Official Launch Dakar May 10, 2009

1. UNECA African Economic Outlook 2008/2009 Official Launch Dakar May 10, 2009

2. UNECA 2009: an evolving partnership AEO Lead partner Junior partners Experts Network Consultants. think tanks … Financial partner

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 Central African Republic Djibouti Gambia Guinea Lesotho Mauritania Seychelles Sierra Leone Swaziland Sudan Togo 99% of GDP 97% of population Source: OECD Development Centre / African Development Bank. 2008 AEO 2009

4. Africa still growing but much slower than before the crisis Growth Real GDP Growth (%) Source: OECD Development Centre / African Development Bank. 2008

5. The crisis taking a toll on Africa’s growth prospects Growth Real GDP Growth (%) April 08 projections Nov 08 projections Feb 09 projections May 09 projections Source: OECD Development Centre / African Development Bank. 2008

6. Regional disparities in growth Growth

7. Regional disparities (May forecasts) Growth Southern Africa hit severely: oil (Angola) and minerals (Botswana)

8. Africa is better prepared to weather the storm Global Crisis Africa today is much more resilient to exogenous shocks: • Committed macro management in many countries has brought inflation under control and improved fiscal balances • The HIPC initiative significantly reduced debt levels in many countries • The commodity boom helped to improve terms of trade • Business climate indicators have been improving steadily. reflecting government efforts in nurturing private sector and enterprise • Political conflicts have declined • Nevertheless…

9. The global trade collapse is now hitting Africa Trade • Many African countries have been dependent on commodity exports for growth • Nominal export growth raced ahead by an annualised 34% over 2003-07 • After years of boom, World Trade is expected to contract by 13% in 2009 - 112% - 94% Source: African Economic Outlook, 2009 Source: Datastream, 2009

10. A global retrenchment of capital Global Crisis

11. 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

12. The commodity boom is over… for now Trade • A cold shower for hard commodity exporters • Soft commodity exports prove more resilient Hard commodities Soft Commodities Source: OECD Development Centre, based on World Bank, 2009

13. The emerging world is not forgetting Africa • While OECD countries are dealing with their downturn, emerging countries continue to invest and strengthen ties with African countries • Africa’s emerging country partners must not sacrifice governance and poverty reduction to strategic interests Significant Chinese and Indian investments in African infrastructure, up to April 2008 India China Source: OECD Development Centre, based on China Mofcom, 2009 Source: OECD Development Centre, based on UNCTAD,Nepgen and Jansson2009

14. After the peak of the food crisis Food prices Food prices Source: World Bank

15. Severe macroeconomic impact (February forecast) Drivers Fiscal balance • The crisis will cause fiscal balances to deteriorate significantly across the continent. • Fiscal space to adopt countercyclical policies is very limited in many countries. Current Account Inflation Source: OECD Development Centre / African Development Bank. 2008 * ExcludingZimbabwe ** Estimations for 20078and predictions for 2009/10

16. Macroeconomic balances deteriorating Drivers Source: OECD Development Centre / African Development Bank. 2008 * ExcludingZimbabwe ** Estimations for 20078and predictions for 2009/10

17. A patchwork of different impacts Global Crisis Cost of the crisis: • Oil exporters the most hit. • More integrated economies also strongly affected • Low-income / non-oil exporting countries are less affected. because: • -- beverages (cocoa. tea. coffee) less affected by decline in global incomes. • -- less integration to the world economy Growth differential 2008 - 2009 - 3.1 to – 23 % - 2 to- 3 % Zero to – 1.9 % Increased growth between 2008-09 Source: OECD Development Centre / African Development Bank

18. Oil exporters and importers: making a switch? Growth Real GDP Growth Oil exporters Oil importers Source: OECD Development Centre / African Development Bank. 2008 Net Oil exporters: Algeria. Angola. Cameroon. Chad. Congo. Côte d'Ivoire. Congo DRC. Egypt. Equatorial Guinea. Gabon. Libya. Nigeria. Sudan

19. The cost of having all eggs in one basket Oil Exporters Taking a 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 reducing external debt Source: OECD Development Centre / African Development Bank *: African Economic Outlook forecasts

20. Benefiting from the end of oil and food price booms Oil Importers Holding up against the crisis so far… …yet challenges rising • Oil-importing countries find it difficult preserving pre-crisis gains.Rising inflation and deteriorating macroeconomic balances. • Good performers’ assets: • Sustained growth; Prudent macroeconomic policies; Diversification; Decreasing poverty • Challenges: • Fiscal deficits; ODA dependency; widening trade deficit; climatic & price shocks Source: OECD Development Centre / African Development Bank *: African Economic Outlook forecasts

21. Main messages Crisis • Africa has been hit severely; 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.

22. Risks Countries to fall further back on progress toward the MDGs Source: OECD Development Centre / African Development Bank. 2008

23. Aid commitments can make the difference Channels DAC members' net ODA 1990 - 2007 and DAC Secretariat simulations of net ODA for 2008 to 2010

24. Good News Several post-conflict countries making progress. Major improvements in political stability and governance in Liberia and Sierra Leone.   After 6 years of civil unrest, the situation in Côte d’Ivoire continues to stabilise.   The Great Lakes region seems to be laying the bases for an improvement in the near future.   The conflict in Uganda has lost impetus with the elaboration of a peace agreement in April 2008 (although not yet signed by the rebels). Elections in Ghana leading to a peaceful transfer of power. Regional cooperation on governance in the framework of NEPAD and APRM is contributing to improvements in governance and stability. Is long term decline in political instability continuing ? Stability

25. Still some bad News However, some concerns remain in some countries with unresolved conflicts. Is long term decline in political instability continuing ? Stability

26. Innovation and Information & Communication Technologies Theme • Africa is the fastest growing market in the world. Today, 4 out of 10 Africans have a mobile phone line. • The exponential growth in ICT is enabling many African users to gain access to basic services (education, health, banking) for the first time. • ICT is a vector for innovation, stimulating of innovative products and business models. • As an endogenous source of growth, ICT is particularly valuable in a time of external crisis. Africa’s Exponential Growth in Mobile Telephony Source: OECD Development Centre, based on Wireless Intelligence, 2009. ICTs are helping to shape an improved business environment by contributing to market development, overcoming traditional infrastructural constraints and reducing business costs

27. Connecting Africa to the world in 2009-10 Infrastructure • The East coast will be connected to the world for the first time through fibre optic submarine cables on open access, TEAMS and SEACOM; the West coast will be connected by at least 3 fibre optic submarine cables on open access, GLO1, MaIN OnE and WACS, instead of having only SAT3 on closed access. • User prices should start decreasing between 4 to 10 times from June 2009, as inland high capacity networks are built and as wholesalers pass on price cuts, which can bring about an exponential uptake in ICT and Innovation in Africa. As of March 2009 MULTIPLE SOLUTIONS THE MISSING LINK SAT3 AT LEAST ONE LINK Source: World Bank Group 2008, www.manypossibilities.net (Steven Song).

28. Good prospects for inland networks Infrastructure • Connecting Africa’s capitals and major cities will require 66.000 km of fibre-optic cables. • Several major initiatives are already being planned: • Eastern and Southern African Backbone. • Central African Backbone. • Western African INTELCOM II Backbone. 7,200 km in Northern Africa 19,500 km in Western Africa 30,500 km in Eastern and Southern Africa 8,800 km in Central Africa Source: ITU, 2007 • Total expenditure commitments for telecoms in Africa are set to reach $55,892,950,000 as agreed in the Connect Africa Summit, Kigali, Rwanda in October 2007 • Participants committed to completing the interconnection of all African capitals and major cities with ICT broadband infrastructure by 2012.

29. ICTs in Africa remain attractive to investors Crisis Healthy Mobile Business in Africa • Like in the dot.com burst in 2000-2001, ICT investment will be less affected by the crisis than other regions. • Big deals have continued through late 2008 and early 2009. • Capital expenditures are decreasing and price competition for market share is rising steadily. • Cash-rich transnational operators will consolidate their presence. With publicly funded high capacity infrastructure projects underway & private investments resilient to the crisis, new products and business models should multiplydespite the crisis Source: Wireless Intelligence, 2008

30. Innovation Africa first to implement free roaming • Africa is the first continent in the world to implement free roaming, allowing any user in a foreign country to receive and send calls and messages at local rates. • Zain launched the world’s first borderless network in 2006. • Free roaming is growing exponentially thanks to pan-African operators  6 operators account for 52 % of total mobile phone subscriptions in Africa by 2009: • Middle East-based: Zain present in 15 countries and Moov in 5. • South African-based: MTN present in 13 countries. • European-based: Orange present in 12 countries, Tigo and Vodacom in 6. Free roaming countries Zain MTN Safaricom - Vodacom - MTN Forthcoming Source: OECD Development Centre

31. Mobile banking lowering transaction costs Innovation • Excellent prospects with e-banking services quickly growing and being already present or announced in 14 Sub-Saharan and 3 North African countries. • Overseas: Orascom and Vodafone have signed agreements with Western Union on remittances. • Mobile-payment and mobile-banking services rely on existing distribution networks: Mobile users, village kiosk agents, eventually Western Union agents. • In Kenya, M-Pesa’s mobile-payment service for domestic transfers has enabled to lower transaction costs sharply, e.g., to send 1 000 Ksh, Western Union asks 500 Ksh, M-Pesa between 30 and 75 Ksh. • M-Pesa has won over 5 million users in less than 2 years only in Kenya and is seeking to expand to East Africa and Afghanistan. Mobile Phone Transactions in Kenya (%) Source: Vodafone, 2009.

32. phoner~1.gif Bringing people and markets together Innovation in agriculture • E-services such as messages and internet through mobile phones have brought together farmers and buyers by enabling access to crop prices and quantities timely and affordably. • These services bring reductions in price differences across markets, e.g., 20 per cent in Niger, due reductions in search costs: Farmers are able to search over more markets and respond to surpluses and shortages, e.g., markets in food crisis regions with mobile phone coverage in Niger in 2005 had lower consumer grain prices than those regions without mobile coverage. • These services are already present in 10 West and Central African countries and growing. Bakin Birgi (Monday) Zinder (Thursday) Tanout (Friday) Niamey (Sunday) Farmer in Niger Home market 65 km ~ from 3 hours to 2 mins 20 km ~ 1 hour 750 km ~ from not accessible to 2 mins Source: Does Digital Divide or Provide? The Impact of Cell Phones on Grain Markets in Niger, Jenny Aker, 2008.

33. Policy recommendations For Africa to continue an innovation frontier.. • ICTs in Africa has proved to be an innovation frontier by combining state-of-art • technologies with local customs and constraints through incremental innovations. • This has been possible through the growth in Infrastructure and Innovation in ICT in Africa, and still more can be done to move forward in delivering value added services to the poorest population : • Expensive inland high capacity networks need to be supported and governments have to ensure that wholesale price drops are passed on, if users are to benefit from being connected to the world by low cost solutions. • In the Connect Africa Summit commitments in Kigali in 2007, African capital and major cities are to be connected to broadband by 2012 and African villages by 2015. • Policies on ICT and Innovation are not presently well integrated in broader development strategies: Donor targets, MDGs and PRSPs. • Governments should do more to attract private investment and knowhow to the fixed-line by adapting convergent licensing regimes and setting symmetric regulation of termination charges. • Many fixed-line operators are close to bankruptcy with decreasing traffic and increasing marginal costs.

34. ICT Policy recommendations for Africa ICTs in Africa has proven to be an innovation frontier by combining state-of-art technologies with local customs and constraints through incremental innovations. • However, there is still more to be done to deliver more and better value added services to the poorest population : • Expensive inland high capacity networks require government support • Governments have to ensure that wholesale price drops are passed on • Policies on ICT and Innovation are not yet well integrated in broader development strategies: Donor targets, MDGs and PRSPs. • With many fixed-line operators close to bankruptcy, governments must attract private investment and knowhow to the fixed-line sector by adapting convergent licensing regimes and setting symmetric regulation of termination charges.

35. Africa’s economic portal for policymakers AEO.org 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

36. Thank You