The WAEMU area remains one of the most dynamic economic zones in Africa with an estimated average growth rate of 6.3% over the 2017-2019 period, higher than the average of the other countries on the continent (3.1% in 2017, 3.3% in 2018 and 3.2% in 2019). It currently has eight countries, which represent the issuers of the Public Securities Market. These are Benin, Burkina Faso, Côte d’Ivoire, Mali, Niger, Senegal and Togo.
Economies of the WAEMU area have been dynamic in recent years. However, due to the negative consequences of the COVID-19 pandemic on the economy, economic activity is expected to slow down in the zone in 2020, while the global economy and sub-Saharan Africa are expected to be in recession, with a recovery in activity expected from 2021 onwards.
A resilient economic area
The economic fabric of the West African Monetary Union (WAEMU) has improved considerably in recent years. In 2019, the Union’s activity recorded a growth rate of 6.1%, relatively stable since 2017. For 2020, the economy of the area is expected to slow down with a projected growth rate of 2.6%. This slowdown is explained by the negative impact of the COVID-19 pandemic on the economies of member states. Inflation remained moderate in WAEMU with a recorded level of -0.8% in 2019 after 1.2% in 2018. This fall in prices is explained, in particular, by the combined effect of a fall in food prices and a fall in demand.
As regards government financial operations, the overall budget deficit excluding grants improved in 2019 with a rate of 4.3% of GDP against 5.2% in 2018. However, a deterioration is expected in 2020 with a projected deficit of 8.0% of GDP. The overall foreign trade surplus in the WAEMU stood at CFAF 1 088.2 billion in 2018, compared with CFAF 304.1 billion the previous year. The overall external trade surplus in WAEMU is estimated at CFAF 1 659.4 billion in 2019, up by CFAF 571.2 billion compared to 2018. On the other hand, it is expected to fall by CFAF 497.7 billion to CFAF 1 161.7 billion in 2020. The current account deficit improved slightly in 2019 to 5.4% of GDP compared with 5.7% in 2018. It is expected to continue on this path in 2020 to reach 5.1% of GDP. This situation is explained by an improvement in the balance of goods. Over the period 2013-2019, the money supply in the WAEMU grew by about 12% per year due to the increase in domestic claims.
The Union’s economic policy for 2020 and the medium-term outlook
Despite the resilience of WAEMU countries to the global financial and economic crises of the last two decades, the agricultural sector remains vulnerable because of the various climatic hazards and the Union’s heavy dependence on exports of non-processed agricultural food and mining raw materials. The vulnerability of this dependence has been highlighted by the fall in the prices of the main commodities exported by WAEMU member states following the negative impact of the COVID-19 pandemic on the world economy. To this end, the diversification of the economy remains a challenge for these states. However, the outlook remains favorable due to the economic reforms adopted in recent years in line with the emergence ambitions of the authorities of the countries of the Union based on the National Development Plans (NDP) for the structural transformation of the economies of the zone. The reforms adopted are reflected in the dynamics of the WAEMU economies, the pursuit of political stability and, finally, the various actions to be implemented to address security issues.
In addition to these reforms, member states have put in place a mechanism to strengthen the surveillance of their macroeconomic policies, a common market to reinforce regional economic integration and sectoral policies to ensure their conditions for balanced and sustainable development.
To know more about the evolution of the economic data of the 8 issuers of the Public Securities Market of the WAEMU zone, click here.
Source: WAEMU information note