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REGIONAL ECONOMIC RELATIONS

REGIONAL ECONOMIC RELATIONS . Governance and Development in Africa SOAS & Mo Ibrahim Foundation Addis Ababa March 2012. Some poverty indicators. Regional Economic Integration.

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REGIONAL ECONOMIC RELATIONS

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  1. REGIONAL ECONOMIC RELATIONS Governance and Development in Africa SOAS & Mo Ibrahim Foundation Addis Ababa March 2012

  2. Some poverty indicators

  3. Regional Economic Integration • “Regional integration remains the key strategy that will enable African governments to accelerate the transformation of their fragmented small economies, expand their markets, widen the region’s economic space and reap the benefits of economies of scale for production and trade, thereby maximising the welfare of their nations.” UN Economic Commission for Africa • “Assessing Regional Integration in Africa IV: Enhancing Intra-African Trade” 2010

  4. Economic drivers of co-operation & interdependence • Access to Ports • Energy security: oil and electricity • Rangelands & livestock market chains

  5. Port distances from major towns

  6. Djibouti Port • May 2000 management agreement with Dubai Port World to 2020 (2008 handling 7.5m tons) 1. Djibouti Port • Capacity for 10m tons cargo & 400,000 TEU pa • Live animal exports 2007/8: 96,000 shoats; 40,000 head of cattle 2. The Port of Doraleh (11 km East of sea port) • New $300m Container Terminal opened 2009: additional capacity of 1.5m TEU • A $130m Oil Terminal (370,000 cubic metres capacity)

  7. Oil • Sudan the only oil producer : 98% of export earnings & 60% of government revenue • Ethiopia’s fuel bill is $1.5bn -17.3% of imports 2010 top 3 suppliers: Saudi Arabia ($988m); UAE ($285m); Sudan ($90m) • Plans for an oil refinery?

  8. Hydro power • Ethiopia’s hydro-power potential: 45,000 megawatts • Current production 2,022 mw; 2015 target 8,000 mw • 2020 target 15,000; planned investment $12bn • Export pledges to Djibouti (220mw), Kenya (500mw), Sudan (200mw), …Somalia

  9. Livestock trade 1. Northern Somali trade 3,000,000+ head of sheep and goats exported 50-60% of them originate in Ethiopia 2. Kenya market: 80-100,000 head of cattle through Garissa 58,000 through Moyale 3. Sudan market: 40,000 cattle from Amhara to Sudan Growing trade in Camels (54,000)

  10. New trends: Ethiopia’s exports

  11. Intergovernmental Authority for Development (IGAD) Membership Key Structural Challenges to Trade Integration in the Horn Lack of complementarities Different types of state Prevalence of informal trading relationships Competing institutional frameworks Regional conflict Donor and national policies Ethiopia Djibouti Somalia Sudan South Sudan Eritrea Kenya Uganda

  12. IGAD and African trade in the Horn

  13. Economic community • Free movement of people • Free movement of goods • Free movement of capital

  14. Questions Q1. Does close economic integration reduce the risk of conflict? What is the evidence from the Horn of Africa? Q2. Can conflict itself be a driver of innovation and integration? Q3. Can economic integration succeed if governments distrust each other? What else has to happen?

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