Transcript Tim Lamont - DPG PSD meeting - 10 April 2013 1

Political, Economic & Demographic Challenges
and Drivers of PSD in East Africa
Dar es Salaam, 10 April 2013
South
Sudan
3 key issues from a development perspective:
E – Economic geography
A – Asymmetry of costs/benefits
C – Capacity/coordination, Corruption & Commitment
Economic geography
Population (2005-2030); Real GDP (2000-2010)
Economic geography
Real GDP in East Africa (2000-2010)
• But, need to keep in perspective… combined GDP size of Croatia…
Economic geography
Trade Performance (2000-2010)
• Fourfold increase in trade 2000-2010
• Trade in 2010 worth 47% of East Africa GDP cf 28% in 2000
Economic geography
Economic geography
Top Three Exports (2010)
• 47% of East African exports from Kenya; 36% Tanzania
Economic geography
Top Three Imports (2010)
• 44% of East African imports to Kenya; 29% Tanzania
Economic geography
Export composition (2010)
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
Burundi
Coffee,coffee substitute 59.6%
Gold,nonmontry excl ores11.0%
Tea and mate
8.5%
Ore,concentr.base metals 2.9%
Hides,skins(ex.furs),raw 2.8%
Petroleum products
2.1%
Ferrous waste and scrap 1.7%
Alcoholic beverages
1.6%
Cotton
1.3%
Tobacco, manufactured 1.2%
92.7%
Ethiopia
Coffee,coffee substitute 30.0%
Vegetables
17.3%
Oilseed(sft.fix veg.oil)
13.2%
Gold,nonmontry excl ores 7.8%
Crude veg.materials, nes
7.7%
Live animals
5.7%
Leather
2.9%
Other meat, meat offal
2.0%
Oilseed(oth.fix.veg.oil)
1.6%
Civil engineering equipt
1.4%
89.6%
Mozambique
Aluminium
51.7%
Electric current
12.3%
Tobacco, unmanufactured
6.4%
Natural gas
6.0%
Spec.transact.not classd3.7%
Crustaceans,molluscs etc
2.3%
Wood, simply worked 2.0%
Fruit,nuts excl.oil nuts 1.9%
Petroleum products 1.6%
Oilseed(sft.fix veg.oil) 1.4%
89.3%
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
Tanzania
Gold,nonmontry excl ores23.9%
Prec.metal ores,conctrts 11.4%
Ore,concentr.base metals 8.9%
Non-ferrous waste,scrap 3.6%
Tobacco, unmanufactured 3.2%
Fruit,nuts excl.oil nuts
3.1%
Fish,fresh,chilled,frozn 3.0%
Coffee,coffee substitute 2.9%
Fertilizer,except grp272 2.5%
Vegetables
2.4%
64.9%
Uganda
Coffee,coffee substitute
Fish,fresh,chilled,frozn
Telecomm.equip.parts nes
Petroleum products
Lime,cement,constr.matrl
Tea and mate
Tobacco, unmanufactured
Sugars,molasses,honey
Crude veg.materials, nes
Animal,veg.fats,oils,nes
Kenya
Tea and mate
22.5%
Crude veg.materials, nes
10.2%
Vegetables
5.2%
Coffee,coffee substitute
4.0%
Petroleum products 4.0%
Gold,nonmontry excl ores
2.2%
Metal.salts,inorgan.acid2.1%
Soap,cleaners,polish,etc
2.1%
Tobacco, manufactured2.0%
Lime,cement,constr.matrl
1.9%
56.2%
17.6%
6.9%
5.1%
4.6%
4.5%
4.2%
3.8%
3.6%
2.9%
2.2%
55.4%
Rwanda
Ore,concentr.base metals 41.1%
Coffee,coffee substitute 24.6%
Tea and mate
14.5%
Live animals
1.7%
Pass.motor vehcls.ex.bus 1.2%
Hides,skins(ex.furs),raw 1.1%
Animal feed stuff
1.0%
Alcoholic beverages
0.8%
Worn clothing,textl.artl
0.7%
Petroleum products
0.7%
87.3%
• Relatively diverse export base in Tanzania, Uganda, Kenya
Economic geography
Intra Regional trade as % of Total Trade (1990-2010)
• Value ($4.1bn) doubled 2005-2010, but share fell from 13% to 11%
• NB. only 5% African trade is internal cf 40-60% in EU, NAFTA, Asia..
• Discrepancies in published data may indicate increasing informal
cross border trade
Economic geography
Foreign Direct Investment (2000-2010)
• 152% increase in FDI over 2000-2010
• Uganda largest since 2007 ($25 per capita cf $16 in Tanzania; $2$4 for rest)
Economic Geography
Economic density map
• Rapid urbanisation
• Kampala, Dar, Mombasa, Kigali, Nairobi in top 20 fastest growing
cities in world
Economic geography
Population density in EAC & selected comparators
Economic geography
Population under age 15: 2005-2039
Economic Geography
Share of population living below the (national) poverty line
• Mixed performance
• Falling number/share in Uganda, Rwanda; Burundi very high…
Economic geography
And then there’s the gas and oil…..
Asymmetry of costs/benefits
• 40% of E. Africans live in landlocked countries
(vs. world average of 1%)
• Av. transport costs 60-70% higher per km in EA vs USA/EU
Asymmetry of costs/benefits
Asymmetry of costs/benefits
Asymmetry of costs/benefits
Northern Corridor traffic projection
• Four fold volume increase on Northern Corridor (doubling by 2015)
• RVR derailments “only” 20 per month….
Asymmetry of costs/benefits
Central Corridor traffic projection
• Seven fold volume increase on Central Corridor
• CDS cost estimate $4.2bn for both corridors ($1.7bn committed)
Asymmetry of costs/benefits
Asymmetric impact of integration policies:
 Regional public goods do not necessarily benefit all members
equally
Coupled with…..





lack of clarity on investment priorities;
complex co-financing arrangements across borders;
lack of risk capital for project preparation;
weak capacity to undertake early stage project preparation;
lack of alignment of national policies (eg. harmonising
legal/regulatory frameworks, including PPPs);
 weak links between required provision of “hard” and “soft”
infrastructure (eg. border post infra and integrated border
management);
 poor coordination between development partners.
The four Cs – Corruption, Capacity/Coordination, & Commitment
The four Cs…
Perceptions of Corruption (2005-2010)
• Index ranges from 1 (corrupt) to 10 (clean)
• Significant improvement in Rwanda; Burundi now worst…
• Importance of continuous political economy analysis
The four Cs
Capacity/coordination
• Weaknesses of EAC structure:
(Summit: Council of Ministers; Coordination Committee (Permanent Secretaries);
Sectoral Committees; The Secretariat; East African Legislative Assembly; East
African Court of Justice; Institutions (eg EADB, LVBC, CASSOA….)
 Weak power of Secretariat and EACJ in particular
 National vs regional tension
• Weaknesses of donor coordination:
 Similar issues !
The four Cs
Commitment (to regional integration)
• EAC “Gentleman’s club” both a strength and
weakness….
• Uncertain impact of (possible) new leadership?
–
–
–
–
2013: Kibaki (Kenya)
2015: Nkurunziza (Burundi) and Kikwete (Tanzania)
2016: Museveni (Uganda)
2017: Kagame (Rwanda)
Ideas for discussion
Do we need to encourage more regional initiatives?
“Go coastal, think global ?”
“EIZ - Economic integration zone(s)” ?
(cf. coastal SEZs in China, India)
“Education policy – focus on labour mobility” ?
Development fund?
Thanks !