collectively enable these countries to diversify their economies and spur sustained growth.
For fuel exporters, this urgency is compounded by the global green energy transition. As the world shifts toward renewable energy, the pressure on these economies to diversify and reduce dependence on oil exports is mounting. The IMF concludes that “more resilient, diversified economies will not only weather future commodity cycles better but will also be better positioned to support sustainable development for their populations.”
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