23 April 2009

1. 23 April 2009 Africa and the global crisis: Will growth hold? Kampala 23 July, 2009 Alex M. Mubiru Principal Research Economist African Development Bank

2. UNECA Measuring Africa’s economies since 2001 AEO • Economic overview & annual thematic focus • 2006: Transport • 2007: Water and sanitation • 2008: Technical & vocational skills • 2009: Innovation & ICT • 2010: Fiscal Governance, Aid & Domestic Resource Mobilization • 47 country chapters • Statistical annex and indicators • New & expanding accompanying website African think tanks Local consultants Lead partner Experts Network Junior partners Key financial backer

3. Tunisia Morocco Algeria Libya Egypt Mauritania Niger Mali Eritrea Chad Sudan Senegal Gambia Guinea-Bissau Burkina Faso Djibouti Guinea Nigeria Ethiopia Togo Côte d'Ivoire SierraLeone Central African Republic Ghana Liberia Cameroon 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 Coverage 2009: 47 Countries AEO New in 2009: Burundi CAR Djibouti Gambia Guinea Lesotho Mauritania Seychelles Sierra Leone Swaziland Sudan Togo Seychelles 99% of GDP 97% of population Mauritius

4. Outline of Presentation → • An Update on Growth • Aspects of Trade • Private Financial Flows • Some Key Macro Numbers • The Global Crisis and its Impact • Some Key Messages

5. Outline of Presentation → • An Update on Growth • Aspects of Trade • Private Financial Flows • Some Key Macro Numbers • The Global Crisis and its Impact • Some Key Messages

6. Africa still growing despite the Crisis Growth Real GDP Growth (%) Δ = -3.5% Δ = - 4.8% Δ = - 4.1% Δ = - 6.6% Source: OECD Development Centre / African Development Bank, 2009

7. Taking a toll on Africa’s general prospects Growth Downsiderisk in GDP Growth projections April 08 Nov 08 Feb 09 May 09 Source: OECD Development Centre / African Development Bank. 2008

8. Regional disparities (May forecasts) Growth Southern Africa hit severely: Oil (Angola); Minerals (Botswana)

9. Outline of Presentation → • An Update on Growth • Aspects of Trade • Private Financial Flows • Some Key Macro Numbers • The Global Crisis and its Impact • Some Key Messages

10. The global trade collapse is now hitting Africa Trade • A cold shower for hard commodity exporters • Soft commodity exports prove more resilient • After years of boom, World Trade is expected to contract by 13% in 2009 Soft Commodities Hard commodities - 112% - 94% Source: Datastream, 2009 Source: African Economic Outlook, 2009 Source: African Economic Outlook, based on World Bank, 2009

11. Outline of Presentation → • An Update on Growth • Aspects of Trade • Private Financial Flows • Some Key Macro Numbers • The Global Crisis and its Impact • Some Key Messages

12. A global retrenchment of capital Private financial flows • Flows to Africa grew by 17% to over USD 60 billion in 2008, despite the global slowdown • Remittances to Sub-Saharan Africa are set to decline from between 4.5% to 8% over 2009 • Stock markets have taken a severe hit Foreign Direct investment Remittances Stock Markets (MSCI price index local currency) Source: OECD Development Centre , based on UNCTAD 2009 Source: OECD Development Centre , based on World Bank, 2009 Source: Thomson Datastream 2009

13. Outline of Presentation → • An Update on Growth • Aspects of Trade • Private Financial Flows • Some Key Macro Numbers • The Global Crisis and its Impact • Some Key Messages

14. …deteriorating significantly Key Macro Numbers… Fiscal balance Current Account Inflation * Includinggrants ** ExcludingZimbabwe, Estimations for 20078and predictions for 2009/10 Source: OECD Development Centre, African Economic Outlook, 2009 Source: OECD Development Centre / African Development Bank, 2008

15. Outline of Presentation → • An Update on Growth • Aspects of Trade • Private Financial Flows • Some Key Macro Numbers • The Global Crisis and its Impact • Some Key Messages

16. A patchwork of impacts Global Crisis African growth has taken a serious hit: 2008: near 6% 2009: below 3% • Oil exporters are taking the most severe hit • More globally integrated economies, such as South Africa and Egypt, are strongly affected • Low-income / non-oil exporting countries are less affected, because: • 1. decrease in energy bill • 2. less integration to the world economy Growth deceleration 2008 - 2009 Greater than 3 % - 2 to- 3 % Zero to – 1.9 % Increased growth between 2008-09 Source: African Economic Outlook, 2009

17. Exposure to the crisis for LICs Global Crisis

18. Time Staggered impacts are to be expected Global Crisis • Weak fundamentals and dependent on one commodity • Guinea, Eritrea, Malawi, Mauritania, DRC • Stronger fundamentals but dependent on one/few commodity/ies • Botswana, Algeria, Cameroon, Rwanda, Benin • Weak fundamentals but less dependent on one commodity • Gambia, Liberia, Sierra Leone, Ethiopia • Strong fundamentals and less dependent on one commodity • Tunisia, Uganda, Kenya

19. Global Crisis Oil exporters and importers Real GDP Growth Source: African Economic Outlook, OECD, 2009 Net Oil exporters: Algeria, Angola, Cameroon, Chad, Congo, Côte d'Ivoire, Congo DRC, Egypt, Equatorial Guinea, Gabon, Libya, Nigeria, Sudan

20. Oil Exporters The price of having all eggs in one basket Taking a clear hit from the oil price fall… …and little room left for manoeuvre • Many oil exporters did not take advantage of commodity windfalls to improve governance and diversify their economies • Nevertheless, some oil exporters have performed well in terms of lowering levels of external debt Source: OECD Development Centre / African Development Bank *: African Economic Outlook forecasts

21. Oil Importers Proving resilient… so far Holding up against the crisis so far… …yet challenges rising • Oil-importing countries have performed well, diversifying their sources of growth over recent years. While lower energy and food prices subsequent to the crisis have helped importers, difficult times lie ahead • Good performers’ strengths: • Sustained and prolonged growth • Prudent macroeconomic policies • More Diversification • Challenges: • Poor capacity in mobilizing domestic resources • Contain fiscal and current account deficits • High dependency on ODA • Prioritise poverty reduction • Difficulty adjusting to price shocks Source: OECD Development Centre / African Development Bank *: African Economic Outlook forecasts

22. Africa today is more resilient to exogenous shocks Beyond the crisis • 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

23. How will the crisis impact the MDGs? Risks African Development Bank indicator of Progress Towards MDGs 2009 Source: African Development Bank, 2009

24. Outline of Presentation → • An Update on Growth • Aspects of Trade • Private Financial Flows • Some Key Macro Numbers • The Global Crisis and its Impact • Some Key Messages

25. Some Key Messages AEO • Africa has been hit severely; However, the impact varies across countries and sectors • Changes in the direction of trade, prudent macroeconomic policies and debt relief make Africa better positioned to weather the current crisis. • African governments have to preserve the gains obtained in the recent past, by pursuing structural reforms, infrastructure development and targeting poverty reduction. • With the right combination of domestic policy reforms, Africa can continue to grow despite the crisis, while setting the stage to faster growth for the future.

26. Africa’s economic portal for policymakers AEO.org www.africaneconomicoutlook.org • The latest developments in Africa’s economies • Brings together the data & research from eight years of AEO • Interactive database of all AEO data and statistics • Complete and updated country notes • Promotes original research by African researchers and institutions

27. Useful Links • www.africaneconomicoutlook.org • www.afdb.org/aec • www.afdb.org THANK YOU