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WTO Seminar

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This presentation is part of a blog post featured in the blog Africa Can located here:
https://blogs.worldbank.org/africacan/

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WTO Seminar

  1. 1. Africa: Enhancing growth and reducing poverty in a volatile world<br />ShantaDevarajan<br />World Bank<br />http://blogs.worldbank.org/africacan<br />
  2. 2. Before the global crisis<br />Africa was experiencing sustained, relatively rapid economic growth<br />As fast as all developing countries (except China and India)<br />
  3. 3. For the first time in 20 years, Africa’s growth is equal to that of developing countries (except China and India)<br />
  4. 4. Before the global crisis<br />Africa was experiencing sustained, relatively rapid economic growth<br />As fast as all developing countries (except China and India)<br />Broad-based: 22 non-oil countries had 4+ percent average GDP growth from 1998-2008<br />
  5. 5. Source: World Development Indicators, World Bank<br />
  6. 6. Before the global crisis<br />Africa was experiencing sustained, relatively rapid economic growth<br />Broad-based: 22 non-oil countries had 4+ percent average GDP growth from 1998-2008<br />Due to <br />Higher commodity prices<br />Increases in aid, debt relief and capital flows<br />Improved macroeconomic policies<br />
  7. 7. Inflation in Africa<br />140<br />45<br />2<br />2<br />2<br />40<br />3<br />4<br />5<br />120<br />6<br />6<br />6<br />7<br />7<br />35<br />13<br />13<br />Inflation&gt;20%<br />100<br />30<br />10%&lt;inflation&lt;=20%<br />80<br />25<br />Number of Countries<br />Average Inflation Rate %<br />Inflation&lt;=10%<br />20<br />60<br />33<br />33<br />33<br />32<br />31<br />31<br />31<br />Median inflation rate<br />30<br />15<br />29<br />28<br />27<br />40<br />24<br />10<br />17<br />20<br />5<br />0<br />0<br />1995<br />1996<br />1997<br />1998<br />1999<br />2000<br />2001<br />2002<br />2003<br />2004<br />2005<br />2006<br />2007<br />
  8. 8. Although least integrated, Africa may be the worst hit by the crisis<br />Private capital flows<br />
  9. 9. Source: IMF, World Economic Outlook, 2008<br />
  10. 10. If FDI flows, more important recently, were to fall, growth would suffer<br />Source: World Bank, Global Economic Prospects 2010: Crisis, finance, and growth<br />
  11. 11. Although least integrated, Africa may be the worst hit by the crisis<br />Private capital flows<br />Remittances<br />
  12. 12. Remittances<br />Source: Ratha and Mahopatra (2009)<br />
  13. 13. Although least integrated, Africa may be the worst hit by the crisis<br />Private capital flows<br />Remittances<br />Tourism<br />
  14. 14. Tourist arrivals(compared with equivalent period in 2008)<br />Source: World Bank staff estimates<br />
  15. 15. Although least integrated, Africa may be the worst hit by the crisis<br />Private capital flows<br />Remittances<br />Tourism<br />Primary commodity prices<br />
  16. 16. Terms of trade shocks(change in trade balance as percentage of 2006 GDP)<br />
  17. 17. Note: 2008 includes 2008/09 fiscal year; 2009 includes 2009/10 fiscal year<br />Source: Regional Economic Outlook, IMF (October 2009)<br />
  18. 18. Although least integrated, Africa may be the worst hit by the crisis<br />Private capital flows<br />Remittances<br />Tourism<br />Primary commodity prices<br />Foreign aid<br />
  19. 19. Foreign aid?<br />Source: David Roodman, Center for Global Development<br />
  20. 20. Impact: Decline in growth<br />Source: African Economic Outlook database<br />
  21. 21. Result: Growth declines<br />Per capita income declines<br />For the first time in a decade<br />Human crisis<br />7-10 million thrown into poverty<br />30-50,000 additional children dying before their first birthday<br />Possible reversals in economic reforms—didn’t happen<br />
  22. 22. Revenue, Expenditure and Deficit (relative to earlier projections) <br />Source: Krumm, Dhar and Choi, “Fiscal Response to the Global Crisis in<br />Low Income African Countries”, August 2009<br />
  23. 23. Policy responses<br />Time-bound bailout programs<br />E.g., Tanzania’s emergency rescue program limits government guarantees and loans to two years<br />Accelerated reform programs<br />E.g., Nigeria is deregulating its downstream petroleum sector, reducing costly and regressive subsidies<br />
  24. 24. Implications<br />Policy environment has never been better<br />External resources are as productive as they have ever been<br />Continued reforms and additional resources could accelerate progress towards the Millennium Development Goals<br />
  25. 25. Africa’s medium-term challenges<br />
  26. 26. Business climate<br />
  27. 27. Low competitiveness<br />Source: World Bank, Doing Business Database<br />
  28. 28. Infrastructure deficit<br />Note: Road density is in kilometers per kilometer squared; telephone density is in lines per thousand population; generation capacity is in megawatts per million population; electricity, water and sanitation coverage are in percentage of population<br />
  29. 29. Youth unemployment<br />
  30. 30. Lagging agricultural productivity<br />
  31. 31. Climate Risks and Development: The “Poor Countries’ Danger”<br />Potential Impact of Climate Change on Agriculture: <br />Projected Percentage Change in Agricultural Productivity in 2080<br />Note: Scenario: SRES A2.<br />Source: Cline 2007.<br />
  32. 32. Back to Infrastructure deficit<br />Note: Road density is in kilometers per kilometer squared; telephone density is in lines per thousand population; generation capacity is in megawatts per million population; electricity, water and sanitation coverage are in percentage of population<br />
  33. 33. GEOGRAPHICAL SCOPE OF THE STUDY<br />SELECTED CORRIDORS<br />OF THE STUDY<br />
  34. 34. THE TRANSPORT PARADOX IN AFRICA (1)<br />A disconnect between low transport costs but high transport prices<br />Transport costs are not excessively high in Africa comparing to France for example<br />However, average transport prices in Africa are high in a global comparison<br />
  35. 35. THE TRANSPORT PARADOX IN AFRICA (2)<br />Although low efficiency, profit margins of trucking companies are high<br />An interesting observation: <br />On Central Africa corridor, trucks with lower average yearly mileage <br />have the higher profit margins<br />
  36. 36. Example of the impact of market deregulation:<br />the case of Rwanda<br />Average transport prices (constant and current) from Mombasa to Kigali<br />
  37. 37. Africa’s time<br />Before the crisis, policies were steadily improving and showing results<br />During the crisis, policies continued to improve<br />Policy environment has never been better<br />Medium-term challenges, while daunting, can also be met with a combination of resources and reform<br />Africa may be poised for sustained, rapid growth, as India was 20 years ago, and China 30 years ago<br />

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