Presented by: H.E. Abdourahmane CISSE, Minister to the Prime Minister in charge of the Budget « SUB-SAHARAN AFRICA: CURRENT ECONOMIC ENVIRONMENT, THE MAJOR DRIVERS OF ECONOMIC GROWTH AND THE ROLE GOVERNMENTS ARE PLAYING IN PROMOTING SOCIOECONOMIC DEVELOPMENT ON THE CONTINENT »
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Presented by:H.E. Abdourahmane CISSE,
Minister to the Prime Minister in charge of the Budget
« SUB-SAHARAN AFRICA: CURRENT ECONOMIC ENVIRONMENT, THE MAJOR DRIVERS OF
ECONOMIC GROWTH AND THE ROLE GOVERNMENTS ARE PLAYING IN PROMOTING
SOCIOECONOMIC DEVELOPMENT ON THE CONTINENT »
CONTENT
2
I. Africa: a new promising economic environment
II. Shift in African economies: example of Côte d’Ivoire
III. Conclusion
RADICAL SHIFT IN THE PERCEPTION OF AFRICA
3
May 2000 December 2011 February 2013
TWO DIFFERENT VERSIONS OF THE STORY (1/2)
4
5
TWO DIFFERENT VERSIONS OF THE STORY (2/2)
AFRICA AT A GLANCE
> $2 trillion, Africa’s collective GDP in 2013;
122.7 million Africans are now classified as ‘middle class’ (daily per capita expenditure of between $4 and $20), 30% higher than in 2000;
629 million, the number of mobile phone subscribers in Africa in 2014;
60%, Africa’s share of the world’s total amount of uncultivated, arable land;
Source: AFDB, McKinsey, IMF, ITU.6
’04 - ’08 2009 2010 2011 2012 2013
OECD 1.23 -4.1 2.4 1.3 0.7 0.9
Subs. Africa 4.7 1.7 4.5 2.7 1.9 2.6
Cote d'Ivoire -1.5 0.2 -1 -7.2 7.5 6.0
Ghana 3.8 1.4 5.3 12.1 6.1 4,5
Nigeria 6.7 6.6 7.6 2.1 1.5 2,6
Mozambique 4.9 3.6 4.4 4.6 4.6 4.5
Rwanda 6.8 4.1 3.1 5.4 5.7 1.8
Sub-Saharan Africa has posted impressive economic growth over the past decade;
The region is forecasted to maintain similar levels of performance in the coming years.
STRONG ECONOMIC GROWTH (1/2)
GDP per capita growth rates (%)
7Source: IMF
Sub-Saharan African countries have outperformed OECD countries by 420 bps on average over the past decade.
STRONG ECONOMIC GROWTH (2/2)
8Source: IMF
6
2
2
5
5
6
6
9
10
12
13
24
Other services
Tourism
Utilities
Construction
Real estate
Financial services
Public administration
Manufacturing
Transport, telecom
Agriculture
Wholesale and retail
Resources
6
1
1
2
3
5
7
8
11
12
21
22
Other services
Tourism
Utilities
Manufacturing
Financial services
Real estate
Public administration
Construction
Resources
Transport, telecom
Agriculture
Wholesale and retail
CONTINUOUS DIVERSIFICATION OF AFRICAN ENCONOMIES
Source: African Development Bank, McKinsey
9
Industries
Industry share of GDP growth (%) 2002-2007
Industries
Industry share of GDP growth (%) 2007-2013
KEY DRIVERS OF AFRICA’S ECONOMIC GROWTH (1/3)
10
1
Political stability &
Improvement in governance
• More democratic institutions (e.g. Nigeria);• Transparency in the management of public resources;• Fight against corruption (e.g. performance in the last
transparency report, etc.);• Risk rating of sovereign African countries (e.g.
Ghana, Cote d’Ivoire, Nigeria, etc.).
2
Strategic developmentplanning
• Adoption and execution of strategic developmentplans;
• Cote d’Ivoire adopted the 2012-2015 NationalDevelopment Plan;
• Kenya launched a development program calledKenya Vision 2030 to support the country’stransformation into a new industrialized nation.
3Regional Integration
• Mutual agreements between African countries to facilitate cross-border trade (goods & people);
• Harmonization of legislation within the communityblocks to facilitate trade;
11
KEY DRIVERS OF AFRICA’S ECONOMIC GROWTH (2/3)
4
Ongoing economic reform and improvement in businessenvironment
• Widespread business-friendly reforms are making iteasier to do business in many African countries (powersectors reforms in Nigeria, etc.);
• According to the World Bank “Doing Business 2013/2014report”, five African countries (Cote d’Ivoire, Benin,Togo, DRC and Senegal) are amongst the top reformers;
• Sub-Saharan Africa accounted for the greatest number ofbusiness facilitation reforms for 2013/2014 – with a tallyof 75 out of a total of 230 reforms registered globally.
5
Access to international capital
• FDI flows of USD 56.3 billion in 2013 (up 27% from 2010);• Between 2007 and 2013, FDI projects in SSA have
registered a CAGR of 19.5%;• The share in value of intra-African investment moved
from 4.4% in 2003 to 22.3% in 2013;• Launch of few eurobond products on the international
financial market (none in 2007 except South Africa & now16 billions $ have been raised in 2014 by 20% of the 48countries in SSA).
12
KEY DRIVERS OF AFRICA’S ECONOMIC GROWTH (3/3)
6Investment in infrastructure
• Strong investment in infrastructures and energy;• Examples include:
dam of the Renaissance on the River Nile inEthiopia (6,000 megawatts);
construction of the Soubré hydroelectric dam inCôte d’Ivoire(275 megawatts);
Abidjan-Lagos highway.
7Living standardimprovement
• Development of a middle class in Africa (up 30% from2000);
• Examples of measures taken in Côte d’Ivoire: 60% of the CIF price guaranteed to cocoa farmers; minimum wage raised by 64%;
• The most striking observation from EY’s 2014 «Africa attractivenesssurvey» is how much Africa’s perceived attractiveness has improved.Indeed, in less than five years, Africa dramatically improved its positionand now stands second for best places to invest globally, on par withAsia
ATTRACTIVENESS OF AFRICAN ECONOMIES
13
14
15
THE GATEWAY TO WEST AFRICA
BRIEF OVERVIEW OF COTE D’IVOIRE
16
1st economy of WAEMU (West African Economic and Monetary Union with a population of 100 millions habitants) with 40% of the GDP;
Winner of the Africa Cup of Nation of Football in 2015;
Estimated population of 24 million inhabitants & 35 B$ GDP;
Diversified agricultural crop:
1st cocoa producer in the world;
1st kola producer in the world;
1st rubber producer in Africa;
1st exporting country of cashew nut in the world and 2nd largest producer;
2nd banana & palm oil producer in Africa;
Abundance of natural resources including petroleum & minerals;
Important infrastructure to support the economic activities (the largest sub-region road network with 6 500 km paved roads, 1st cocoa port in the world, etc.)
BRIEF OVERVIEW OF COTE D’IVOIRE
1717
Years of prosperity (1960-1980): Average growth rate of 7% per
year driven by strong commodity prices;
Investors and international community‘s confidence ;
The implementation of a sustained investment policy, with total investment rate of: 22% of GDP in 1970; 27% of GDP in 1980.
Period of economic, social and political crisis (1980-2011):
Significant reduction in the real GDP growth rate: From 1980 to1993: 1%; From 1994 to 1999: 5.4%; From 2000 to 2011: 0.6%;
Deteriorating terms of trade; Increase in public debt; Collapse in investment (in
average less than 10% of GDP).
The return of the Elephant (2012-now)
Economy has grown by more than 25% over the past 3 years;
Investment move back to 16.2% of GDP in 2014 (10% private);
Debt to GDP ratio of 36.3%; Budget deficit under control
(around 3% the past 3 years); Yearly inflation below the 3%
community norm.
GDP Growth rate %
A LARGER PORTION OF THE BUDGET DEDICATED TO INVESTMENTS
1818
HE President Ouattara intends to turn Cote d’Ivoire into an emerging market country and has an ambitious investment program:
Energy sector: goal is to increase capacity from 1650 MW to 4000 MW in 2020;
Infrastructure: the modernization and expansion of the railway to join Abidjan-Ouagadougou and diverse structuring road projects;
Agriculture: x 4 between 2010 and 2015;
Health: x 2.5 between 2010 and 2015;
Education: represents 20% of the budget.
A SIGNIFICANT PART OF THE BUDGET ALLOCATED TO THE FIGHT AGAINST POVERTY
19
% of Total Budget 26,7% 29,6% 28,6% 28,4%
These important budget allocations reflect the Government’s strong commitment to significantly improve the living standards of populations and have an inclusive growth.
To achieve its goal, the Government intends to encourage private investment inthe country by creating a business friendly environment;
Reforms include:
Creation of a one-stop-shop for business creation => 24 hours max to create a company;
Reduction of the fiscal costs associated to starting a business;
Creation of the Abidjan Commercial Court for faster settlement of trade disputes;
Adoption of a new investment code with specific codes for the mining and electricity sectors ;
Implementation of an institutional and legal framework for PPPs.
Doing Business:
For the second year in a row, Cote d’Ivoire is amongst the 10 greatestreformers, according to the World Bank’s ‘’Doing Business’’ ranking;
Côte d’Ivoire moved up 30 spots in the « Doing Business » ranking and 135spots on the « starting a business » criteria in just 2 years.
A BUSINESS-FRIENDLY ENVIRONMENT
20
21
AFRICA: A LARGE POTENTIAL YET TO EXPLOIT
Does investing in Africa risky? YES like everywhere, BUT the risk isdecreasing day after day;
Does investing there profitable? YES, very profitable;
Overall, Africa is now a more stable continent that offers uniqueopportunities, including:
Abundant commodities;
A workforce poised to become the largest in the world by 2035;
A big local market with an ever increasing middle class;
Infrastructures that are constantly improving;
A new ruling class with a vision that fosters business-friendlyenvironments.
22
TESTIMONY OF EXECUTIVES OF SOME THE MAJOR U.S. CORPORATES
« Winning takes bold commitments, a dedicatedteam and resilience. In Africa, we are a productivitypartner … growing 30% annually. » Jeff Immelt, CEO, GE,
in his 2013 letter to shareholders
« Africa is the untold story, and could be the bigstory of the next decade, like India and China werethis past decade. The presence and the significance ofour business in Africa is far greater than India andChina, even today. » Muhtar Kent, CEO, Coca-Cola