Transcript 23 April 2009

23 April 2009
Presentation to the Council
Javier Santiso
Director
OECD Development Centre
23 April 2009
UNECA
DEV
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Non-OECD members
2009 - 23 members
2009 - 15 members
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Morocco
South
Africa
Mauritius
India
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Colombia
Chile
Israel
Peru
Costa Rica
Indonesia
AfDB
(Observer)
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2006: Transport
2007: Water and sanitation
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2009: Innovation & ICT
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Growth
Africa still growing despite the crisis
Real GDP Growth
Δ = 3.5%
Δ = 4.8%
Δ = 4.6%
Δ = 7.1%
Source: OECD Development Centre / African Development Bank, 2009
Trade
The global trade collapse is now hitting Africa
• Many African countries have been dependent on commodity exports for growth
• Nominal export growth raced ahead by an annualised 34% over 2003-07
• After years of boom, World Trade is expected to contract by 13% in 2009
Baltic Exchange Dry Index
USD Billion
14000
Africa Trade balance
12000
10000
150
120
90
8000
60
6000
30
4000
2000
0
- 94%
- 112%
0
-30
Source: African Economic Outlook, 2009
Source: Datastream, 2009
The commodity boom is over… for now
Trade
• A cold shower for hard commodity exporters
• Soft commodity exports prove more resilient
Hard commodities
400
350
300
Soft Commodities
400
Petroleum
Copper
Aluminium
Gold
350
300
250
250
200
200
150
150
100
100
50
50
0
0
Source: OECD Development Centre, based on World Bank, 2009
Cocoa
Coffee (arabica)
Coffee (robusta)
Tea
Cotton
Private financial flows
A global retrenchment of capital
• Flows to Africa grew by 17% to over USD 60 billion in 2008, despite the global slowdown
• Remittances to Sub-Saharan Africa are set to decline from between 4.5% to 8% over 2009
• Stock markets have taken a severe hit
70
60
USD Billion
USD billion
Foreign Direct investment
Remittances
Stock Markets
45
180
40
160
35
50
(MSCI price index local currency)
140
30
120
40
25
30
20
100
15
20
10
0
Source: OECD Development Centre , based on UNCTAD 2009
80
10
60
5
40
0
20
Source: OECD Development Centre , based on World Bank, 2009
EGYPT
NIGERIA
SOUTH AFRICA
Source: Thomson Datastream 2009
Global Crisis Africa has become more resilient to exogenous shocks
• Over recent years, terms of trade improved
and good macro management in many
countries strengthened fiscal balances
2000-05
2008(e)
% GDP
-1.4
2.8
Current
Account, %
0.6
3.3
Fiscal balance,
• HIPC initiative significantly reduced debt
levels and composition in many countries
GDP
• Politically more stable than in past decades
Total external
Debt/GDP, %
Debt service /
exports, %
• Africa is more integrated with the world
economy and less dependent on traditional
OECD markets
• Governments’ efforts in nurturing private
sector and enterprise resulted in steady
improvements in business climate indicators
Nevertheless…
2005
2008
110.6
20.8
20.8
4.7
Total trade with China has increased
tenfold in the past decade to reach
USD 106 billion in 2009
Global Crisis A patchwork of impacts
African growth has taken a serious hit:
2008: near 6%
2009: below 3%
• Oil exporters are taking the most
severe hit
• More globally integrated
economies, such as South Africa
and Egypt, are strongly affected
Growth deceleration
2008 - 2009
Greater than 3 %
- 2 to- 3 %
Zero to – 1.9 %
Increased growth
between 2008-09
Source: African Economic Outlook, 2009
• Low-income / non-oil exporting
countries are less affected,
because:
1. decrease in energy bill
2. less integration to the
world economy
Global Crisis Oil exporters and importers: making a switch?
• Oil importers are now performing better than exporters
• Lower oil prices and good performance of non-mineral
exports are reversing the terms of trade shock
Real GDP Growth
9
8
7
6
5
4
3
2
1
0
-1
-2
-3
-4
-5
2001
Africa
2002
2003
2004
2005
Oil-exporting countries
2006
2007
2008(e) 2009(p) 2010(p)
Oil importing countries
Total OECD
Source: African Economic Outlook, OECD, 2009
Net Oil exporters: Algeria, Angola, Cameroon, Chad, Congo, Côte d'Ivoire, Congo DRC, Egypt, Equatorial Guinea, Gabon, Libya, Nigeria, Sudan
Risks
Political instability is on the rise again
AEO political stability indicator
Civil tensions
6
5
4
3
2
1
0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Source: African Economic Outlook, 2009
Civil Tensions: occurrence of strikes, demonstrations, violence and coup d’état. Qualitative data obtained from Marchés Tropicaux et Méditerranéens.
Risks
How will the crisis impact the MDGs?
African Development Bank indicator of Progress
Towards MDGs 2009
Source: African Development Bank, 2009
Policies 1
OECD countries must not forget Africa
Aid commitments can make the difference, particularly in times
of crisis, but to maximize aid effectiveness, donors must :
• Leverage the countercyclical properties of aid
• Work together to minimize aid fragmentation
DAC members' net ODA 1990 – 2007
DAC Secretariat simulations of net ODA to 2008 and 2010
Source: OECD DAC / DCD, 2008
Policies 2
The emerging world is not forgetting Africa
• While OECD countries are dealing with their downturn, emerging
countries continue to invest and strengthen ties with African countries
• Africa’s emerging country partners must not sacrifice governance and
poverty reduction to strategic interests
Significant Chinese and Indian investments in
African infrastructure, up to April 2008
China-Africa trade
USD billion
120
100
80
60
40
20
India
China
0
Source: OECD Development Centre, based on China Mofcom, 2009
Source: OECD Development Centre, based on UNCTAD, Nepgen and Jansson 2009
Policies 3
African innovation is building tomorrow’s Africa
AEO 09: Innovation and ICTs
•
Africa has been adapting state-of-art ICTs to local customs and constraints through
incremental innovations.
• Today, 4 out of 10 Africans have a mobile phone line. Africa is the fastest growing market
in the world.
• The exponential growth of ICT is enabling many African users to gain access to basic
services (education, health, banking) for the first time.
• ICTs are helping to improve business environments by contributing to market
development, overcoming traditional infrastructural constraints and reducing business
costs.
•
Policy challenges for governments: work with business to lift the hurdles to infrastructure
development, improve regulation, and invest in scaling-up innovative applications for social
services.
ICT shows that African countries can pursue growth based on greater domestic investment and
consumption, in turn reducing the impact of exogenous shocks and crises
23 April 2009
Supplementary information
UNECA
Theme Innovation and Information & Communication Technologies
Africa’s Exponential Growth in Mobile Telephony
Africa
Sub-Saharan Africa - Resource Rich
• The exponential growth in ICT is
enabling many African users to gain
access to basic services (education,
health, banking) for the first time.
Sub-Saharan Africa - Resource Scarce Coastal
Sub-Saharan Africa - Resource Scarce Landlocked
North Africa
• ICT is a vector for innovation,
stimulating of innovative products
and business models.
Middle East
Latin America and Caribbean
Asia and Pacific
Europe
Annual growth rate in 2008
Market penetration in 2008
• Africa is the fastest growing market in
the world. Today, 4 out of 10 Africans
have a mobile phone line.
0%
50%
100%
• As an endogenous source of growth,
ICT is particularly valuable in a time of
150%
external crisis.
Source: OECD Development Centre, based on Wireless Intelligence, 2009.
ICTs are helping to shape an improved business environment by contributing to market
development, overcoming traditional infrastructural constraints and reducing business costs
ICT
Policy recommendations for Africa
ICTs in Africa has proven to be an innovation frontier by combining state-of-art
technologies with local customs and constraints through incremental innovations.
However, there is still more to be done to deliver more and better value added services
to the poorest population :
• Expensive inland high capacity networks require government support
• Governments have to ensure that wholesale price drops are passed on
• Policies on ICT and Innovation are not yet well integrated in broader development
strategies: Donor targets, MDGs and PRSPs.
• With many fixed-line operators close to bankruptcy, governments must attract
private investment and knowhow to the fixed-line sector by adapting convergent
licensing regimes and setting symmetric regulation of termination charges.
Growth
Africa still growing despite the crisis
Real GDP Growth
Real GDP Growth (%)
2000-05
2008(e)
2009(p)
2010(p)
Central
5.7
5.0
2.8
3.6
East
4.9
7.3
5.5
5.7
North
4.1
5.8
3.3
4.1
South
4.1
5.2
0.2
4.6
West
7.1
5.4
4.2
4.6
Africa
4.8
5.7
2.8
4.5
4.2
6.0
3.5
4.2
Sub-Saharan Africa
5.2
5.5
2.4
4.7
Oil-exporting countries
5.4
6.6
2.4
4.5
Oil importing countries
4.1
4.6
3.3
4.5
Memorandum items
North Africa (including Sudan)
Source: OECD Development Centre / African Development Bank, 2008
Oil Exporters
The price of having all eggs in one basket
Taking a clear hit from
the oil price fall…
…and little room left for
manoeuvre
• Many oil exporters did not
take advantage of commodity
windfalls to improve
governance and diversify
their economies
• Nevertheless, some oil
exporters have performed
well in terms of lowering
levels of external debt
Source: OECD Development Centre / African Development Bank
*: African Economic Outlook forecasts
Oil Importers Proving resilient… so far
…yet challenges rising
Holding up against the crisis so far…
Oil-importing countries have performed well,
diversifying their sources of growth over recent
years. While lower energy and food prices
subsequent to the crisis have helped importers,
difficult times lie ahead
Good performers’ strengths:
•
•
•
Sustained and prolonged growth
Prudent macroeconomic policies
More Diversification
Challenges:
•
•
•
•
•
Source: OECD Development Centre / African Development Bank
*: African Economic Outlook forecasts
Poor capacity in mobilizing domestic
resources
Contain fiscal and current account deficits
High dependency on ODA
Prioritise poverty reduction
Difficulty adjusting to price shocks
Global Crisis
Staggered impacts are to be expected
•Weak fundamentals and dependent on one commodity
• Guinea, Eritrea, Malawi, Mauritania, DRC
• Stronger fundamentals but dependent on one/few commodity/ies
Time
• Botswana, Algeria, Cameroon, Rwanda, Benin
•Weak fundamentals but less dependent on one commodity
• Gambia, Liberia, Sierra Leone, Ethiopia
•Strong fundamentals and less dependent on one commodity
• Tunisia, Uganda, Kenya
Macro management Standing up well to recent OECD performance..
• Fiscal balances to deteriorate significantly across the continent.
Africa
% of GDP
15
% of GDP
balance
% of GDP
20 Fiscal
15
10
5
0
-5
-10
OECD economies
2
0
-2
-4
-6
-8
-10
Fiscal balance
2000-05
Current Account
2006
2007
2008
2009
2010
2008
2009
2010
Current Account
10
0.5
% of GDP
5
0
-5
0.0
-0.5
-1.0
-10
-1.5
Inflation
-2.0
2000-05
2006
2007
Source: OECD, 2009
Source: OECD Development Centre / African Development Bank, 2008
Source: OECD Development Centre, African Economic Outlook, 2009
* Excluding Zimbabwe
** Estimations for 20078and predictions for 2009/10