AFRICAN ECONOMIC OUTLOOK AFRICAN ECONOMIC OUTLOOK 2002/032002/03

Geneva – 8 September 2003Geneva – 8 September 2003

The AEO projectThe AEO project

A joint product of A joint product of the African Development the African Development

BankBank& &

the OECD Development the OECD Development CentreCentre

Key featuresKey features

Country level analysis, organised Country level analysis, organised in a single unified frameworkin a single unified framework

social and political developments social and political developments along with economic performance,along with economic performance,

set of individual countries set of individual countries representative of the whole representative of the whole continent.continent.

Country coverage, Country coverage, 2002/032002/03

OutcomesOutcomes

Contributing to policy Contributing to policy monitoring: AEO could be used monitoring: AEO could be used in the APRM process of NEPADin the APRM process of NEPAD

Capacity building: Progressively Capacity building: Progressively hand over AEO to African hand over AEO to African economists througheconomists through

– Training within AfDB Training within AfDB

– Constitution of a networkConstitution of a network

ProductProduct

ProcessProcess

Structure of the reportStructure of the report A report structured around A report structured around

individual country notesindividual country notes

starting with a synthesis, starting with a synthesis, highlighting the major features highlighting the major features – AEO 2002/03: Privatisations– AEO 2003/04: Energy Supply

and closing with a statistical annex.and closing with a statistical annex.

Main Findings 2002/2003Main Findings 2002/2003

Growth ProspectsGrowth Prospects

Poverty: Meeting the Millennium Poverty: Meeting the Millennium Development GoalsDevelopment Goals

Focus on PrivatisationFocus on Privatisation

1. Growth Prospects1. Growth ProspectsThe 2002/2003 outlookThe 2002/2003 outlook

0

1

2

3

4

5

6

7 Africa performance Africa performance affected by global affected by global slowdown but…slowdown but…

domestic factors domestic factors (governance, (governance, epidemics, and epidemics, and agricultural agricultural outcomes) pose outcomes) pose major challenges.major challenges.

22 AEO countries

Africa

ODA to AfricaODA to Africa

0

5

10

15

20

25

1996 1997 1998 1999 2000 2001

US

$ b

illio

ns

0

0.1

0.2

0.3

0.4

perc

enta

ge

ODA to Af rica Af rica's share in ODA

Average growth rates of Average growth rates of AEO countriesAEO countries

REGION AVERAGE 1995-2000

2001 2002(E) 2003(P)

Central 2.7 4.7 5.7 4.7

East 4.3 4.7 2.6 5.3

North 4.2 3.8 2.9 3.3

South 3.0 2.4 3.4 2.9

West 3.6 3.0 1.1 2.4

Total 3.6 3.3 2.9 3.3

Best and worst performersBest and worst performers

-20

-10

0

10

20

30

40

GD

P gr

owth

2003

2002

Central East North South West

Gabon

Equatorial Guinea

Madagascar

Madagascar

Zimbabwe

Angola

Mozambique

Nigeria

Mali

Cote d'Ivoire

Sierra Leone

Mali

ZimbabweZimbabweGovernance mattersGovernance matters

- 15

- 10

- 5

0

5

1019

95

1996

1997

1998

1999

2000

2001

2002

(e)

2003

(p)

Increasing Increasing macroeconomimacroeconomic imbalances c imbalances

Food crisisFood crisis

Political Political tensiontension

02468

10121416

1996

1997

1998

1999

2000

2001

2002

Political hardening

Political tensions

GDP growth

2. Poverty2. Poverty

Sub-Saharan Africa Sub-Saharan Africa

will miss the 2015 will miss the 2015

Millennium Development Goals Millennium Development Goals (MDGs) target …(MDGs) target …

while Northern Africa will while Northern Africa will achieve themachieve them

The income poverty targetThe income poverty target

46.7

39.3

23.9

47.7

0

25

50

1990 1995 2000 2005 2010 2015% o

f p

eo

ple

liv

ing

be

low

1 U

SD

a d

ay

SSA Actual SSA projected SSA path to goal

Completion rate of MDGsCompletion rate of MDGs by 2015 by 2015

(by total population in the Sub region)(by total population in the Sub region)

sub-Saharan Africa

-100%

-50%

0%

50%

100%

HalvePoverty

Primaryschool

completion

Genderequality in

school

Childmortality

Maternalmortality

HIV/AIDSprevalence

no datanoyes

Impact of HIV/ AIDSImpact of HIV/ AIDS

3. Privatisations3. Privatisations

Ownership of the processOwnership of the process

Lack of local capacityLack of local capacity

Lack of regulatory frameworkLack of regulatory framework

StrategyStrategy

Cornerstone of SAPs but recent Cornerstone of SAPs but recent phenomenon in SSAphenomenon in SSA

Main Obstacles

CompanyCompany Buyers (stake)Buyers (stake) Proceeds Proceeds (US$)(US$)

RemarksRemarks

Maroc Maroc Telecom 2000Telecom 2000

Vivendi (35%)Vivendi (35%) 2.1 billion2.1 billion Network Network expanded and expanded and reduced tariffsreduced tariffs

Telkom 1997Telkom 1997 SBC (US) & SBC (US) & Telekom Malaysia Telekom Malaysia (30%) + BEE (3%)(30%) + BEE (3%)

1.26 billion1.26 billion Higher Higher investment and investment and network network improved. IPO improved. IPO in 2003 15 % in 2003 15 %

Sonatel 1997-Sonatel 1997-9898

France TelecomFrance Telecom

(33.3%) + (33.3%) + Senegal flotation Senegal flotation (17%)(17%)

197 million 197 million Increased Increased profitsprofits

Boost to the SEBoost to the SE

ACSA 1998ACSA 1998 Aeroporti di Aeroporti di Roma (20%), BEE Roma (20%), BEE (4%)(4%)

280 million 280 million Expansion Expansion plansplans

Kenya Kenya AirwaysAirways

19961996

KLM (26%), KLM (26%), Nairobi Stock Nairobi Stock Exchange (51%, Exchange (51%, 34% to local 34% to local investors)investors)

26 million 26 million (KLM)(KLM)

48 million 48 million flotationflotation

Total 74 Total 74 millionmillion

Profits up, Profits up, passengers + passengers + 78%78%

Challenges ahead for AfricaChallenges ahead for AfricaAchieving MDGsAchieving MDGs

– ability to cope with vulnerabilityability to cope with vulnerability

– improved governance improved governance

– ownership of structural reformsownership of structural reforms

Algeria Algeria Oil dependency & Oil dependency &

governancegovernance

0

1

2

3

4

5

6

1995

1996

1997

1998

1999

2000

2001

2002

(e)

2003

(p)

Rea

l GD

P g

row

th

Recovery is boosted Recovery is boosted by dominant by dominant hydrocarbon sector.hydrocarbon sector.

High unemployment High unemployment and social unrest.and social unrest.

Despite fiscal Despite fiscal expansion and high expansion and high INV/GDP.INV/GDP.

Vested interests Vested interests delay badly needed delay badly needed structural reforms.structural reforms.

Egypt Egypt Unfinished reformsUnfinished reforms

0

1

2

3

4

5

6

7

1995

1996

1997

1998

1999

2000

2001

2002

(e)

2003

(p)

Rea

l GD

P g

row

th

Slow-down of RGDP Slow-down of RGDP growth…growth…

… … combined with combined with unemployment and unemployment and high population high population growth growth

Exogenous sources of Exogenous sources of income and spillovers income and spillovers from Middle East from Middle East instability. instability.

Declining foreign Declining foreign exchange and FTA exchange and FTA with EU can put with EU can put pressure for reforms.pressure for reforms.

Morocco Morocco VolatilityVolatility

-10

-5

0

5

10

15

Rea

l G

DP

gro

wth

Successful Successful stabilization and stabilization and structural reformsstructural reforms

but growth is volatile,but growth is volatile,

and social indicators and social indicators worseningworsening

Challenge is Challenge is achieving sustained achieving sustained growth to reduce growth to reduce unemploymentunemployment

Tunisia Tunisia Resilience to shocksResilience to shocks

0

1

2

3

4

5

6

7

8

1995

1996

1997

1998

1999

2000

2001

2002

(e)

2003

(p)

Rea

l GD

P g

row

th

Open and highly Open and highly diversified diversified economy…economy…

……succeeded in succeeded in poverty reduction poverty reduction and improved and improved human human development development

Despite adverse Despite adverse shocks, growth shocks, growth resumesresumes

Challenges AheadChallenges Ahead

Vulnerability :Vulnerability :

– Reduce dependency on volatile income Reduce dependency on volatile income sources – outlook for oil exporterssources – outlook for oil exporters

– Security and political tensions – tourism and Security and political tensions – tourism and FDIFDI

Integration with EU: need to raise Integration with EU: need to raise competitiveness of private sectorcompetitiveness of private sector

Set up poverty-reduction strategiesSet up poverty-reduction strategies