23 April 2009
José Gijon Spalla Head, Africa Desk
OECD Development Centre
Africa and the global crisis: Impact and way forward
Africa Forum, Paris5 June, 2009
GrowthGrowth Africa still growing despite the crisis
Source: OECD Development Centre / African Development Bank, 2009
Δ = 6.6%
Δ = 4.1%
Δ = 3.5%
Δ = 4.8%
Real GDP Growth (%)
Global CrisisGlobal Crisis …staggered impacts are to be expected
•Weaker fundamentals and dependent on one commodity
• Angola, Chad, DRC
• Stronger fundamentals but dependent on one/few commodity/ies
• Botswana, Algeria, Cameroon
•Weaker fundamentals but less dependent on one commodity
• Tanzania, Ghana, Ethiopia
•Stronger fundamentals and less dependent on one commodity
• Tunisia, Uganda, Kenya
Time
Global CrisisGlobal Crisis What does 3 points growth deceleration imply?
• Deceleration of economic activity and trade outflows will cause a government revenue increase of just 3%, after an average nominal increase of 20% over the last 8 years.
• Decrease in private investments by 4%, FDIs are expected to decrease by 10-20 %.
• Stagnation in public expenditure and decrease in investment (7%) in 2009
Total African current and capital expenditure 2000-10
Source: OECD Development Centre / African Development Bank, 2009
For the first time in a decade, GDP per capita will decrease in Africa
Global CrisisGlobal Crisis What does 3 points growth deceleration imply?
This represents a threat to:
• Progress towards MDGs
• Recent progress in poverty reduction
• Political stability (mostly in fragile states)
Global CrisisGlobal Crisis Fiscal balances will deteriorate significantly
* Including grants** Excluding Zimbabwe, Estimations for 20078and predictions for 2009/10
Source: OECD Development Centre / African Development Bank, 2008
Inflation
Current Account
Fiscal balance
0
10
20
2000-05 2006 2007 2008(e) 2009(p) 2010(p)
infla
tion
%
Central East NorthSouth West AFRICA
Source: OECD Development Centre, African Economic Outlook, 2009
2008 (e) 2009 (p) February
2009 (p)May
External Current Account* (% GDP) 3.3 -4.4 -5.3
2008 (e) 2009 (p) February
2009 (p)May
Overall fiscal balance* (% GDP) 2.8 -5.4 -5.8
2008 (e) 2009 (p) February
2009 (p)May
Consumer prices 11.6 8.1 8.4
Beyond the CrisisBeyond the Crisis Africa today is 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
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 2008
2005 2008Total external Debt/GDP, % 110.6 20.8
Debt service / exports, % 20.8 4.7
It’s time for Africa to tap its unexploited potential
Beyond the CrisisBeyond the Crisis
AEO 09: Innovation and ICT• ICTs are an engine of endogenous growth : they contribute to improve
the local business environment by fostering markets development, overcoming infrastructural bottlenecks and reducing production costs
• ICTs foster human development allowing a better acces to basic services
• ICTs in Africa represent a new innovation fronteer , combining existing technologies with innovative applications, suited to the local environment and constraints.
•Domestic Markets: More attention should be given to fostering domestic investment and domestic demand
• Regional Markets: Only 9.5% of total African trade is regional
• Structural reforms are necessary to increase domestic resource mobilisation, overcome infrastructural hurdles and improve the business climate