Transcript Diapositive 1 - Dr. Robert E. Looney Homepage

SUB-SAHARAN AFRICA (SSA)
KE NAKO
IT’S NOW OR NEVER
proposed by Matthieu Delouvrier
February 2013
Megatrend: it is the dawn of SSA
Working-age population worldwide
7 000 000
6 000 000
5 000 000
36%
4 000 000
33%
28%
3 000 000
18%
2 000 000
9%
China
India
ROW
2100
2090
2080
2070
2060
2050
2040
2010
2000
1990
1980
More developed regions
12%
2030
17%
1970
1950
0
21%
34%
1960
1 000 000
15%
7%
23%
14%
22%
2020
(Thousands)
11%
SSA
Source: United Nations
2
SSA GDP is in top 20
Some references
(USD trillion in 2012)
GDP current
GDP current PPP
France
2.6
India
4.7
Brazil
2.4
Brazil
2.5
India
1.9
France
2.2
Spain
1.3
SSA
2.1
SSA
1.3
Mexico
1.7
Mexico
1.2
Korea
1.6
Korea
1.1
Spain
1.4
Indonesia
0.9
Indonesia
1.2
Turkey
0.8
Turkey
1.1
Source: IMF WEO Oct 2012
3
What do we see today?
4
SSA countries show the highest growth
Ten fastest growing countries*
(Annual average GDP growth rate in %)
2001-2010
2011-2015 (f)
Angola
11.3
Iraq
11.0
China
10.5
Ghana
9.4
Myanmar
10.3
China
8.5
Nigeria
8.9
Mozambique
7.8
Chad
8.6
Guinea
7.6
Ethiopia
8.3
Rwanda
7.6
Kazakhstan
8.3
Niger
7.4
Mozambique
8.0
Zambia
7.4
Cambodia
8.0
DR Congo
7.2
Rwanda
7.8
Cambodia
7.0
• Countries with population above 10 million
Source: IMF WEO Oct 2012
5
The trend is very supportive
GDP growth of SSA countries
(Annual GDP growth rate in %)
Forecast
8
7
6
5
4
3
2
1
0
-1
-2
1980
1985
1990
1995
2000
2005
2010
2015
Source: IMF WEO Oct 2012
6
Big industries are paving the way
Sales of SSA biggest companies (US $ bn)
600
CAGR
500
400
7.3%
300
200
5.7%
100
0
2007
South Africa
2011
SSA (excluding South Africa)
Source: The Africa Report - Top 500 African companies
. South Africa companies remain
largely dominant.
. Oil and mining: 33.2% of sales.
. FTSE ASEA Pan Africa index
increased by around 20% in 2012.
7
Technology (mobile) is breaking through
Mobile: the door to modernity
Source: MobileMarketingWatch
. Africa has twice as many mobile
phones as the USA.
. Mpesa (Kenya) has become a
global leader in mobile banking and
is selling its technology to India.
. Mobile phone is decreasing costs,
improving efficiency.
. Nigeria is distributing subsidized
inputs to 1.5 million farmers
through cell phones.
8
Entrepreneurs are building success stories
Mr. Dangote ranked 76th world richest*
*Source: Forbes
. Current activities: cement, sugar,
flour, salt….
. Company expected to be listed on
the London Stock Exchange in 2013.
. February 2013: signature of a
strategic agreement with General
Electric to collaborate on power,
transportation and oil & gas.
9
Entrepreneurs are dedicated to the continent
Mr. Mo Ibrahim created his Foundation
. Mr. Mo Ibrahim made a
remarkable success in mobile
telecommunications with Celtel
which was sold in 2005.
. The Mo Ibrahim Foundation
was created in 2006 to
stimulate good governance and
leadership in Africa.
10
The culture industry is not left over
NOLLYWOOD: the star of Afrotainment
The second largest film industry in the world
. Second largest employer in Nigeria
. 56% of movies in local language
. Average DVD sale: 25-50,000 copies
. 300 producers
. Above 1,000 films per year
. Average cost: US$ 20,000 per film
11
The middle class is driving growth
Middle class size in Africa (million)
350
326
300
+60%
250
200
204
157
150
100
50
0
1990
2000
2010
Source: African Development Bank
. Middle class expected to double in
20 years.
. Consumer spending (US$ 1tr) similar
to India, higher than Russia.
. Passenger cars import in SSA
increased by 25%+ in Q4 2011
(YOY) and 250%+ in Rwanda.
. Nestlé invested US$ 1 bn in 2011.
12
The overall security has improved
Conflicts are regressing
1980-89
2000-09
Source: Uppsala University
. The number of deaths by violence
has decreased due to the reduction of
conflicts and their intensity following
the democratization of the continent.
. Successful coups in Africa were
down from 20 during 1980-89 to 7
during 2000-09.
13
Growth is not inclusive enough
Extreme poverty headcount ratio (%)
Sub-Saharan Africa
East Asia & the Pacific
Required Millenium
Development Goal
progress
Source: World Bank 2012
. The ILO* estimates that between
2000 and 2007, the working age
population grew by 96 million but
only 63 million jobs were created.
* International Labour Organization
. Unemployment hits the youth.
. Most countries are not on track to
achieve the Millennium Development
Goals by 2015.
14
Political and civil rights are not progressing
Classification of countries
2012
18%
43%
2002
17%
47%
Free
Partly free
39%
36%
Not free
Source: Freedom House
. During the last ten years, political
and civil freedom has not improved
significantly.
. On the other side, many elections
held in 2011 showed that peaceful
political alternation is possible.
15
What are the drivers of change?
16
Macro policies have produced results
Foreign exchange reserves / External debt
70%
60%
50%
40%
30%
20%
10%
0%
1990
Foreign exchange reserves / External debt
2011
External debt / GDP
Source: IMF, World Bank data
. Debt reduction strategies together
with external trade oriented policies
resulted in a dramatic improvement of
SSA countries savings and solvency.
. All recent sovereign bond issues are
oversubscribed.
. 9 sovereign wealth funds created. 10
to be created soon.
17
Foreign financing to SSA has surged
Destination of funds: public vs private
Source: IMF
. Foreign flows: x10 in 10 years.
. Remittances: over US$ 30 billion per
year.
. Funds going to the private sector:
average return on investment is the
highest in the world.
18
Intra-African foreign direct investment is emerging
Number of projects
. The share of intra-African investment
has more than doubled in the last 8
years at the expense of developed
markets.
. Leading investors come from South
Africa, Nigeria and Kenya.
19
There is a dramatic shift in trading partners
Destination of SSA exports
Excluding oil exporting countries
Oil exporting countries
Source: IMF
. Current switch from Europe to BICs.
Trade, not aid. Resources driven.
. Intra-African trade still low despite
efforts of economic communities.
. Diversification of partners has been
an engine for growth: reduction of
export volatility, better terms of
trade, scale economies.
20
Investment in infrastructure has been crucial
The future new air terminal in Lomé, Togo
. Infrastructure contributed to 50% of
SSA past growth.
. Current annual spendings: US$ 45 bn.
. Improving infrastructure halfway to
regional best practice (Mauritius)
would increase GDP by 4.4%*.
* World Economic Forum 2013
21
Africa has a buried treasure
A vast potential in underground resources
Oil
10%
Gold
40%
Chromium
&
Platinum
80%
to
90%
. Africa is not richly endowed with
major minerals like copper, lead, zinc.
. Africa’s mining sector accounts for
just 10% of the world production.
Share of world reserves
Source: Mc Kinsey Global Institute, June 2010
. «African subsurface per ground km² is
estimated at around $25,000 compared
to $125,000 in developed countries»*,
showing that Africa is underexplored.
* Collier and Venables, 2008
22
Africa can help feed the world
SSA: 45% of the potential available land
Global surface
in millions of ha
Asia
456
Source: FAO, Fischer and Shah 2010
. Productivity can be boosted: no
country in Africa is now achieving
more than 30% of the potential yield
on currently cultivated areas (World Bank).
736
2,047
Rest of the world
54%
89
Mena
46%
326
Latin America
Sub Saharan Africa
438
Potential arable land
Cultivated land
. Africa is ripe for a green revolution
and the first stage of this revolution is
the land rush we are witnessing now.
23
Labor productivity has been unleashed
Evolution of productivity
1 Used working age population (15-64) as a proxy for labor force
Source: Conference Board World Economy Database; McKinsey Global Institute
. For the first time since the eighties,
productivity of labor increased, and at
a higher pace than labor force.
. This gives scope for increased per
capita revenues.
24
Demography supports general productivity
Dependency ratio
Non working population (<15;64<) for 100 people at working age (15-64)
100
90
Brazil
80
Western Europe
70
China
India
60
Sub-Saharan Africa
50
40
2100
2090
2080
2070
2060
2050
2040
2030
2020
2010
2000
1990
1980
1970
1960
1950
30
Source: United Nations
. Today, SSA has the worst dependency
ratio. Twice as much as China.
. However, it is constantly declining
since 1985, giving a boost to Africa’s
competitiveness.
25
Urbanization is stimulating growth
The development of cities in Africa
. The advantages of the city: it is more
cost-efficient to manage transport,
food distribution and most services.
. Labor is available.
. If urbanization triggers higher
productivity, it is a big challenge.
26
Efforts are made for better education
Secondary school gross enrolment rates
Source: United Nations, Renaissance
. SSA at the level of Mexico, Turkey in
1975.
. But there are still concerns about
quality: facilities, teachers.
27
Better health fosters productivity
Fighting against malaria: a prominent example
In Ghana, the mining company AngloGold Ashanti invested
around US$ 7 million in a comprehensive program against
malaria with the following results:
2005
2009
Cases in AngloGold’s hospital (number per month)
6,603
1,146
Drug expenditures (US$ per month)
55,000
9,800
Work days lost (number per month)
6,983
282
. In Africa, Malaria mortality rate was
reduced by 33% since 2000.
. Life expectancy at birth in SSA: 49.5
in 1990; 49.7 in 2000; 54.2 in 2010.
. Experience shows that investment
in water, sanitation and health yields
between 4$ and 60$ per 1$ invested.
28
Trade integration is slowly taking off
Total bilateral African trade
Source: Ernst & Young’s 2012
Africa attractiveness survey.
Total respondents: 505
2002
2003
2004
2005
2006
. Africa has integrated with the rest of
the world, mostly selling commodities,
faster than with itself.
2007
2008
2009
2010
. Nevertheless, intra African trade has
grown at the same pace as all African
trade at 17% a year for the last 10 years.
29
Perception is still a big obstacle
Perception of Africa relative to other regions
Africa is less attractive than…
Africa is more attractive than…
Asia
North America
Middle East
Western Europe
Latin America
Eastern Europe
Central America
Former Soviet States
-50
-40
-30
-20
-10
0
Respondents with no presence in Africa
10
20
30
40
Respondents wth a presence in Africa
Source: Ernst & Young’s 2012 Africa attractiveness survey. Total respondents: 505
. For investors with no presence in
Africa, the continent is still viewed as
relatively unattractive against all
regions.
. It is the contrary for investors having
knowledge of Africa.
. Major factors: political instability,
corruption, difficulty of doing business.
30
What to do next?
31
So many things to do! - The governance challenge
Education
Millenium Development Goals
HIV
Employment
Housing
Social protection
Justice
Corruption
Public management
Gender equality
Fiscal policy
Capital availibility
Competitiveness
Health care
Infrastructure
Food
Natural resources
Security
Regional integration
Entrepreneurship
SSA needs faster, more inclusive growth
32
Implement a new public management method
SSA’s absorption capacity is far too low
SSA needs to implement
countless projects to boost its
development
Foreign/local funds and
partners are increasingly
available
 Despite this very favorable context, the result has been
disappointing: too many projects take too long to
implement when they do not fail.
 Governments need to implement a new management
method focused on the rapid execution of development
projects with the creation of highly specialized teams:
Project Delivery Squads
33
Innovate in infrastructure finance
Infrastructure density in SSA is weak
(as a percentage of the density of other low income countries)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
. Another US$ 40 billion per year need
to be mobilized. Possible sources:
China, investment funds, local…
Improved sanitation
Improved water
Electricity coverage
Power generation
capacity
Internet density
Mobile density
Télécom main-line
density
Total road density
Paved-road density
Source: Economic Commission
for Africa, African Union 2012
. Principle: bottleneck hunting,
defragmenting the space (create
regional spaces), cost cutting.
34
Care about cities, strengthen local governments
2,000,000
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
—
Rural population
2050
2045
2040
2035
2030
2025
2020
2015
2010
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
Urban = 36% of total
1950
Thousands
Urban rural population are growing in SSA
Urban population
Source: United Nations data
. Urban population growth: 3.7%.
. People need housing, water, power,
food, jobs…
. Urban planning, land use regulation,
property rights… are urgently needed.
Revolutions come from cities
35
Africa is a continent,
not a country
A Country Assessment Framework
to measure diversity
36
The macro environment
Insufficient
Cape Verde
Botswana
1
4
Namibia
Ghana
65
60
São Tomé and Príncipe
Benin
Senegal
55
Mali
Lesotho
Zambia
Burkina Faso
Uganda
Gabon
Kenya
Malawi
Swaziland
50
Mozambique
Rwanda
Gambia
Madagascar
45
40
Guinea-Bissau
35
Ethiopia
Cameroon
Angola
Congo
Liberia
Nigeria
Côte d'Ivoire
Central African Republic
2
Chad
Average
Niger
Comoros
Togo
Burundi
Guinea
Tanzania
DR Congo
Eritrea
Level of inclusion
South Africa
70
High
Seychelles
Equatorial Guinea
Zimbabwe
3
Low
(Source: 2012 Mo Ibrahim index of African governance)
Quality of economic and social policies
80
75
Sufficient
Level of growth
30
-5.0
-2.5
0.0
2.5
5.0
7.5
GDP growth (average 2011, 2012, 2013) minus current urban population increase
(Source: World Bank data)
37
The business environment
Low risk
High risk
Resource curse
1
South Africa
Rwanda
4
Ghana
High
60
Botswana
80
Namibia
Kenya
120
Uganda
Swaziland
Lesotho
140
Ethiopia
Nigeria
Tanzania
Madagascar
Average
Sierra Leone
Gambia
160
Senegal
Benin
180
2
Niger
Mozambique Liberia
Burkina Faso
Mali
Malawi
Burundi
Cameroon
Côte d'Ivoire
Zimbabwe
Togo
Guinea-Bissau
Central African Republic
Angola
DR Congo
Guinea
Chad
Incentive to
private activity
Zambia
100
Gabon
Congo
Low
(Source: World Bank, 2012 figures)
Ease of Doing Business (world ranking)
40
Average
20
3
200
1%
Bubble: size of GDP
10 %
100 %
Weight of natural resources in the GDP (Log)
(Source: World Bank Data, 2010)
38
« The risk of not going to Africa is to
find that it is too late to get there ».
Lord Boateng, former British High Commissioner in South Africa
and director of Aegis
Matthieu Delouvrier
Swensee
[email protected]
39
References
. Africa’s natural resources in a global context, Raf Custers & Ken
Matthysen, IPIS, August 2009.
. It’s time for Africa, Africa attractiveness survey, Ernst & Young, March
2011.
. Land grab or development opportunity?, Lorenzo Cotula, Sonja
Vermeulen, Rebeca Leonard and James Keeley, iied, FAO, IFAD, 2009.
. Economic Report on Africa 2011, Economic Commission for Africa, African
Union, March 2011.
. Sustainability and security of the global food supply chain, Rabobank,
2010.
. Africa Progress Report 2011, Africa Progress Panel, April 2011.
. The World Health Report, World Health Organization, 2010.
. China, Africa and the International Aid Architecture, Deborah Bräutigam,
African Development Bank Group, April 2010.
. Rising Global Interest in Farmland, World Bank, September 2010.
. Sub-Saharan Africa: Resilience and Risks, Regional Economic Outlook,
International Monetary Fund, October 2010.
. African acceleration, Société Générale, October 2010.
. Top Banques, African Business, October 2010.
. The struggle underground, The Africa Report, October 2010.
. Anticipated trends in the use of global land and water resources, F.
Nachtergaele, J. Bruinsma, J. Valbo-Jorgensen, and D. Bartley, FAO, 2010.
. China in Africa, A Macroeconomic Perspective, Benedicte Vibe
Christensen, December 2010.
. Africa, The new frontier for growth, Accenture, 2010.
. Africa’s Infrastructure, A Time for Transformation, Vivien Foster and
Cecilia Briceño-Garmendia, World Bank, Agence Française de
Développement, 2010.
. Africa’s impressive growth, The Economist, January 2011.
. Fulfilling Africa’s Potential, Goldman Sachs Global Economics, January
2011.
. The Mining sector, an opportunity for Growth in Africa?, Proparco, January
2011.
. Africa‘s Future and the World Bank‘s Support to It, World Bank, February
2011.
. Sub-Saharan Africa: Recovery and New Risks, Regional Economic
Outlook, International Monetary Fund, April 2011.
. Africa’s pulse, World Bank, April 2011.
. The Middle of the Pyramid: Dynamics of the Middle Class in Africa, African
Development Bank, April 2011.
. Foreign aid, trade and development, The strategic presence of China,
Japan and Korea in sub-Saharan Africa, Dr. Johan Lagerkvist, The Swedish
Institute of International Affairs, April 2011.
. Agribusiness for Africa’s prosperity, UNIDO, May 2011.
. Transformation through Infrastructure, Issues and concept Note, World
Bank, June 2011.
. African Agriculture: From Meeting Needs To Creating Wealth, Mo Ibrahim
Foundation, 2011.
. Private equity and investment in Africa, Yingni Lu and John Battersby,
SouthAfrica.info, July 2011.
. Africa, The bottom billion becomes the fastest billion, Renaissance Capital,
July 2011.
. Africa in 50 Years’ Time, The Road Towards Inclusive Growth, African
Development Bank, September 2011.
. Rising Global Interest in Farmland, World Bank, September 2011.
. Sub-Saharan Africa: Sustaining the Expansion, Regional Economic
Outlook, International Monetary Fund, October 2011.
. Growth and poverty reduction in Africa in the last two decades, Andy
McKay, University of Sussex, December 2011.
. Africa’s population, Miracle or Malthus, The Economist, December 2011.
40
References
. World Investment Report, UNCTAD, 2011.
. African Economic Outlook 2012, OECD, 2012.
. Classement des Banques, Jeune Afrique, 2011.
. Global Development Finance 2012, World Bank, 2012.
. Yes Africa can, World Bank, 2011.
. Inclusive Wealth Report 2012, UNEP, UNU-IHDP, 2012.
. The Africa Competitiveness Report 2011, Africa Commission, World
Economic Forum, 2011.
. Assessing Progress in Africa toward the Millennium Development Goals,
MDG Report 2012, Economic Commission for Africa, Africa Union, African
Development Bank, UNDP, 2012.
. Will the lion roar in 2012?, African Business, January 2012.
. Growing with Africa’s consumers, Bain & Company, February 2012.
. Defragmenting Africa, Marcelo Giugale, Huffington Post, February 2012.
. BRICs’ Philosophies for Development Financing and Their Implications for
LICs, Nkunde Mwase and Yongzheng Yang, International Monetary Fund
Working Paper, March 2012.
. Economic Report on Africa 2012, Economic Commission for Africa, African
Union, March 2012.
. Africa Human Development Report 2012, UNDP, 2012.
. World Development Indicators, World Bank, 2012.
. World Investment Report, UNCTAD, 2012.
. Is Africa’s Recent Economic Growth Sustainable?, Ifri October 2012
. Global Trends 2030, Alternative Worlds, National Intelligence Council,
December 2012.
. Building Bridges, Africa attractiveness survey, Ernst & Young, March 2012.
. Sub-Saharan Africa: Sustaining Growth amid Global Uncertainty, Regional
Economic Outlook, International Monetary Fund, April 2012.
. How can Africa compete with China, Marcelo Giugale, Huffington Post,
April 2012.
. Africa Losing Billions of Dollars Due to Trade Barriers, Mohammed
Suleman, allafrica.com, April, 2012.
. The New Business of Africa: Markets and People transforming the
continent, Fair Observer, May 2012.
. Jobs, Justice and Equity, Africa Progress Panel, June 2012.
. Waking up to the maths of malaria, Ed Cropley, AlertNet, June 2012.
. Sub-Saharan Africa Region, Global Economic Prospects, World Bank,
June 2012.
. Assessing Africa’s Policies and Institutions, CPIA Africa, World Bank, June
2012.
. The Millennium Development Goals Report, United Nations, July 2012.
41