Measuring the Pulse of Africa
23 April 2009
African Economic Outlook 2010
Presentation of the AfDB/UNECA/OECD African
Economic Outlook
Mario Pezzini, Director a.i., OECD Development Centre
Barfour Osei, Chief Research Economist, Development Research Department, AfDB
Federico Bonaglia, Senior Policy Analyst, OECD Development Co-operation Directorate
FAO - Economic and Social Development
Department
Rome, July 7th 2010
UNECA
Overview
1
The AfBD/UNECA/OECD African Outlook
2
Highlights on the Macro-Economic Outlook
3
Implications for long-term growth
AEO Partners
Lead partner
(since 2007/08)
Other partners
UNECA
Experts Network
Financial partners
(European Development Fund)
10 Independent African
Think Tanks
Increased coverage and relevance for the continent
Coverage
from 47 to 50 countries
(+ Comoros, Guinea-Bissau and
Sao Tomé & Principe)
Relevance
99.5% of Africa’s GDP
97.3% of its population
Focusing on key structural issues every year
Special annual focus
2003: Privatisation
2004: Energy
2005: SMEs
2006: Transport
2007: Water and sanitation
2008: Technical & vocational skills development
2009: Innovation and ICT
2010: Public Resource Mobilisation and Aid
Highlights on the Macro-Economic Outlook
1
Macroeconomic Outlook
2
Drivers of Growth
3
The Global Crisis and Africa’s Resilience
2002-2008 Growth was sustained and accelerating...
Evolution of Real GDP and Real GDP per capita in Africa
1995-2010
RGDP growth in Africa
1995-2008
Annualised average of RGDP per capita in USD - 2000- 2008
% change
7
6
5
4
3
2
1
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source : AEO 2010
= 5.0% ≦ GDP pc (PPP) ＜ 17.9%
= 2.5% ≦ GDP pc (PPP) ＜ 5.0%
= 0% ≦ GDP pc (PPP) ＜ 2.5%
= -3.7% ＜ GDP pc (PPP) ＜ 0%
PART 1: MACROECONOMIC OUTLOOK
The outlook is generally positive...
10
%
9
Real GDP growth (%) in Africa
8
7
6
5
4
+ 4.5% in 2010
3
2
1
+ 5.2% in 2011
0
2001
2002
2003
2004
2005
2006
2007
2008
2009 (e) 2010 (p) 2011(p)
PART 1: MACROECONOMIC OUTLOOK
Differentiated performance across the continent
Real GDP Growth
March 2010 estimates
2008
Central Africa
Eastern Africa
Northern Africa
Southern Africa
Western Africa
Africa
Additional Areas of Differentiation
North Africa (including Sudan)
Sub-Saharan Africa
Oil-exporting countries
Oil importing countries
4.8
7.2
5.3
5.4
5.5
5.6
5.4
5.7
6.0
5.0
2009(e)
2010(p)
2011(p)
Real GDP Growth (%)
1.7
4.4
5.8
6.2
3.8
4.8
-1.1
3.4
3.0
4.4
2.5
4.5
4.4
6.4
5.4
4.3
5.5
5.2
3.8
1.6
3.1
1.8
4.8
4.3
4.9
4.0
5.3
5.2
5.5
4.8
PART 1: MACROECONOMIC OUTLOOK
Projected 10 fastest growing countries in 2010
Congo, Rep
Ethiopia
Liberia
Angola
Resource
rich
Uganda
Ghana
Congo, DRC
Malawi
Mozambique
2011
Zambia
2010
0
2
4
%
6
8
10
12
PART 1: MACROECONOMIC OUTLOOK
Projected 10 slowest growing countries in 2010
Madagascar
Equatorial Guinea
Comoros
Chad
Resource
rich
Swaziland
Lesotho
South Africa
Togo
Namibia
2011
Gabon
2010
-1
0
1
%
2
3
4
5
SECTION 2: DRIVERS OF GROWTH
The drivers of growth still largely trade related...
Improving commodity
prices and volumes
Oil and gold
Growth rates
15
10
World trade (volume)
Copper and
aluminium
5
0
Africa exports
(volume)
-5
Rice, wheat
and maize
-10
-15
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
SECTION 2: DRIVERS OF GROWTH
Private financial flows are to rebound…
USD billion
FDI flows to Africa
2000-2009
100
90
80
70
60
50
40
30
20
10
0
SECTION 3: THE GLOBAL CRISIS AND AFRICA’S RESILIENCE
In 2009, the crisis slashed economic growth …
Real GDP Growth
… however, the continent continued growing and
the impact was unequal across regions
SECTION 3: THE GLOBAL CRISIS AND AFRICA’S RESILIENCE
Whereas some countries saw negative growth…
11 countries experienced declines in GDP per capita of 2% or more in 2009
Equatorial Guinea
South Africa
Resource
rich
Oil
Gabon
Angola
Chad
Mauritania
Key
Vulnerability
Factors
Political
Crises
Namibia
Niger
Botswana
Minerals
Madagascar
Seychelles
-8
-6
-4
% -2
0
SECTION 3: THE GLOBAL CRISIS AND AFRICA’S RESILIENCE
… many others have proved resilient
Several countries saw GDP per capita increase between 3% and 7% in 2009
Ethiopia
Agriculture
Congo, Rep
Malawi
Resource rich
Morocco
Key
Resilience
Uganda
Zambia
Factors
China
Mozambique
Djibouti
0
2
4
%
6
8
Diversification
SECTION 3: THE GLOBAL CRISIS AND AFRICA’S RESILIENCE
Economic policies key to resilience
% of GDP
8
%
Current Account Balance
12
6
10
4
8
2
6
0
4
-2
-4
Inflation
Fiscal Balance
2
0
-6
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
(e)
(p)
(p)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
(e) (p) (p)
Macro balances deteriorated in 2009,
but are expected to improve in the mid-term
SECTION 3: THE GLOBAL CRISIS AND AFRICA’S RESILIENCE
ODA (not declined)
Supportive aid flows
SECTION 3: THE GLOBAL CRISIS AND AFRICA’S RESILIENCE
ODA
(not declined)
Dynamic
emerging
partners have also
supported growth and assisted with the recovery
%
14
China
12
10
India
8
Africa
6
4
2
Brazil
0
-2
Real GDP growth in Africa and emerging countries
-4
-6
2001
2002
2003
2004
2005
2006
2007
2008
2009 (e) 2010 (p) 2011(p)
SECTION 3: THE GLOBAL CRISIS AND AFRICA’S RESILIENCE
While emerging partners dynamism helped to support growth
China’s
role stands
out
and to trigger
recovery
60,000
50,000
China's imports from Africa
40,000
$bn
China's exports to Africa
30,000
20,000
10,000
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Implications for long term growth
1
Challenges and risks ahead
2
Public Resource Mobilisation
CHALLENGES AND RISKS AHEAD
Key risks
1. Global economy not
recovering as expected
2. Exit strategies might be
politically difficult and
harm fundamentals
3. Expectations of food prices
rising again  new social
tensions?
4. Commodity driven growth
might bring further
specialisation and growth
volatility
350
Annual Food Price Indices
300
(2002-04=100)
250
200
150
100
50
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Food Price Index
Cereals Price Index
Meat Price Index
Oils Price Index
Dairy Price Index
Sugar Price Index
16
14
AEO Diversification Index
12
10
8
6
4
2
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
CHALLENGES AND RISKS AHEAD
Beyond crisis recovery
Address the structural problems that existed before the global
crisis and constrain the potential of sustained endogenous
growth, in particular:
– Further improving political and economic governance
– Improving infrastructure
– Reducing barriers for intra-African trade
– Combating inequalities and poverty
… including through improved domestic resource mobilisation
Burundi
Guinea-Bissau
Congo Dem. Rep.
Sierra Leone
Ethiopia
Niger
Central Afr. Rep.
Malawi*
Liberia
Madagascar
Rwanda
Mozambique
Uganda
Guinea
Tanzania
Burkina Faso
Togo
Gambia
Mali
Comoros**
Ghana**
Benin
AFRICAN MEDIAN
São Tomé & Principe
Côte d'Ivoire
Mauritania
Kenya
Cameroon
Senegal
Zambia
Djibouti
Chad
Sudan
Lesotho
Egypt
Nigeria
AFRICAN AVERAGE
Morocco
Cape Verde
Tunisia
Swaziland
Namibia
Mauritius
Congo
South Africa
Botswana
Angola
Algeria
Gabon
Seychelles
Equatorial Guinea
Libya
PUBLIC RESOURCE MOBILISATION
Mobilising Africa’s public resources: can and must be achieved
USD
ODA per capita
Average
2000
1600
Tax revenue per capita
1200
800
Median
400
0
Source: Development Centre, based on AEO country survey’s, 2010.
PUBLIC RESOURCE MOBILISATION
Encouraging trends considering income levels
Taxes as a share of GDP in Africa
% GDP
40
Average tax collection per capita in Africa
3500
3000
35
USD per Capita
≈ USD
3000
2500
30
2000
25
1500
20
1000
≈ USD 500
15
500
≈ USD 70
10
0
1996
1998 2000 2002
Upper Middle Income
2004
2006 2007
1996 1998 2000 2002 2004 2006 2007
Lower Middle Income
Lower Income
Source: Development Centre, based on AEO country survey’s, 2010.
PUBLIC RESOURCE MOBILISATION
But driven by volatile and unbalanced sources of income
Compared to Germany:
16
14
% GDP
12
Tax share
Taxes on income and profits
VAT
Residual taxes
= 36.4% of GDP
= 11.6% of GDP
= 10.5% of GDP
= 14.3% of GDP
Resource taxes
Taxes on personal income and profits
VAT and excises
Import duties
10
8
6
4
2
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: Development Centre, based on AEO country survey’s, 2010.
PUBLIC RESOURCE MOBILISATION
Four Challenges for African Tax Policy Makers
1. Inadequate capacity
Small staff, low pay, IT, governance …
2. Low to very low fiscal legitimacy
Health, infrastructure, education …
3. Shallow tax base
Informal sector = about 75%
4. Unbalanced tax mix
Some overtaxed, some undertaxed
Source: Centre de Développement, sur la base des notes pays des Perspectives économiques en Afrique, 2010.
PUBLIC RESOURCE MOBILISATION
At national level
In the short run
• Tax big informal and formal transactions better
• Fight fraud and fiscal evasion
In the medium / long run
• Stimulate private sector development
• Moderate, broad-based effective tax rates
• Strengthen administrative capacity
• Build fiscal legitimacy by improving quality of expenditure
Thank you
www.AfricanEconomicOutlook.org
UNECA