1
Myths and Realities of Africa’s Development
Mthuli NcubeChief Economist and Vice PresidentAfrican Development Bank group2 May 2011DANIDA DEVLOPMENT DAYS, Copenhagen: 2-4 May 2011
2
Africa’s Economic Growth:2000-2010
African growth is strong. Africa the 3rd fastest
growth region over 10 years
Africa did well out of financial crisis due to good economic management, and diversification
GDP level at US$1.6 billion at par with Brazil or Russia
Growth is being held back by factors such as infrastructure (taking away 2% of GDP growth)
Africa is natural resource rich
Growth not Inclusive
Source: AfDB
3
4
Africa’s Socio-Economic Progress
Poverty levels are falling Per capita income is rising Inequality is rising Intra-Africa trade has risen slightly and
so has Africa’s share of world global trade
ICT access and penetration has increased substantially
Access to water and sanitation has not improved
5
Africa’s Socio-Economic Progress….continued
Staple food yields have not improved Fertilizer consumption has fallen Under-5 child mortality has fallen Primary school completion rates are flat Number of fragile states has dropped Combustible renewables and waste to
generate energy is not increasing Cost of doing business has fallen Time required for business start-up has
fallen
6
Regulatory Policy Improvements in Africa
Improvements in regulatory environment
Reforming countries grow faster
Investment climate is improving
Rising Middleclass of 300 million people critical to private sector growth
Source: McKinsey Global institute
7
Intra-Africa Trade
Intra-Africa trade remains low compared to other regions
Investment in regional transport infrastructure and ports, is necessary
Source: AfDB
8
Sub-Saharan Africa lags behind other developing regions on all dimensions
Regional connectivity is particularly lacking
0
50
100
150
200
250
300
350
Infrastructure Coverage: SS Africa vs Other Low-income Regions
Sub-Saharan Africa
Other low-income coun-tries
Norm
alize
d u
nit
s
9
Pow
er
: M
issi
ng lin
ks
Source: AUC, AfDB, WB presentation at UN Millennium Summit, September 2010
10
Roads
: M
issi
ng lin
ks
Source: AUC, AfDB, WB presentation at UN Millennium Summit, September 2010
11
ICT:
Mis
sing lin
ks
Source: AUC, AfDB, WB presentation at UN Millennium Summit, September 2010
12
Africa’s Agriculture Performance
Agriculture sector is important as 60% of population in Africa depends on it
Staple crop yields remain flat
Fertilizer consumption low
Source: FAO
13
Africa’s Governance Progress
Improvements in 3 areas of governance
No improvement in “voice and accountability”
Static in “government effectiveness”
Source: World Governance Indicators 2010
New Classification of African Countries
- Very low incom
e
- Macroeconom
ic instability
(e.g. Burundi, Sierra Leone)
- Low incom
e
- Macroeconom
ic stability
(e.g. Gam
bia, Niger)
- Low incom
e
- Macroeconom
ic stability
- Enabling business environment
(e.g. Ethiopia, Lesotho)
14
Fragile States
Pre-Transition
Transition
Frontier Markets
Emerging Markets
- High income & growth
- Macroeconomic stability
- Diversified export base
-Financial markets
(e.g. Ghana, Kenya)
- High income & growth
- Macroeconomic stability
- Diversified export base
-Financial markets
(e.g. South Africa, Tunisia)
Oil Producers: additional criteria focusing more on capacity to manage oil revenues (e.g. Angola, Libya)
15
Africa’s Development Challenges
Infrastructure Deficit (US$45 billion annually)
Opportunity but Better management of relationships with “new partners”: China, India, Brazil, Russia, etc
Regional integration Improving investment climate Promoting Domestic Direct Investment
(DDI) Development Small to Medium Scale
enterprises
16
Africa’s Development Challenges….continued
Economic structural transformation Balancing “population dividend” with
“poverty challenges” Inclusive growth and Youth
Unemployment Higher education, vocation
education and skills development Financial inclusion Development of agricultural sector
17
Africa’s Development Challenges…continued
Domestic resource mobilization Effective and transparent management of
natural resource revenues< e.g SWFs Dealing with illicit financial flows Piracy Leveraging ODA for private sector support Instituting flexible macroeconomic
management Ensuring “Strong, Sustained and Shared
Growth, which is preferably Clean” (SSSc)
18
Thank You