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UNECA. 27 June 2008. Javier Santiso Director & Chief Development Economist , OECD Development Centre www.africaneconomicoutlook.org www.oecd.org/dev/aeo. Investment : a new driver?. Growth. Public and Private Investment % of GDP.

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slide1

UNECA

27 June 2008

Javier Santiso

Director & Chief Development Economist,

OECD Development Centre

www.africaneconomicoutlook.org

www.oecd.org/dev/aeo

slide2

Investment : a new driver?

Growth

Public and Private Investment

% of GDP

  • The share of investment in GDP has increased in Africa, both public and private, both domestic and foreign.
  • Saving rate increased by 30% since 2002, witnessing more prudent economic policies.

Source: OECD Development Centre / UNCTAD, 2008

slide3

Private capital flows more important than ODA?

Growth

African ODA

Source: OECD Development Centre / UNCTAD, World Bank, IMF, 2008

*: UNCTAD preliminary estimation

slide4

Record investment inflows for 2007

FDI

  • Africa FDI 2007 : $36 billion
  • +20% on 2006; +200% on 2004
  • FDI outflows - $8 billion 2006
  • Largely due to surging extractive industry investment: South Africa and oil producing countries are still receiving the bulk of direct investment to Africa
  • Previously off-limit sectors opening to foreign investment:
  • Banking: Congo, Egypt, Nigeria
  • Telecoms: Botswana, Burkina Faso,
  • Cape Verde, Ghana, Namibia
  • Land ownership: Morocco
  •  FDI inflows likely to remain strong, but unevenly distributed by sector and destination.

Source: OECD Development Centre / UNCTAD, 2008

slide5

Asian investments driving African growth

FDI

Distribution of cross-border M&A purchases in Africa

by home region, 2001-2006 (US$ million)

Source: OECD Development Centre based on UNCTAD cross-border M&A database, 2008

slide6

South Africa: dominating the investment landscape

Equities

  • Africa still lagging behind in investment compared to other emerging regions (Asia especially).
  • In turnover, the SA stock exchange is worth 100 times that of Africa’s second market: Nigeria.
  • Over 2001-2006 period, South Africa received as much portfolio equity investment as the entire rest of SSA, 46 times over…
  • African allocations in global equity funds remains stable at 10% of total.

Source: OECD Development Centre / EPFR, 2008

slide7

Well adapted to African conditions?

Private Equity

    • Total emerging world private equity funds raised:
  • Sub-Saharan Africa 2005 - 2006: $2.3 billion raised (+198% yoy)
  • Average deal size $1.2 million (2005), trending towards larger deals
  • South Africa: 81% of investments, Nigeria 50% of remainder (2005)
  • Top sectors: Transport, consumer-related investments, telecommunications/IT (2005)
  • 2006: first $1 billion pan-African fund

Above: OECD Development Centre / African Venture Capital Association, EMPEA, 2008

slide8

Bonds

Lowering spreads signal increased confidence

Source: OECD Development Centre, based on Thomson Datastream, 2008

slide9

Sovereign Development Funds: future investors?

Opportunity

Sovereign Wealth Funds

Emerging market investment potential

If Sovereign Development Funds allocated 10% of their portfolios to emerging and developing countries, this will generate inflows of $100 billion/year over the next 10 years.

With such huge potential flows, it is critical to address SWF impact on developing world early on.

SWFs will dwarf ODA flows to developing world.

$1.4 trillion to the emerging world over coming decade?

slide10

A platform for global dialogue

Dev Centre

OECD members at Development Centre

Non-OECD members

Israel

Brazil

Romania

Vietnam

Colombia

Chile

South Africa

India

Thailand

Egypt

slide11

African Economic Outlook impact

AEO

International Forum on African Perspectives

Paris, June 2008

Seminar on Capitol Hill Washington D.C, June 2008

EU-Africa Summit Lisbon, December 2007

TICAD

Tokyo, May 2008

AfDB Annual Meeting

Maputo, May 2008

  • International launch at AfDB Annual Assembly: 11th May 2008
  • European launch: 13th May 2008
  • Over 40 presentations and events within 3 months of publication
slide12

UNECA

27 June 2008

Javier Santiso

Director & Chief Development Economist,

OECD Development Centre

www.africaneconomicoutlook.org

www.oecd.org/dev/aeo