The African Economic Outlook 2008

1. The African Economic Outlook 2008 UNECA

2. The African Economic Outlook Project 1 2 Macroeconomic Outlook: challenges and opportunities 3 Skills Development: Investing in African Youth

3. UNECA AEO An Evolving Partnership: from 2007 Lead partner Junior partners Experts Network Consultants, think tanks … Financial Partner

4. An innovative product AEO • Comprehensive, independent analysis • Short-termmacroeconomicforecasts • Special annual focus • 2003: Privatization • 2004: Energy • 2005: SMEs • 2006: Transport • 2007: Water and sanitation • 2008: Technical & vocational skills development • Overview & annual thematic focus • Comparable country chapters • Statistical annex and indicators

5. A strong African voice in policy dialogue AEO • Promoting public debate on economic policies • At national level (African policy makers) • At regional and continental level (input for African Peer Review Mechanism) • Building indicators tracking main APRM areas of focus • Promoting best practice and lessons learned through experience • Supporting the International Dialogue on Africa’s Development • Monitoring capacity-building in infrastructure, trade, institutions • Monitoring policy reforms, financial flows for development • Millennium Development Goals • Monitoring progress in 31 countries in 2007, 35 in 2008 • AEO, a joint AfDB/OECD/UNECA contribution to Goal 8

6. Tunisia Morocco Algeria Libya Egypt Mauritania Niger Mali Senegal Chad Sudan Eritrea Gambia Guinea-Bissau Burkina Faso Djibouti Guinea Nigeria Ethiopia SierraLeone Côte d'Ivoire Togo 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 2008: 35 African countries AEO New in 2008: Cape Verde Liberia Libya Equatorial Guinea Cape verde Benin Sao Tome et principe 91% of GDP 86% of population AEO 2008 Comores Mauritius

7. Net Progression in Media Impact AEO Citations in mainstream media Source: OECD

8. Policy Impact and Dissemination AEO In 2007, over 1500 participants at 35 events • Africa and OECD capitals: governments, parliamentarians, civil society, private sector, … • Some AEO country notes and Policy Insights released in Portuguese, Italian, German Input in international dialogue on Africa • Reference document in the G8 document (St Petersburg, July 2006) • NEPAD Secretariat, EC, UN, World Bank, IMF, APF • Annual AfDB meetings, OECD Global Forum on Agriculture, ABCDE, Aspen, LINK, Afristat, European Council on Africa …

9. The African Economic Outlook Project 1 2 Macroeconomic Outlook: challenges and Opportunities 3 Skills Development: Investing in African Youth

10. Africa continues steady growth Growth Real GDP growth expected to exceed 5% for the fifth consecutive year in 2008 , and reach 5.9% More countries with GDP growth rate above 5% : • 2007: 25 countries over 5% • 2008: 31 countries over 5% • 2007: 13 countries between 3-5% • 2008: 16 countries between 3-5% • Growth in 2009 will remain sustained at 5.9% Real GDP Growth Africa Total OECD Source: OECD Development Centre / African Development Bank, 2008

11. Oil exporters and importers: future re-converging? Growth Real GDP Growth • Growth rates for oil importer and oil exporter countries diverged significantly in 2007 and 2008 • However, this difference is set to narrow in 2009 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

12. The commodity boom: a key driver for Africa Commodities Global commodity prices 2001-2009 Source: OECD Development Centre / World Bank, 2008

13. Record investment in 2007: a new driver? Investment Public and Private Investment in % of GDP Source: OECD Development Centre / UNCTAD, 2008 31

14. China / India A new driver of African growth

15. Sustainedgrowth in oil-producing countries Oil - X • Outstanding achievers: • Angola: 11.8% average growth 2000-07 • Algeria: 4% average growth 2000-07 • Assets: • Sustained and prolonged growth • Improving macro management • Raising Investment in non-oil sectors • Disappointing performers: • Gabon: 1.7 average growth 2000-07 • Chad: strong growth between 2001-05 stagnation in 2006/07 • Liabilities: • Structural declining productivity of old oil fields • Declining growth Source: AfDB/OECD *: African Economic Outlook forecasts

16. Good Growth but of what quality? Oil - M • Best performers, average growth 2000-07 : • Tanzania: 6.7 % • Ghana: 5.2 % • Tunisia: 4.9 % • Assets: • Sustained and prolonged growth • Prudent macroeconomic policies • Decreasing poverty • Poor quality growth: • Mozambique: strong growth but not broad-based, stagnating poverty • Senegal: erratic growth, high vulnerability to food imported inflation Source: AfDB/OECD *: African Economic Outlook estimate

17. Significant food price inflation Food Prices African Cereal Production (million tonnes) Source: OECD Development Centre / FAO, 2008 Source: OECD Development Centre & Thomson Datastream, 2008

18. Is long term decline in political instability continuing? Stability Regime Hardening (LHS) Qualitative data obtained from Marchés Tropicaux et Méditerranéens. Data is used to construct two indicators referring to: Political instability: occurrence of strikes, demonstrations, violence and coup d’état. Hardening of the political regime : incarcerations of opponents, measures threatening democracy such as dissolution of political parties, violence perpetrated by the police and the banning of demonstrations or public debates. Source: OECD Development Centre “Moving towards political stability? Monitoring political instability, governments response and economic performance in African countries” forthcoming article, April 2008.

19. Oil and Mineral exporters Challenges: Capitalise on windfall gains Maximise spillover to rest of the economy Avoid Dutch Disease Oil importers Challenges: Contain fiscal deficit Finance widening trade deficit Streamline spending to prioritise poverty reduction Oil exporter & importers: divergent paths? Outlook Fiscal Balance Growth Inflation* Trade Balance Inflation is a challenge for all the continent Source: OECD Development Centre, African Economic Outlook, 2008

20. Between 2002 and 2006 29 african countries have further specialised. The 10 less diversified countries are all oil exporters The 5 most diversified include Tunisia, Morocco, South Africa, Tanzania and Senegal Common challenge: Increase diversification to raise export volumes Diversification In 2007, only 12 out of 35 AEO countries increased export volume by 5 per cent or more Diversification should be fostered to sustain growth and fight against raising import costs

21. African economies safe from U.S downturn? Subprime Due to a low share of external trade with the U.S, Africa is less vulnerable to effects of U.S subprime woes African Exports by Destination - 2006 Note: The “Others” category includes Latin America, Middle East. East Asia and South Asia. Source: OECD Development Centre / UN Comtrade, 2008. (data on Nigeria corresponds to last available year, 2003)

22. Foreign aid as a catalyst for development Aid • Net Official Development Assistance to Africa (all donors, constant 2005 USD billion) Source: OECD Development Centre / African Development Banks, 2008

23. Slow progress,despitegrowth MDGs Source: OECD Development Centre / African Development Bank, 2008

24. Key Messages • Africa doing better – due to favorable external environment but, as importantly, due to internal factors • Prospects for sustained improvement are brightened by new drivers of growth such as increased economic relations with China and India. • At the same time, emerging risks including rising food prices cloud the future prospects • African countries need to take advantage of the improved prospects and deepen reforms to safeguard against the emerging risks • Africa’s development partners should maintain support in line with commitments

25. The African Economic Outlook Project 1 2 Macroeconomic Outlook: Challenges and Opportunities 3 Skills Development: Investing in African Youth

26. Technical and vocational skills development Definition Acquisition of knowledge and practical competences & knowhow Workplace training in enterprises Informal Apprenticeship Public or private TVET schools Dual Training Degree of formalization of labour market Formal Informal

27. Delivery Modalities TVSD

28. Tunisia Morocco Algeria Libya Egypt Mauritania Niger Mali Senegal Chad Sudan Eritrea Gambia Guinea-Bissau Burkina Faso Djibouti Guinea Nigeria Ethiopia SierraLeone Côte d'Ivoire Togo 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 Enrolment statistics only show part of the picture ACCESS The percentage in total secondary enrolment of technical and vocational programmes in 2005 African countries can be grouped in three categories: Group I: Proportion of TVET enrolment > 10%. Group II: Proportion of TVET enrolment between 5 % and 9%. Group III: Proportion of TVET enrolment <5%. Others: Data not available Group I: Group II: Group III: Others:

29. Gender inequalities in TVET is significant. 6 out of 34 countries were F% enrolment rates in total secondary education (all pgm.) >50%. 7 out of 37 countries were F% enrolment rates in total secondary education (general pgm.) > 50% 7 out of 27 countries the female enrolment rate were higher in ISCED 3 (TVSD) . The more equitable in terms of gender, the higher the percentage of TVET participation. Upper secondary (ISCED 3) Enrolment in technical and vocational programmes (%) Source: OECD Development Centre, UNESCO-UIS, 2006

30. Ethiopia plans to increase its admissions to TVE from 103 708 (2005) to 312 826 (2010) and 624 095 by 2015. Gambia and Ghana have committed a 50 per cent increase in the number of TVE institutions. Mauritania has engaged in a reform to offer opportunities for skills training adapted to labour market needs. Mozambique in 2005 launched a pilot reform to increase participation in secondary and TVE. Rwanda has plans to increase the number of TVE institutions by 50 per cent by 2015. South Africa the national objective is to reach a million students by 2014-2015, compared to the current 276 000. Selected country examples Main targets and policies for 2015 regarding TVSD

31. Lessons Learnt Constraints on TVSD’s impact & expansion TVSD Missing links Weak links Post-Secondary and Tertiary Institutions Industry Skills needs & educational curricula Firm-based and informal training National development policy The lack of a coherent strategic approach

32. Adopting a Clear vision: Ghana: A Presidential Committee on Education & TVET Council Bill passed Senegal: Launched a TVSD reform making the TVSD a tool for competitiveness Yet in many cases it remains difficult to identify the leading institution. Reforms of TVSD are successful and sustainable: based on broad ownership clear mandate and authority over resources. 2. Improve Forecasting and Planning for Skills Needs Successful TVSD reforms include long-term planning setting up of a clear legal and regulatory framework Zambia: 2005 – Technical, Vocational and Entrepreneurship Training Authority Ethiopia: Conduct on-site visits to help acquired skills take root Benin: Systematically M&E craft enterprises and SMEs. Lessons Learnt Vision and Planning

33. 3. Improving the quality of TVSD Recent reforms have witnessed a switch from a provider-driven training model to a demand-driven one. Countries are developing pilot initiatives establishing new TVET National Qualification Framework (NQF): Ethiopia: New Quality Management System (2006) South Africa: A new statement for the NQF was developed to enhance the efficacy and efficiency (2007) Tunisia: Set up a national framework for quality in VET 4. Addressing the skill needs of the informal sector Training in the informal sector should go hand-in-hand with other instruments, such as: e.g. fiscal policies and provision of credit. Benin: The traditional apprenticeship evolved into a dual training sys. Senegal: Pilot scheme to transform traditional apprenticeship into a dual system. Ethiopia: Accreditation of skills by making training in the informal sector an integral part of the training system. Lessons Learnt Quality Improvement & Informal Sector

34. 5. Facilitate The Growth of the Productive Sector through Technological Learning and Innovation Some countries are designing integrated programs that couple access to finance with appropriate short-term, accessible, relevant training for the informal sector to foster innovation and improve performance. Rwanda: Partnership for the Enhancement of Agribusiness in Rwanda (PEARL) (2001). AfDB & ILO: Support to growth oriented women (GOWE). 6. Foster Partnership with All stakeholders Policy design and actual delivery of education and training can best be achieved through a partnership between government, social partners and various stakeholder groups in the formal and informal sectors of the economy. Egypt: The most successful example of PPP between training institutions & businesses is the Mubarak-Kohl Initiative (MKI). Lessons Learnt Innovation & Partnership

35. 7. Involving Local Communities TVSD must be adapted to local and regional needs. Experience has shown that regional participation and local control play a key role in determining the success of TVSD initiatives. Malawi: The success of the Skills Development and Income Generation Project (SDIG) is due to the community development approach. 8. Strengthening Local Management of TVSD Decentralising the management of TVSD. Delegation of responsibilities to regional authorities. Ethiopia: Consider establishing autonomous TVET Authorities at federal and state levels. Tunisia: The decentralization process is based on the devolution of responsibilities to the training centres. Mozambique: Insufficient pedagogical, managerial, and administrative capacity to discharge new responsibilities. Lessons Learnt Local Communities & Management

36. The training system in Africa is largely underfinanced. Many enterprises under-train their staff. Donors’ support to training has been erratic & insufficient to upgrade the quality and access to training. A pressing issue for African countries is to make better use of existing funds Move towards: Greater diversification of funding sources for TVSD, Development of private training markets, Encouragement of more and higher quality enterprise training. State retains the crucial role of designing financial support mechanisms to facilitate access by the poor and vulnerable. Financing TVSD Challenges

37. In Africa, public pre-employment training is mostly financed by government’s budgetary allocations On average, only about 2 to 6% of educational budgets are devoted to (mainly formal) TVSD. Public expenditure on TVET (% total public expenditure on education) in Selected African Countries

38. Financing Pre-employment Training Botswana: Community-owned TVET centres generate external income by involving training in productive work. Malawi: Lilongwe Technical College has improved the relevance of its training through relations with the private sector and market. South Africa: Implementation of Cost-sharing schemes. 2. Financing Continuing Training: Most African countries have set up National Training Funds to generate sufficient funds to support skills training and motivate firms South Africa: Continuing training is financed through a skills development levy-grant scheme. Côte d’Ivoire: The payroll levy financed Vocational Development Training Fund in Côte d’Ivoire (FDFP) has extended its areas of training support to include training for small firms and the informal sector. Financing Diversification of funding sources for TVSD

39. The share of bilateral donor ODA commitments to primary education increased from 11% in 1995 to 34% in 2006. The share of vocational training in bilateral ODA commitment to education remains unaltered at around 3-4% throughout the entire period. Financing Total Bilateral ODA for TVSD still dwarfed by Bilateral ODA for Primary Education (commitments in USD millions, 2005)

40. In order for TVSD to be fully effective, they need to form part of integrated policies directed at economic growth & decent work (DW) 1. Youth Unemployment: 133 million young people (>50% of youth population) in Africa illiterate. Many young people have little or no skills and are excluded from DW. Incidence of youth unemployment in SSA >20%. 2. Fragile States: Large numbers of people become trapped in a cycle of violence, often because of lack of educational and decent employment opportunities. TVSD is a vital part of reintegration and reconstruction in post-conflict situation, and is seen as the 4th pillar of humanitarian response. 3. Migration: Brain Drain: High rates of emigration among highly skilled workers. Emigration can benefit home countries through remittances, investments, diaspora networks, circular migration. Challenges TVSD in Specific Contexts

41. Main Messages • Technological Change and Globalization is increasing the demand for a more educated and skilled workforce (enhance competitiveness) • Both governments and the private sector will need to respond to improve education, and train and upgrade skills of the workforce • Pay attention to non-TVET issues: • Access to and quality of general education • An integrated policy environment (technology, investment, etc) • Encourage private provision and financing of TVET • Many enterprises do not train despite potentially large productivity gains from formal training • Different TVSD policy options exist, which ones are most appropriate depend on country conditions (tailor schemes to context) • Evaluate impacts of TVSD policies to improve effectiveness of training programs, and to design and implement reforms • TVSD critical in the context of: • Rising youth unemployment • Fragile states • Globalization and migration

42. Thank you More information: www.oecd.org/dev/aeo www.afdb.org