javier santiso director oecd development centre 23 april 2009 uneca presentation to the council
TRANSCRIPT
Javier Santiso
Director
OECD Development Centre
23 April 2009
23 April 2009
Presentation to the Council
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1. Economic overview & annual thematic focus
2006: Transport
2007: Water and sanitation
2008: Technical & vocational skills
2009: Innovation & ICT
2. 48 country chapters
3. Statistical annex and indicators
GrowthGrowth Africa still growing despite the crisis
Source: OECD Development Centre / African Development Bank, 2009
Real GDP Growth
Δ = 7.1%
Δ = 4.6%
Δ = 3.5%
Δ = 4.8%
TradeTrade 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
Source: Datastream, 2009Source: African Economic Outlook, 2009
- 94% - 112%
• A cold shower for hard commodity exporters• Soft commodity exports prove more resilient
Source: OECD Development Centre, based on World Bank, 2009
TradeTrade The commodity boom is over… for now
Hard commodities Soft Commodities
Private financial flowsPrivate financial flows A global retrenchment of capital
Source: OECD Development Centre , based on UNCTAD 2009 Source: OECD Development Centre , based on World Bank, 2009
RemittancesForeign Direct investment
• 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
Stock Markets(MSCI price index local currency)
Source: Thomson Datastream 2009
Global CrisisGlobal 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
• HIPC initiative significantly reduced debt levels and composition in many countries
• Politically more stable than in past decades
• 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…
2000-05 2008(e)Fiscal balance, % GDP
-1.4 2.8
Current Account, % GDP
0.6 3.3
Total trade with China has increased tenfold in the past decade to reach USD 106 billion in 2009
2005 2008Total external Debt/GDP, % 110.6 20.8
Debt service / exports, % 20.8 4.7
Global CrisisGlobal Crisis A patchwork of impacts
Source: African Economic Outlook, 2009
• Oil exporters are taking the most severe hit
• More globally integrated economies, such as South Africa and Egypt, are strongly affected
• Low-income / non-oil exporting countries are less affected, because:
1. decrease in energy bill
2. less integration to the world economy
- 2 to- 3 %
Zero to – 1.9 %
Greater than 3 %
Increased growth between 2008-09
Growth deceleration2008 - 2009
African growth has taken a serious hit:
2008: near 6% 2009: below 3%
Global CrisisGlobal Crisis Oil exporters and importers: making a switch?
Source: African Economic Outlook, OECD, 2009Net Oil exporters: Algeria, Angola, Cameroon, Chad, Congo, Côte d'Ivoire, Congo DRC, Egypt, Equatorial Guinea, Gabon, Libya, Nigeria, Sudan
Real GDP Growth
• 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
RisksRisks Political instability is on the rise again
Civil Tensions: occurrence of strikes, demonstrations, violence and coup d’état. Qualitative data obtained from Marchés Tropicaux et Méditerranéens.
AEO political stability indicator
Source: African Economic Outlook, 2009
RisksRisks How will the crisis impact the MDGs?
Source: African Development Bank, 2009
African Development Bank indicator of Progress Towards MDGs 2009
Policies 1Policies 1 OECD countries must not forget Africa
DAC members' net ODA 1990 – 2007DAC Secretariat simulations of net ODA to 2008 and 2010
Source: OECD DAC / DCD, 2008
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
Policies 2Policies 2 The emerging world is not forgetting Africa
Source: OECD Development Centre, based on China Mofcom, 2009
• 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
India China
Source: OECD Development Centre, based on UNCTAD, Nepgen and Jansson 2009
Significant Chinese and Indian investments in African infrastructure, up to April 2008
African innovation is building tomorrow’s Africa
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
Policies 3Policies 3
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.
23 April 2009
Supplementary information
ThemeTheme Innovation and Information & Communication Technologies
Africa’s Exponential Growth in Mobile Telephony • Africa is the fastest growing market in the world. Today, 4 out of 10 Africans have a mobile phone line.
• The exponential growth in ICT is enabling many African users to gain access to basic services (education, health, banking) for the first time.
• ICT is a vector for innovation, stimulating of innovative products and business models.
• As an endogenous source of growth, ICT is particularly valuable in a time of 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
ICTICT Policy recommendations for Africa
ICTs in Africa has proven to be an innovation frontier by combining state-of-arttechnologies 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.
GrowthGrowth Africa still growing despite the crisis
Source: OECD Development Centre / African Development Bank, 2008
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
Memorandum items
North Africa (including Sudan) 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
Oil Oil ExportersExporters
The price of having all eggs in one basket
Source: OECD Development Centre / African Development Bank *: African Economic Outlook forecasts
…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
Taking a clear hit from the oil price fall…
Oil Oil ImportersImporters
Proving resilient… so far
Source: OECD Development Centre / African Development Bank *: African Economic Outlook forecasts
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:• Poor capacity in mobilizing domestic
resources• Contain fiscal and current account deficits• High dependency on ODA• Prioritise poverty reduction • Difficulty adjusting to price shocks
Holding up against the crisis so far… …yet challenges rising
Global CrisisGlobal 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
• 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
Time
Macro Macro managementmanagement
Standing up well to recent OECD performance..
* Excluding Zimbabwe** Estimations for 20078and predictions for 2009/10
Source: OECD Development Centre / African Development Bank, 2008
Inflation
Current Account
Fiscal balanceAfrica
• Fiscal balances to deteriorate significantly across the continent.
Source: OECD Development Centre, African Economic Outlook, 2009
Fiscal balance
Current Account
Source: OECD, 2009
OECD economies