Transcript Economic and Social Conditions in Africa

Economic and Social
Conditions in Africa
ECA Presentation to the Committee of
Experts
29-30 May 2003
Addis Ababa
Overview
Economic growth in 2002
 Trade---commodity prices
 Finance---ODA, FDI
 HIV/AIDS
 Poverty
 Medium-term Outlook

African economic performance was
below expectations
5 .8
6.0
AFRICA
North Africa
5.0
Sub-Saharan Africa
4 .3
3 .7
4.0
3 .2
3 .4
3 .3
3 .2
2 .8
2 .8
3.0
2.0
1.0
0.0
2001
2002f
2002
Distribution of GDP growth rates of Africa, 1998-2003
(Number of countries)
Range
1998
1999
2000
2001
2002
Negative growth rate
2
0
1
5
5
Zero & Positive growth rate
51
53
52
48
48
a) Low (0-3.9%)
23
26
37
19
27
b) Medium (4.0%-7.0%)
26
23
14
24
16
c) High (>7.0%)
2
4
1
5
5
Real GDP growth rates, the top 10 and the
bottom 5 African countries, 2002 (%)
Equatorial Guinea
24.4
Mozambique
12.3
Angola
12.1
Chad
11.0
Rwanda
9.9
Uganda
6.2
Ethiopia
6.1
Cape Verde
5.8
Benin
5.7
Mauritania
5.5
AFRICA
3.2
Gabon
-0.3
Guinea-Bissau
-1.4
Malawi
-1.6
Madagascar
Zimbabwe
-12.0
-3.5
-8.9
-7.0
-2.0
3.0
8.0
13.0
18.0
23.0
Unfavorable weather stunted
agriculture





In Kenya flooding affected 30,000 people.
In Northern Senegal flooding killed 500,000
livestock, destroyed 20,000 homes, and
damaged 2,500 hectares of crops.
Algeria agricultural output fell by 3.2% in
2002, partly because of flooding in the east in
July and August.
Tunisia’s agricultural output declined by 14%
Botswana, Ethiopia, Lesotho, Malawi,
Mauritania, Namibia, Niger, Swaziland, Tunisia,
Zambia, and Zimbabwe suffered severe
Despite heterogeneous conditions
performance was generally even
Real GDP Growth, S ub-regions of Africa, 2002
4.0
C e ntral Africa
3.6
East Africa
3.3
Southe rn Africa
AFRIC A
3.2
W e st Africa
3.1
2.8
North Africa
0.0
1.5
3.0
4.5
Largest economies--mixed performance
South Africa grew by 3.5% up from 2%
---driven by higher precious metal
prices, strong tourism receipts and
domestic demand
 Nigeria contracted by 3% amid oil
cutbacks, political uncertainty and
excessive government spending that
pushed up inflation

Largest economies—mixed
(contd.)
GDP growth in Algeria was weak at 1.9%
down from 3% in 2001.
 GDP dominated by investments in oil sector
but constrained by OPEC quota
 Inflation spiralled upwards and current
account worsened to 14% from 8 % in 2001
 high youth unemployment and the pace of
reforms clouded the outlook.

Regional Inflation in check…
CPI inflation fell to 7.8% down from
15% in 2001 reflecting increased fiscal
discipline across the region
 However, inflationary pressures remain a
concern in Angola, Nigeria, Zambia and
Zimbabwe

But the external account worsened
Regional current account deficit
increased to 2% of GDP
 Due to a decline in the surpluses of
Nigeria and Algeria
 This was offset in part by a current
account surplus in South Africa as a
result of higher prices for gold and other
precious metals

…amid heightened global
uncertainty
U.S. economy slowed appreciably in Q2
 In Q3 despite volatile downward spiral
in equity prices, consumer and business
sentiment deteriorated as new orders
for goods and services stagnated

U.S. recovery pauses
…growth in Europe remained weak
Is this a double dip slowdown?
5
5
4
4
Unite d
S ta te s
3
2
F ra nc e
3
C a na da
Ita ly
2
2 001
Euro A re a
U.K.
1
1
OEC D
Ge rm a ny
2 002
0
0
2000
2001
2000
G7 2 0 0 2
-1
-1
-2
-2
J a pa n
-3
-3
-4
-4
2001
2002
World Trade
In H1 world trade was slowly recovering from
its worst growth performance in two decades
 Oil prices rose markedly—topping USD 35 at
end of 2002 fuelled by war fears
 Gold was also up by 17% to USD 320/oz
 Coffee was recovering from its lows thanks to
expectations of a lower Brazilian crop.

Intra-African trade is low
Intra-Africa trade accounts for only 12% of
Sub-Saharan exports, up 8% from 1989.
 Five countries dominate Intra-African trade—
Côte d’Ivoire, Nigeria, Kenya, Zimbabwe, and
Ghana.
 Very little or no trade occurs between
countries that are geographically distant, such
as Nigeria and Tanzania.

Aid—Pledges increase
European union ---all members should
meet or exceed the EU average of
0.33% by 2006
 US increased its ODA by 50% through
Millennium Challenge Account yielding
an extra $15 billion through 2006
 Canada—pledged CAN$6 billion over five
years

ODA by sector shows worrying trends
1975-1980
Action relating to
debt
7%
Emergency
1995-2000
Social
Emergency
assistance infrastructure &
Economic
services
1%
infrastructure &
11%
Action relationg to
assistance
debt
6%
Social
infrastructure &
services
14%
37%
services
23%
Programme
assistance
12%
Multisector
Programme
assistance
38%
5%
Production
Multisector
Production
sectors
3%
sectors
11%
17%
Economic
infrastructure &
services
15%
Dramatic drop in FDI
Billions of US$
FDI flows to Africa
20
$17B
15
10
$6B
5
0
2001
2002
29.4M adults and children live with
HIV/AIDS as of end 2002
North America
980 000
Caribbean
440 000
Latin America
1.5
million
Eastern Europe
Western Europe & Central Asia
570 000 1.2 million
East Asia & Pacific
North Africa
1.2 million
& Middle East South
Asia
550 000 & South-East
6 million
Sub-Saharan
Africa
29.4
million
Total: 42 million
Australia
& New Zealand
15 000
2.4M adult and child deaths
from HIV/AIDS during 2002
North America
15 000
Caribbean
42 000
Latin America
60 000
Eastern Europe &
Western Europe Central Asia
8 000
North Africa
& Middle East
25 000 East Asia & Pacific
45 000
South
37 000
Sub-Saharan
Africa
2.4
million
& South-East Asia
440 000
Australia
& New Zealand
Total: 3.1 million
<100
Africa needs 40% of global resources
to tackle HIV/AIDS epidemic
Millions of US Dollars
Global Resources Needed by Region
16,000
14,000
12,000
Latin America & Carribean
10,000
Western & Eastern Europe &
Central Asia
North Africa & Middle East
8,000
East Asia & Pacific
6,000
South & South-East Asia
4,000
Sub-Saharan Africa
2,000
-
2001 2002 2003 2004 2005 2006 2007
Increasingly affordable prices
Annual cost per person for triple therapy in Africa
(US$)
$12,000
$10,000
Drug Access Initiative
$8,000
$6,000
Domestic production
$4,000
Accelerated access
initiative
February-April 2001 offers
$2,000
$0
1991
1993
2003
1995
1997
1999
2001
Poverty predicted to rise by 2015
500
Millions
*
Percent
*
*
*
45
400
426
*
300
50
40
361
302
200
242
35
30
217
100
25
0
1987
Source: World Bank (2001)
1990
1998
20
2015 low-case 2015 base case
scenario
scenario
Head Count Poverty, %
90
80
70
60
50
40
30
20
10
0
Zambia
Uganda
Tanzania
Nigeria
Niger
Mauritania
Mali
Kenya
Ghana
Ethiopia
But..some are making inroads into
poverty
Survey 1
Survey 2
Medium Term Outlook





Sources of growth---primary commodities and
natural resources--- remain fragile and
vulnerable to exogenous shocks and subsidies
Political determinants of growth---conflict
weighing on economic performance and FDI
Private sector performance is spotty—strong in
South and North and weak elsewhere
Agricultural modernization is stalled reducing
prospects for poverty reduction
Underlying macroeconomic fundamentals
continues to improve. Growth of 4 %
Thank you!