African Economic Outlook
2004/2005
African Development Bank / OECD Development
Centre
Outline of Presentation
 The African Economic Outlook (AEO)
Project
 Highlights of the 2004/2005 Report
 Major Development Challenges facing
African Countries
The AEO Project...
 Joint Publication of the ADB and the OECD
Development Centre
Objective: Independent analysis of African
countries using a common methodology and targeted
at a broad audience …
Core work – Analysis of individual countries,
overall review of African economy, and focus on a
major theme each year – SMEs in 2004/05
 Improvements in successive editions:
• More intensive peer-review process
• Improved modelling and data harmonisation
• Broader Coverage …
Coverage 2004/2005: 29 African
countries
Tunisia
Morocco
Other
Algeria
Libya
AEO 04/05
Mauritania
Egypt
Niger
Mali
Senegal
Gambia
Chad
Guinea-Bissau
Eritrea
Burkina
Faso
Guinea
Djibouti
Togo
Nigeria
Ethiopia
Côte
d'Ivoire
Sierra Leone
Sudan
Central African
Republic
Liberia
Cameroon
Ghana
89% of GDP,
86% of population
Somalia
Equatorial Guinea
Uganda
Congo
Gabon
Kenya
Rwanda
Dem.Rep.
Congo
Burundi
Tanzania
Angola
Malawi
Zambia
Mozambique
Zimbabwe
Madagascar
Namibia
Botswana
Swaziland
Lesotho
South
Africa
Mauritius
Highlights of 2004/2005
AEO
Africa had the best GDP growth
rate in eight years ...
Africa: Real GDP Growth Rates, 1990-2004 (%)
6.0
5.6
4.4
5.0
3.9
3.6
4.0
3.2
2.6
3.0
2.0
5.1
1.3
3.2
3.2
1.5
1.0
3.5
3.4
0.9
0.0
-1.0
-1.2
-2.0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Excluding N. Africa and S. Africa,
GDP Growth Rate was even better ...
Africa excluding North Africa and South Africa : Real GDP Growth
Rates,1990-2004 (% )
7.0
6.0
6.0
5.0
4.6
6.4
2003
2004
4.3
4.0
3.0
4.6
4.5
2.9
2.3
3.3
1.7
2.0
2.9
1.1
2.6
1.0
0.5
0.0
-1.0
-1.5
-2.0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Considerable regional
variations were observed …
Table 1 - Average Growth Rates of African Regions
Region
Central Africa
East Africa
North Africa
Southern Africa
West Africa
Total
1996-2002
3.9
4.1
4.3
3.1
3.6
3.8
2003
5.0
2.3
5.1
2.6
7.0
4.4
2004(e)
14.4
6.8
4.6
4.0
3.4
5.1
2005(p)
4.1
5.2
4.8
4.6
4.9
4.7
Note: Due to lack of data, these aggregates do not include Liberia and Somalia.
Source: Authors' (e) estimate; (p) projection.
2006(p)
5.5
5.1
5.2
5.2
4.8
5.2
Newer oil producers are growing
most rapidly
2004 (e)
2005 (p)
Angola
10,9
14,7
Chad
31,3
10,8
Congo
4,0
9,4
59,8
-4,7
Equatorial Guinea
Real GDP growth rates, expected (e) and forecast (p).
(Source: AEO).
But reforming oil-importers are
also doing quite well
2004 (e)
2005 (p)
Ghana
5.8
5.9
Senegal
6.0
6.3
Mozambique
7.8
7.7
Tanzania
6.4
7.0
Uganda
5.9
5.4
Real GDP growth rates, expected (e) and forecast (p).
(Source: AEO).
Factors Behind Improved
Growth Performance
•External Factors
•Internal Factors
OECD recovery has spurred
African economies
6,0
Africa
OECD
5,0
4,0
3,0
2,0
1,0
0,0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
a/
b/
b/
b/
Rates of real GDP growth (Sources: AEO, IMF, OECD).
ja
t-0
t-0
3
5
4
4
3
nv
ie
r-0
ille
2
2
nv
ie
r-0
ille
ju
ja
t-0
1
1
nv
ie
r-0
ille
ju
ja
t-0
0
0
nv
ie
r-0
ille
ju
ja
t-0
nv
ie
r-0
ju
ja
ille
nv
ie
r-0
ju
ja
Rising oil and metals prices
200
180
160
140
120
Petroleum
Gold
Copper
Aluminium
100
80
60
40
Africa is also benefiting from
increased aid flows...
0.35
120
0.32
0.33
0.30
0.30
80
0.22
60
ODA to Africa
as a % of GNI
(left scale)
0.15
0.13
Total ODA
(right scale)
40
0.09
0.10
0.08
0.06
20
0.05
2010
2009
2008
2007
2006
2005
0
2004
2003
2002
2001
1999
1998
1997
1996
1995
1994
1993
1992
1991
0.00
2000
Total ODA to Africa
(right scale)
DAC Members’ ODA: 1990-2003 and simulations to 2006 and 2010, based on
Monterrey and subsequent commitments
ODA (US$ 2003 billion)
0.25
0.20
1990
% of GNI
0.25
100
ODA as a %
of GNI
(left scale)
Decline in Debt / GDP ratio, although
still high for poor countries
Africa: Debt / GDP, 1990-2004 (% )
80.0
76.0
75.0
71.3
68.6
70.0
59.4
64.5
66.2
66.5
60.9
65.0
61.9
60.4
55.9
60.0
53.7
53.9
55.0
48.3
50.0
43.2
45.0
40.0
35.0
30.0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Internally, political stability is
improving …
600
500
400
300
200
100
0
1996 1997 1998 1999 2000 2001 2002 2003 2004
Political troubles
Trend
Macroeconomic management is
improving: Inflation is largely under
control ...
Africa: Inflation, 1990-2004 (%)
45.0
42.0
40.0
35.0
30.7
30.0
28.6
24.5
26.2
25.0
27.9
20.0
13.5
15.0
10.0
10.5
9.6
16.2
10.0
14.2
11.8
9.1
5.0
7.7
0.0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Significant variations in regional
inflation rates
Table 2 - Weighted Geometric Average CPI Inflation of African Regions
Region
Central Africa
East Africa
North Africa
Southern Africa
West Africa
Total
1996-2002
31.1
5.8
3.3
17.2
9.7
11.0
2003
3.5
6.8
2.5
15.7
11.2
8.3
2004(e)
2.4
8.2
4.5
11.2
9.9
7.9
2005(p)
3.9
5.7
4.7
10.2
9.7
7.5
Note: Due to lack of data, these aggregates do not include Liberia and Somalia.
Source: Authors' (e) estimate; (p) projection.
2006(p)
3.5
4.5
4.1
9.1
6.5
6.2
Fiscal discipline is also generally
good and improving
Africa: Fiscal Balance, 1990-2004 (% of GDP)
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
1.0
0.0
0.0
-0.3
-0.5
-1.5
-1.0
-1.4
-2.0
-3.0
-2.2
-3.6
-4.4
-3.0
-4.0
-3.9
-5.0
-4.8
-6.0
-6.0
-6.6
-7.0
-2.2
-6.3
Regional variations in fiscal
balance
Table 3 - Average Budget Balance to GDP Ratio
Region
Central Africa
East Africa
North Africa
Southern Africa
West Africa
Total
1996-2002
-1.1
-3.4
-0.9
-3.3
-1.9
-1.9
2003
2.4
-3.9
-0.2
-2.8
-2.0
-1.4
2004(e)
3.9
-3.0
0.9
-3.2
3.7
0.0
2005(p)
6.7
-3.9
2.3
-3.0
3.0
0.7
Note: Due to lack of data, these aggregates do not include Liberia and Somalia.
Source: Authors' (e) estimate; (p) projection.
2006(p)
6.8
-4.0
1.8
-2.9
2.4
0.3
Despite recent improvements, major
development challenges remain …
Meeting the Millennium Development Goals
(MDGs) remains a major challenge for
most African countries
African economies remain highly
vulnerable to both external and domestic
shocks
Meeting the MDGs remains a
challenge
Progress Towards Achieving Millennium Development Goals
120
100
80
60
40
20
0
Go al 1: Reduce
Extreme po verty
by half
Go al 1: …and
Hunger
Satisfacto ry
Go al 2: Net
P rimary
enro lment ratio
Go al 3:
Eliminating
Gender Disparity
(female primary
ratio )
Go al 3:
Eliminating
Gender Disparity
(female
seco ndary ratio )
Go al 4: Reduce
child mo rtality
No n Statisfacto ry
Go al 7: Ensure
Enviro nmental
Sustainability
Further Reforms Required to Make
Progress towards the MDGs
Maintain stable macroeconomic
framework by building on recent gains –
prudent use of windfall gains is essential
Push through structural reforms and
improve the investment climate:
– Privatization of SOEs
– Governance reforms and institution
building/strengthening
– Financial sector reforms
Greater effort at diversification
has to be made:
Libya
1,17
Angola
1,19
Equatorial Guinea
Nigeria
1,23
1,26
Congo
1,52
Guinea Bissau
1,61
Chad
1,65
Burundi
1,66
Gabon
1,70
1,71
Sudan
Congo Democratic Republic
Africa
1,78
7,73
Export Diversification Index (inverse of sum of squared shares of each exported
good; lower numbers = less diversified; Source AEO).
Regional cooperation and integration
efforts need to be strengthened
• Take advantage of the NEPAD initiative
• Streamline regional economic groupings
• Greater focus on promoting investment
in addition to trade
• Greater effort to remove bureaucratic
and other barriers that still hinder
trade and investment
More efficient use of resources
for human capital development
• Africa would also need to build its
human capital to compete globally
• More countries are increasing their
investments in education and health
• Improving service delivery is now a
major challenge for most
External Support will remain
critical
 ODA -- Commission for Africa
recommendation of doubling ODA to Africa
by 2010 -- $25 billion/year
 Debt Relief – UK proposal -- 100 percent debt
relief on debt owed to the IFIs
 Trade – Doha Round:
– Dismantling of remaining trade barriers; removal
of agricultural subsidies
– Developing Africa’s Capacity to trade
Conclusion
 Africa doing better – due to favorable
external environment but, as importantly, due
to internal factors
 Prospects for sustained improvement are
good
 African countries would need to deepen their
reforms and carry out remaining structural
reforms;
 Africa’s development partners should scale up
their support in line with commitments
Thank you!