3b accounting for natural capital the case of the african economic outlook by henri bernard solignac-lecomte oecd dev centre

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Mr. Henri-Bernard Solignac-Lecomte (Head of Unit Europe, Middle East and Africa, OECD Development Centre), presented on Accounting for natural capital? The case of the African Economic Outlook. Presentation delivered at the OECD ENVIRONET EXPERT WORKSHOP: GREEN GROWTH, DEVELOPMENT PLANNING AND POLICY; as part of the 16th ENVIRONET meeting in Paris.

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3b accounting for natural capital the case of the african economic outlook by henri bernard solignac-lecomte oecd dev centre

  1. 1. Accounting for natural capital? The case of the African Economic Outlook HB Solignac-Lecomte OECD Development Centre DAC Environet, 20 Feb. 2014
  2. 2. 22 Chapter 1: Macroeconomic Prospects Africa’s Growth: resilience in the face of headwinds from the global economy 0 1 2 3 4 5 6 7 GrowthRate(%) Africa Africa excluding Libya
  3. 3. Chapter 2: External Financial Flows and DRM FDI is picking up -30 -10 10 30 50 70 90 110 130 150 170 190 210 USDbillion TOTAL Remittances ODA FDI Portfolio investments
  4. 4. Chapter 3: Trade and Regional Integration Trade: China in the lead 0 50 100 150 200 250 Billion USD Africa's exports to selected partners (2000-2011) EU-27 China USA India, Brazil, Korea, Turkey, Russia Intra-African
  5. 5. 6 Chapter 4: Human Development Slow progress Average change in income and non-income human development indices, 2005-12
  6. 6. 7 Chapter 5: Political and Economic Governance Public protest up, civil violence down but > 2011 0 100 200 300 400 500 600 Public protest (base 100 = 2000) Civil Violence (base100 = 2000)
  7. 7. 2002 (no theme) 2003 Privatisation 2004 Energy 2005 SME Financing 2006 Transport 2007 Water and sanitation 2008 Technical & Vocational Skills 2009 Innovation and ICT 2010 Public Resource Mobilisation and Aid 2011 Africa’s Emerging Partners 2012 Promoting Youth Employment 2013 Structural Transformation and Natural Resources 2014 Global Value Chains and Africa’s Industrialisation Chapter 6: Special Theme
  8. 8. 9 Chapter 6: Special Theme 2014 “Global Value Chains and Africa’s Industrialisation” Potential for integrating GVCs : 1. Extractive industries: backward linkages from oil, copper, diamonds, gold. e.g. MOZAL cluster. 2. Agriculture /agroindustry : Cotton, coffee, tobacco, flowers, horticulture, cashews, cut flowers … But so far mainly isolated success stories, no massive upscaling. 3. Light manufacturing: few success stories (Mauritius, Tunisia, Morocco, Lesotho) despite preferential access to EU, US markets 4. Tradable services: Some successful companies across the region, e.g. Kenya: Business Process Outsourcing (BPO), Call Centers. GVC do have potential in certain areas – but unlikely to become strong drivers of the desired structural change. Greatest potential for inclusive growth in high-value agriculture. Source: Tilman Altenburg (German Development Institute)
  9. 9. Farmer Processor RetailerLogistics Blue Skies’ ‘fresh from harvest’ value chain • Employment • Income distribution • Technology and skills transfer Chapter 6: GVCs (cont.) Cut fruit from Ghana Source: Blue Skies
  10. 10. Chapter 6: GVCs (cont.) Textile/clothing in Ethiopia, Tanzania • over 28000 employees in China and Cambodia, export to the US and EU markets • hired over 1000 local workers in Dar es Salam, Tanzania in 2013 • Incentives: stable political environment, good relations with China, SEZ • Sourcing knitwear from MAA Garment & textile, in Mek’ele • Lower wage cost, delivery time to EU shorter by 1/3 vs. China • Ethiopia’s textile & apparel exports grew by 28% / 12 months to June 2012 = US$84.6m (compared to total German imports alone $17.4bn) • Next: Tesco (UK), Primark (IRE) Source: Tang Xiaoyang, Tsinghua University
  11. 11. Chapter 6: GVCs (cont.) Regional Value Chains: The rise of supermarkets 12 Who will benefit? • Supermarkets aim for preferred suppliers • Small holders ill-prepared to meet demands (quality, packaging etc.) • But experience of Kiambu’s small holders in Kenya shows that it can be done • Though experience of Nicaragua farmers with Walmart warrants caution • South African supermarkets in the lead • Kenyan supermarkets focused in East Africa (Nakumatt eyeing Nigeria) • International players entering (Spar, Walmart ) Can supermarket increase global reach of African manufacturers? Source: Julius Gatune (African Centre for Economic Transformation)
  12. 12. 54 Country Notes Strictly comparable, 15 pages, 7000 words 13 2-year Forecasts • Growth • Inflation • Current account, • Budget balance Analysis • Macroeconomic Policy • Economic and Political Governance • Incl. Natural Resource Management & Environment (300 words) • Social Context and Human Development • Thematic Analysis: GVCs
  13. 13. African Economic Outlook 14 Macro Trade Human GovernanceFinance Algeria Angola Benin Ethiopia Zambia Zimbab we Statistical Annex Special Theme: Youth Employment, Natural Resources, GVCs … FORECASTS
  14. 14. Drivers of growth = “Shifting wealth” (including the commodity price boom), demography and better macroeconomic policies But 5% growth is not enough to take-off Tackling the job challenge: structural transformation, private sector development Two drivers: natural resources, rising consumer demand => Territorial strategies, product-specific The Big Picture: Is Africa Rising? 15
  15. 15. The “environmental risks faced by developing countries today call for a radical shift in how we view growth and development” OECD (2013) Putting Green Growth at the Heart of Development. 16 Are we missing something?
  16. 16. 1. Integrate the environment in country growth forecasts (upgrade model) → data? 2. Add section in country notes → tokenistic? 3. Add selection of environmental indicators to statistical annex→ visibility, impact? 4. Chapter on environment → add? 5. Other? 17 Options for “Greening” the AEO? Additional issues: • Green Economy, Green Growth, Sustainable development? • Political economy Source: Stoever, J. Options for Greening the AEO.
  17. 17. Option 1 - Integrate the environment in country growth forecasts (upgrade model) 18 +  truly integrates environmental factors into the (traditional) economic growth model  Results are in a language that is familiar to policymakers/the audience of the AEO  Analytically strong and theory-based approach -  Theoretically and empirically challenging  Large workload and data requirements  Uncertain outcome  Dependent variable is still GDP growth (close to GG concept, not necessarily a weakness)
  18. 18. Option 2 – Add Section in country notes 19 + • Textual closeness the of environment and economic growth emphasizes their close connection • Brings the environment to the attention of the readers of the country notes • Individually tailored paragraphs for each country, specific contexts can be incorporated and/or highlighted • Can be combined with options 3&4 - • Add-on solution, no full integration • It does not seem logically consistent with the current structure of country notes to include a separate fairly standardized paragraph on the environment in all country notes • Workability (all authors of country notes have to be involved) • Natural resources are already included in the country notes when they are an important component of GDP growth
  19. 19. Option 3 - Add a section on the environment in the statistical annex 20 + • Relatively little effort required • Has been done in other reports (e.g. ADB, 2013; World Bank, 2013b) • Easy and quick to implement • Can be combined with options 2&4 • Only one point for discussion: selection of indicators (and ways of presentation) - • Will not generate much attention compared to other options • Added, but not really integrated in AEO (as stand-alone option) • Without explanations: limited interpretation • Does not “change how we think about growth” if numbers are not put into context
  20. 20. Option 4 - Add an extra chapter on the environment to the AEO 21 + • A special theme would generate public interest • An additional chapter 6 would give the environment the space and visibility it deserves in the logic of comprehensive wealth • Can be combined with options 2&3 - • Add-on solution • Chapter 6 (Special theme): partly very close to 2013 special theme on natural resources • Environment & poverty overlaps with other chapters • (Minor) re-organization of other chapter(s) necessary • “far away”, separates the environment from economic growth part
  21. 21. www.africaneconomicoutlook.org 22

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