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UNECA. 23 April 2009. Presentation to the Council. Javier Santiso Director OECD Development Centre 23 April 2009. A policy tank for a better world. DEV. OECD members 2009 - 23 members. Non-OECD members 2009 - 15 members. Egypt South Africa India Thailand Brazil Chile Peru

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UNECA

23 April 2009

Presentation to the Council

Javier Santiso

Director

OECD Development Centre

23 April 2009


A policy tank for a better world

DEV

OECD members

2009 - 23 members

Non-OECD members

2009 - 15 members

Egypt

South Africa

India

Thailand

Brazil

Chile

Peru

Indonesia

Morocco

Mauritius

Romania

Vietnam

Colombia

Israel

Costa Rica

AfDB

(Observer)


Africa’s economic portal for policymakers

AEO.org

AfricanEconomicOutlook.org

  • The latest developments in Africa’s economies

  • Brings together the data & research from eight years of AEO

  • Interactive database of all AEO data and statistics

  • Complete and updated country notes

  • Promotes original research by African researchers and institutions


Promoting women’s rights online – Wikigender Africa

Wikigender

Wikigender.org

  • Based on a ‘wiki’ model of collective publication and editorial process

  • Created by women in developing countries it reflects their realities and concerns


UNECA

Measuring Africa’s economies since 2001

AEO

  • Comprehensive, independent analysis

  • Short-termmacroeconomicforecasts

  • Special annual sectoral focus

  • Economic overview & annual thematic focus

    • 2006: Transport

    • 2007: Water and sanitation

    • 2008: Technical & vocational skills

    • 2009: Innovation & ICT

  • 48 country chapters

  • Statistical annex and indicators

African think tanks

Local consultants

Lead partner

Experts Network

Junior partners

Key financial partner


Africa still growing despite the crisis

Growth

Real GDP Growth

Δ = 3.5%

Δ = 4.8%

Δ = 4.6%

Δ = 7.1%

Source: OECD Development Centre / African Development Bank, 2009


The global trade collapse is now hitting Africa

Trade

  • 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

- 112%

- 94%

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

Soft Commodities

Source: OECD Development Centre, based on World Bank, 2009


A global retrenchment of capital

Private financial flows

  • 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

Foreign Direct investment

Remittances

Stock Markets

(MSCI price index local currency)

Source: OECD Development Centre , based on UNCTAD 2009

Source: OECD Development Centre , based on World Bank, 2009

Source: Thomson Datastream 2009


Africa has become more resilient to exogenous shocks

Global Crisis

  • 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

  • Total trade with China has increased tenfold in the past decade to reach USD 106 billion in 2009

Nevertheless…


A patchwork of impacts

Global Crisis

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

  • Low-income / non-oil exporting countries are less affected, because:

  • 1. decrease in energy bill

  • 2. less integration to the world economy

Growth deceleration

2008 - 2009

Greater than 3 %

- 2 to- 3 %

Zero to – 1.9 %

Increased growth between 2008-09

Source: African Economic Outlook, 2009


Oil exporters and importers: making a switch?

Global Crisis

  • 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

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


Political instability is on the rise again

Risks

AEO political stability indicator

Source: African Economic Outlook, 2009

Civil Tensions: occurrence of strikes, demonstrations, violence and coup d’état.Qualitative data obtained from Marchés Tropicaux et Méditerranéens.


How will the crisis impact the MDGs?

Risks

African Development Bank indicator of Progress Towards MDGs 2009

Source: African Development Bank, 2009


OECD countries must not forget Africa

Policies 1

  • 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


The emerging world is not forgetting Africa

Policies 2

  • 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

India China

Source: OECD Development Centre, based on China Mofcom, 2009

Source: OECD Development Centre, based on UNCTAD,Nepgen and Jansson2009


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


UNECA

23 April 2009

Supplementary information


Innovation and Information & Communication Technologies

Theme

  • 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.

Africa’s Exponential Growth in Mobile Telephony

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.


Africa still growing despite the crisis

Growth

Real GDP Growth

Source: OECD Development Centre / African Development Bank, 2008


The price of having all eggs in one basket

Oil Exporters

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


Proving resilient… so far

Oil Importers

Holding up against the crisis so far…

…yet challenges rising

  • 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

Source: OECD Development Centre / African Development Bank

*: African Economic Outlook forecasts


Time

Staggered impacts are to be expected

Global Crisis

  • 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


Standing up well to recent OECD performance..

Macro management

  • Fiscal balances to deteriorate significantly across the continent.

Fiscal balance

Africa

OECD economies

Fiscal balance

Current Account

Current Account

Inflation

Source: OECD, 2009

Source: OECD Development Centre / African Development Bank, 2008

Source: OECD Development Centre, African Economic Outlook, 2009

* ExcludingZimbabwe

** Estimations for 20078and predictions for 2009/10


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