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Javier Santiso Director OECD Development Centre 23 April 2009

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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Javier Santiso Director OECD Development Centre 23 April 2009

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  1. UNECA 23 April 2009 Presentation to the Council Javier Santiso Director OECD Development Centre 23 April 2009

  2. 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)

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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…

  11. 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

  12. 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

  13. 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.

  14. How will the crisis impact the MDGs? Risks African Development Bank indicator of Progress Towards MDGs 2009 Source: African Development Bank, 2009

  15. 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

  16. 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

  17. 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

  18. UNECA 23 April 2009 Supplementary information

  19. 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

  20. 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.

  21. Africa still growing despite the crisis Growth Real GDP Growth Source: OECD Development Centre / African Development Bank, 2008

  22. 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

  23. 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

  24. 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

  25. 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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