23 April 2009 José Gijon Spalla Head, Africa Desk OECD Development Centre Africa and the global crisis: Impact and way forward Africa Forum, Paris 5 June, 2009

Growth 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 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

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

Global 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

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

For the first time in a decade, GDP per capita will decrease in Africa Global 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)

For the first time in a decade, GDP per capita will decrease in Africa

This represents a threat to:

Progress towards MDGs

Recent progress in poverty reduction

Political stability (mostly in fragile states)

Global 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 Source : OECD Development Centre, African Economic Outlook, 2009 Inflation Current Account Fiscal balance 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 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 Total trade with China has increased tenfold in the past decade to reach USD 106 billion in 2008 2000-05 2008(e) Fiscal balance, % GDP -1.4 2.8 Current Account, % GDP 0.6 3.3 2005 2008 Total external Debt/GDP, % 110.6 20.8 Debt service / exports, % 20.8 4.7

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 2008

It’s time for Africa to tap its unexploited potential Beyond 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

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

23 April 2009 José Gijon Spalla Head, Africa Desk OECD Development Centre Africa and the global crisis: Impact and way forward Africa Forum, Paris 5 June, 2009