African financing needs in the 1990s

This paper discusses the magnitude of external resources that sub-Saharan Africa may require during the 1990s. There can be no firm projections because requirements are affected both by the growth and efficiency targets chosen and by a wide range of factors, both internal and external to sub-Saharan Africa, which often interact to reinforce or offset one another. However, the specific projects provided by this paper offer a point of departure for further discussions. It also provides a qualitative framework for considering how various factors affect resource requirements. The conceptual framework used in this paper for estimating external resource requirements is based essentially on the two-gap model, in which the gap between domestic savings and gross investment must equal the difference between imports and exports, which is financed by external capital or foreign savings. To provide a context for the discussions, this paper starts with a section on the economics history and evolution of sub-Saharan Africa. A section on savings, investment and efficiency of capital follows, dealing with the feasibility of achieving the desired growth targets, the policy instruments available to attain them, and the policy reforms that African countries should implement to boost the demand for investment as well as private and public savings. The final section analyzes the external resource requirements and discusses implications for other related economic and financial variables.