1. Africa’s Economic Transformation:
Trends and Prospects for Enhancing
African Development Bank Group
Economics, Value Chains and Policy
Dialogue on International Food Security 2014, University of Alberta
2. The Continent’s Transformation Process
- Change is rapidly taking place, … where
 change altering dev. landscape
- The last investment & development frontier, with diverse countries;
where need harness emerging
- Global opportunities, … …, …. a challenge!
 Reason for speaking on Africa’s Economic Transformation
- Firstly, this dialogue is critical in the African context …
transformation prospects depend on:
- How we manage it; how we respond to opportunities; how we deal
with the inherent challenges.
- Secondly, … several regions in Africa still food insecure
- Africa in need of gaining its rightful please in the global value chain
- Still has not acquired it rightful share of global trade, … internal
capacity constraints …. ; but also due to trade-related problems
3. African Voices
- Level of optimism (rising, moment,
investment frontier, growth pole, etc)
- Where is this optimism coming from?
- What does it mean for food security/
- What are the policy implications, ….?
Sources: AEO, ACR, WB-Doing Business,
McKinsey Report: Lions on the Move
Own Research, as Research Manger
4. The African Story
- unprecedented /sustained growth, > 5% on @;
- Bet. 2000 & 2010, six of the 10 fastest growing
countries of the world;
- Growth is expected to remain strong, with IMF
projecting, 7 of 10 fastest growing economies in
the world over the next 5 years to be African
- Caveat: diverse countries; varying
opportunities; different levels of growth; some
still stuck in low growth paths.; nonetheless, …
- A continent-wide GDP of barely US$600 billion
in 2000, reached US$2.2 trillion in 2013; … sig.
-GDP growth in 2013 to average 6.6%.
5. Drivers of Change
6. Important Trends, but Challenges Remain
 Lack of basic infrastructure
 Disjoint regional economies
 Undiversified economies driven by few
commodities (oil, extractive resources)
 Fragility & conflicts
Countries differ markedly
 Underdeveloped infrastructure (roads,
power, energy, water infrastructure)
hinders regional integration
Increases cost of doing business
makes firms less competitive, ….
even harder to benefit from globalizatn
Hinders structural transformation
 Growth has not been inclusive, or ….
 e.g. agriculture, employing 60-70% of pop.
has seen little transformation (land, labor,.)
- Inequality (6 / 10)
- $30 bn food import
7. # What does this mean for food security, and
what are the continents prospects for moving
higher on the value chain?
- Africa does not produce all the food it needs
- Urbanization leading to more food imports, … …
- Cost is huge; $30 bn a year; could double by 2020
- Situation gets worse during crisis (droughts), … …
- In 2007-2008 food crisis; cereal prices went up
- Response? Public protests in several cities, …
- …, …, …., Africa a net cereal importer
- Cereal import bill about $22 bn in 2008 (50% SSA)
- Food price vulnerability analysis: Cereal Balance;
Import Dependency; Ability to Pay; Urbanization.
8. • BUT doesn’t Africa have some 400 mn ha
of land waiting to be cultivated?
• And isn’t Africa one of the last frontiers
where such unexploited potential is still
…Africa is net cereals importer because
structural transformation is still a tall order
9. …. But what about the drivers of global food
- Global level, food price risk due to volatility
- Can be managed through regulating trade, …
Short-Term: conflicts; natural disasters; oil prices
increases; exchange rate fluctuations; hedge funds
Long-Term: population growth; higher incomes;
changing tastes; demand for biofuels, among
In Africa, … exacerbated low productivity, market
distortions, infrastructure gap, also conflicts;
disproportionate damage by climate change.
- Global price could stimulate food production, but
price transmission mechanisms in Africa operate
with a lag  market distortions; capacity consts.
10. This brings me to my third point: policy
considerations for enhancing food security
Many believe food Africa’s insecurity, … has to
do with laws, policies and institutions that have
held back agriculture.
 Land ownership structure (not new! CGIAR)
 Low agricultural productvy, since 1970, real
growth at 2-2.5%, @ par or below pop growth,
 Technologies, do exists, CGIAR, biosc. corps
- BUT problem persists: i) GM method driven by
private firms , …. brings both opportunities and
challenges (FAO: world’s 10 transnational bioscience
corps spend ca. $3 bn/year on R & D. (3x > CGIAR)
 Bureaucracy ….; new seeds, fertilizer… regulated,
years to approve: the result? Improved seeds get
stuck at the border, … farmers stuck with low yields.
11. And the challenge of climate change?
- The developing world, esp. Africa contributes
little to the causes of CC, but stands to be hit
hardest by its impacts
- Preliminary assessment suggest agric. prodtvty.
decreases on @ of about 15-20% by 2080, & by up
to 50% in highly vulnerable countries.
- The risks of humanitarian food crisis likely to rise
due to increased freq. of extreme weather events
- In some regions, e.g. Southern Africa, this risk is
exacerbated by that of HIV/AIDS.
 These are in addition to the binding structural
constraints discussed earlier, notably trade and
12. Africa and the Global Value Chains
-African has a growth
-A good potential for true
-Formidable challenges lie
-Momentum creates a long
awaited opportunity for
Africa to move higher on the
- About 350 mn in 2010, up
from 126 mn in 1980;
- Consumer spending now at
$720 bn/yr; AfDB projects to
reach $1 trillium in 2020.
 We believe that this
provides the first foot in the
door, for Africa to move
higher on global value chian
- Intra-regional trade in
professed goods will be the
first opp. for African firms to
move higher on the VC.
13. Africa and the Global Value Chains … contd.
- Though still modest, intra-Africa trade more
than doubled bet. 2005 & 2011, rising from $49
billion to $108 billion
- In 2010 it was 16% of African exports were to
other African countries. Much higher ….!
- Expected to be higher, once statistics is
corrected; including coffee, tea sold to neighbors;
 We believe this is the most logical place to
start, …. by providing “smart aid” such as the
AfDB’s “Aid For Trade” program, which seeks to
remove trade related constraints.
14. Africa and the Global Value Chains … contd.
- By some estimates, lifting barriers to food trade
(inc. structural constraints) , from farm to market,
could double Africa’s production of cassava and
rice; triple maize, millet and sorghum; and
quintuple wheat. The region could feed itself!
 This could mean higher incomes for farming
families, and more secure food supply for urban
dwellers; and better employment opportunities
 This is why the African Development Bank
Infrastructure its core business; along with
Regional Integration; Private Sector Development;
Governance; and Capacity Building to enhance
Skill and Technology.
15. Africa Going Forward
AfricaisOpenforBusiness! - With this unmatched potential, Africa is open
for business, and organizations, like the AfDB,
have laid so many foundations for trade, growth
- The Bank has helped build a network of roads,
rail, water, electricity, and build institutions to
- During the food crisis in 2007/2008, we
launched $1 billion trade finance initiative; over
the past 3 yrs, we have supported a cum. level of
trade of $2.5 billion; in 2013 along we committed
some $6.7 billion dev. projects, about 60% of
which is geared towards infrastructure constraints
 We believe this is the most logical place to
16. Development Aid
only as part of the
Africa Going Forward