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Economic Report on Africa 2011Economic Report on Africa 2011

Governing development in Africa – the role of the state in economic transformation

Rob VosRob VosDirector, UN-DESA

18 May 2011New York

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Outline of the Report

• Part I: Recent economic and social developments and emerging development issues

• Part II: Governing development in Africa

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Key messages

Trends• Positive developments in the global economy for

Africa in 2010• Recovery strengthened, but remains uneven across

the region and unemployment rates remain high.• Continued high dependence on commodity exports

despite some diversification• Prospects for economic performance in Africa during

2011 are favourable.– However, in the upcoming updated UN forecast, continued

political turmoil in North Africa is projected to lead to lower growth for Africa as a whole

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All regions slowly recovering from All regions slowly recovering from the global crisisthe global crisis

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2004 2005 2006 2007 2008 2009 2010 2011

Years

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Africa East and South Asia Western Asia Latin America and the Caribbean

World Developed economies Developing countries

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Africa's economic growth Africa's economic growth rebounded from the financial rebounded from the financial and economic crisesand economic crises

• Africa grew at 4.7% in 2010, up from 2.3 per cent in 2009.• Growth factors included:

Rising commodity prices and exports Increasing domestic demand in many countries Increased FDI in extractive industries and aid flows Return of Tourism, etc

• More diversified exports - manufactures, trade services and tourism.

4.7 5.05.2 5.4

4.04.65.0

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3.4

5.4

1.0

4.5

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2008 2009 2010 2011

Africa Oil-exporting countries Oil-importing countries

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Growth performance continues to Growth performance continues to vary considerably across sub-vary considerably across sub-regions and countriesregions and countries

• Oil-exporting countries grew at 5.2% in 2010 compared with the oil-importing countries rate of 4.0%.

• Subregional growth in 2010: East Africa (6.8%), West Africa (6%), North Africa (4.7%), Central Africa (4.3%) and Southern Africa (3.3%).

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North Africa West Africa Central Africa East Africa Southern Africa Africa

2008 2009 2010

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Africa's recovery was largely Africa's recovery was largely joblessjobless

• Job growth and creation was disappointing overall on the continent in 2010.

• The narrow-based economic structure contributed to the high levels of unemployment.

• Job creation also remained limited in countries with rather modest recovery.

• Persistent high youth unemployment rate is a cause of concern and a potential source of political instability.

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Growth prospects for 2011 Growth prospects for 2011 (Recently revised downward (Recently revised downward due to political events)due to political events)

• Africa’s GDP growth rate is expected to accelerate from 4.7 per cent in 2010 to 5 per cent in 2011

– However, the upcoming revised forecast will show lower growth of 3.6% for Africa in 2011, mainly due to the political turmoil in North Africa.

• Sub-regional growth:– East and West Africa are projected to grew at 6.4% in 2011– Oil-importing countries (4.6%) and oil-exporting countries (5.4%).

• The growth rates are still below the levels needed to make significant impact on unemployment and poverty reduction.

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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Africa Sub-Saharan Africa Oil-exporting countries Oil-importing countries

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Growth prospects for 2011 and Growth prospects for 2011 and downside risks (cont’d)downside risks (cont’d)

• Outlook for 2011 is subject to potential downside risks and uncertainties:Pace and duration of recovery and growth in

Africa’s economic partners, developing and emerging economies such as India and China, and developed economies in Europe and the US.

Political disturbances in NA and other countries.Recurrent adverse weather conditions and

heavy dependence on rain-fed agriculture.Premature and severe fiscal tighteningAvailability of financing especially trade finance,

FDI and ODA.

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Key messages – cont’d

Challenges• Structural transformation is essential for sustained

economic growth rates, low growth volatility and decent employment. – Between 1973 and 2010 , only six African countries

recorded sustained growth; five countries showed sustained structural shifts

– Successful economic transformation in emerging economies was achieved by active State intervention

– Good governance in Africa should focus on developmental role government, enabling markets and the private sector to function better

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Emerging development issues – Emerging development issues – steering towards sustainable steering towards sustainable developmentdevelopment

• Economic diversification is key– ‘Green economy model’ could be win-win: accelerating

economic growth, achieve the MDGs and other social development goals while maintaining environmental sustainability

– Sustainable agriculture and food security– Green industrialization, based on sustainable energy

supplies and transformation of natural resources• Such a transformation requires a repositioning of the

state in setting creating enabling policies and institutions with adequate incentives and regulations.

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Constructing a developmental state in Africa

• The construction and promotion of developmental States in Africa must involve:– Bold, but credible and integrated development strategies– Enhance stakeholders participation (private sector, civil

society) in design and implementation– Use carrot and stick approach to allocation of resources and

distribution of rents– Ensure clear accountability and oversight mechanisms– Recognize policy constraints….

• contingency planning; fiscal stabilization funds– … and seek to enhance policy space

• Use WTO flexibility as well as negotiate greater flexibility and more Aid for Trade

• Negotiate more stable external funding

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