UNECA

The African Economic Outlook 2008

The Macroeconomic Picture

Total OECD

Africa

Source: OECD Development Centre / African Development Bank, 2008

0

1

2

3

4

5

6

7

1999 2000 2001 2002 2003 2004 2005 2006 2007(e) 2008(p)2009(p)

Re

al G

DP

Gro

wth

(%

)

Real GDP Growth Real GDP growth expected to exceed 5% for the sixth consecutive year in

2008 , and reach 5.9%

•2007: 25 countries over 5%•2008: 31 countries over 5%

•2007: 13 countries between 3-5%•2008: 16 countries between 3-5%

Growth in 2009 will remain sustained at 5.9%

Growth Africa continues steady growth

Commodities The commodity boom: a key driver for Africa

Global commodity prices 2001-2009

Source: OECD Development Centre / World Bank, 2008

0

50

100

150

200

250

300

350

400

450

500

2001 2002 2003 2004 2005 2006 2007 2008(f) 2009(f)

Cocoa

Tea

Coffee (robusta)

Coffee (arabica)

0

50

100

150

200

250

300

350

400

450

500

2001 2002 2003 2004 2005 2006 2007 2008(f)2009(f)

Petroleum

Copper

Aluminium

Gold

Drivers China & India: new drivers of African growth

0

5

10

15

20

25

30

USD

Bill

ion

Chinese and Indian Exports to Africa1995 – 2006 USD billion

India X

China X

Source: OECD Development Centre / UN Comtrade, 2008

2001 2002 2003 2004 2005 2006

World 15524 4684 6427 4595 10509 17569

Developed

economies14964 3668 3156 4571 9564 7173

Developing

economies559 1016 3270 2024 476 9721

Africa 520 809 569 1849 360 746

Asia 39 141 2536 175 116 8850

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

Trade Investment

Drivers Improved macroeconomic framework

* Excluding Zimbabwe** Estimations for 2007 and predictions for 2008/09

Source: OECD Development Centre / African Development Bank, 2008

Fiscal Balance % GDP Current account % GDP Inflation

Average 2000-04

Average 2005-09**

Average 2000-04

Average 2005-09**

Average 2000-04

Average 2005-09**

Central 1.6 8.6 Central -3.2 3.2 Central 14.6 4.6

East -2.2 -3.2 East -4.3 -7.5 East 6 8.7

North -1.2 6 North 5.6 13.2 North 2.6 5.2

South -2.5 1.6 South -1.2 -1.7 South* 14.4 6.8

West -0.5 4.5 West -2.7 3.3 West 10.3 7.8

AFRICA -1.5 3.4 AFRICA 0.8 3.8 AFRICA* 8 6.4

Drivers Record investment in 2007: a new driver?

Source: OECD Development Centre / UNCTAD, 2008

31

0

5

10

15

20

25

30

35

40

Pe

rce

nt

of

GD

P

Ghana

Madagascar

Senegal

Tanzania

Zambia

Public and Private Investment % of GDP

Source: OECD Development Centre / EPFR, 2008

0

2

4

6

8

10

12

14

16

18

20

USD

Bill

ion

Equity flows to AfricaMonth-end aggregate holdings

Total Africa

South Africa

Growth Oil exporters and importers: divergent paths?

Source: OECD Development Centre / African Development Bank, 2008

Net Oil exporters: Algeria, Angola, Cameroon, Chad, Congo, Côte d'Ivoire, Congo DRC, Egypt, Equatorial Guinea, Gabon, Libya, Nigeria, Sudan

Real GDP Growth

2

3

4

5

6

7

8AFRICA

Net Oil exporters

Net Oil importers

Re

al G

DP

Gro

wth

(%

)

• Growth rates for oil importer and oil exporter countries diverged significantly in 2007 and 2008

• However, this difference is set to narrow in 2009, due to:

- Slower growth of oil production in Angola

- Growth recovery in Kenya and South Africa

Oil Exporters Performance and threats

Source: OECD Development Centre / African Development Bank

*: African Economic Outlook forecasts

0 2 4 6 8 10 12

Chad

Gabon

Cameroon

Algeria

OIL IMPORTERS

Equatorial Guinea

AFRICA

Nigeria

Congo

Congo Dem. Rep.

Egypt

Libya

Sudan

Angola

Oil exporters’ GDP growth 2008* (%)

…but poor diversification & governance

Strong growth…

Oil-exporting countries have a historical opportunity to pull ahead, yet many remain mired in poor governance, not using oil windfalls to finance broad development.

Good performers’ assets:• Sustained and prolonged growth• Improving macro management• Rising Investment in non-oil sectors

Challenges:• Poor diversification and governance• Structural declining productivity of oil fields• Capitalise on windfall gains and maximise

spillover to rest of the economy• Avoid Dutch Disease

Oil Importers Performance and threats

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. However, rising inflation, food prices and lower global demand for non-resource exports

signal rougher waters ahead.

Good performers’ assets:• Sustained and prolonged growth • Prudent macroeconomic policies• Good Diversification• Decreasing poverty

Challenges:• Contain fiscal deficits, streamline spending• High dependency on ODA• Finance widening trade deficit• Prioritise poverty reduction • Vulnerability to climatic and price shocks

Good performance… …yet challenges rising

0 2 4 6 8

Kenya

Rwanda

South Africa

Namibia

Senegal

Mauritania

Tunisia

AFRICA

Morocco

Ghana

Tanzania

OIL EXPORTERS

Mozambique

Cape Verde

Oil importers’ GDP Growth 2008 (%)

Food Prices Significant food price inflation over past year

Source: OECD Development Centre / Thomson Datastream, 2008

Source: OECD Development Centre / FAO, 2008

2006(e) 2007(e)Change 2006-

2007 (%)

Africa 144.1 135.6 -5.9

North Africa 36 28.9 -19.8

Western Africa 49.1 47.4 -3.5

Central Africa 3.6 3.5 -2.7

Eastern Africa 33.9 33.9 0

Southern Africa 21.5 21.9 2.1

• Rising grain prices : an international and local trend

• Sub- Saharan Africa is a net cereal importer

• But vulnerability varies among countries

• Need for long term concerted solutions

0

200

400

600

800

1000

USD

/ T

on

ne

International Cereal Prices 2006 - 2008

Wheat

Rice

Corn

African Cereal Production (million tonnes)

Stability Long term decline in political instability ?

Regime Hardening (LHS)

Qualitative data obtained from Marchés Tropicaux et Méditerranéens. Data is used to construct two indicators referring to: Political instability: occurrence of strikes, demonstrations, violence and coup d’état.Hardening of the political regime : incarcerations of opponents, measures threatening democracy such as dissolution of political parties, violence perpetrated by the police and the banning of demonstrations or public debates.

Source: OECD Development Centre “Moving towards political stability? Monitoring political instability, governments response and economic performance in African countries” forthcoming article, April 2008.

0

100

200

300

400

500

600

0

50

100

150

200

250

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Po

liti

cal

tro

ub

les:

weig

hte

d s

um

of

ev

en

ts

Hard

en

ing

of

the r

eg

ime:

weig

hte

d s

um

of

ev

en

ts

Political Troubles and Hardening of the Regime

Hardening of the regime indicator Political troubles indicator

Outlook Oil exporter & importers: different challenges ahead?

Oil and Mineral exporters

Challenges:• Capitalise on windfall gains• Maximise spillover to rest of the

economy• Avoid Dutch Disease

Trade Balance Inflation*

Growth Fiscal Balance

Oil importers

Challenges:• Contain fiscal deficit• Finance widening trade deficit• Streamline spending to prioritise

poverty reduction

Source: OECD Development Centre, African Economic Outlook, 2008

0

2

4

6

8

2006 2007(e) 2008(p) 2009(p)

0

1

2

3

4

5

6

7

8

2006 2007(e) 2008(p) 2009(p)

* Oil Importers exclude Zimbabwe

-4

-2

0

2

4

6

8

10

2006 2007(e) 2008(p) 2009(p)

-15

-10

-5

0

5

10

15

20

25

2006 2007(e) 2008(p) 2009(p)

Inflation is a challenge for the entire continent

Diversification

• Between 2002 and 2006 29 african countries have further specialised.

• The 10 less diversified countries are all oil exporters

• The 5 most diversified are Morocco, Tunisia, South Africa, Tanzania and Senegal

0

1

2

3

4

5

6

7

8

9

2002

2006

0

10

20

30

40

50

60

70

80

2002

2006

In 2007, only 12 out of 35 AEO countries increased export volume by 5 per cent or more

Diversification should be fostered to sustain growth and fight against rising import costs

Common challenges: diversify to raise exports

Source: OECD Development Centre, UN Comtrade, 2008

Challenges Energy crises threaten prospects

Liberia

Morocco

Source: Briceno-Garmendia (2006); Eberhard and others (2008).

Countries Vulnerable to Energy Shortages: • Installed capacity in SSA is

insufficient to respond to high growth rates and increasing demand

• Half of the continent is currently experiencing severe energy shortages.

• Crises have been worsened by South Africa shortages, Kenyan political crisis, droughts and high oil prices.

• A combination of high growth and low investment in energy infrastructures has created severe bottlenecks to development

No crisis/no data

Energy crisis

Credit Crisis Is Africa safe from U.S downturn?

Source: OECD Development Centre / UN Comtrade, 2008. (data on Nigeria corresponds to last available year, 2003)

Destination of African Exports - 2006

Algeria

Egypt South Africa

Nigeria

Note: The “Others” category includes Latin America, the Middle East. East Asia and South Asia.

AngolaOil exporters:

Oil-non exporters:

Due to a low share of external trade with the U.S, Africa is less vulnerable to effects of U.S credit crisis

Morocco

European Union (25) United States Others

Aid Foreign aid as a catalyst for development

Source: OECD Development Centre / African Development Banks, 2008

0.33

0.22

0.33

0.28

0.35

0

20

40

60

80

100

120

140

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

OD

A (

20

04

USD

bill

ion

)

% o

f G

NI

ODA as a % of GNI (left scale)

Total ODA(right scale)

ODA to Africa(right scale)

MDGs Slow progress, despite growth

Source: OECD Development Centre / African Development Bank, 2008

0% 20% 40% 60% 80% 100%

Ensure environmental sustainability Target

Combat diseases

Improve maternal health

Reduce child mortality

Promote gender equality and empower women

Achieve universal primary education

Eradicate extreme poverty and hunger

Progress on Millennium Development Goals 2007

satisfactory not satisfactory

Goal 1

Goal 2

Goal 3

Goal 4

Goal 5

Goal 6

Goal 7

Thank you

For more information:

www.oecd.org/dev/aeo