African Economic Outlook African Economic Outlook 2003/20042003/2004

Paris, 7 July 2004Paris, 7 July 2004

AEO Challenges• Making the AEO a reference point for

individual country analysis• Making the AEO an important background

document for the African Peer Review Mechanism

• Monitoring progress towards the MDGs• Improve knowledge on strategic issues for

Africa:– Privatization 2002/03– Energy Sector 2003/04

Other Countries

AEO Countries

Algerie

Lybie Egypte

Mauritanie

Mali

Niger

Tchad

RepubliqueDemocratiquedu Congo

Soudan

Republique Centraafricaine

Guineequatoriale

Gabon

Congo

Cameroun

Angola

GuinneeBissau

Guinee

Serrea Leone

Liberia

Côted'Ivoire

Tunisie

Burkinafaso

Ghana

NigeriaTogo Ethiopie

Somalie

Djibouti

Erytree

Kenya

Tanzanie

Mozambique

Afriquedu Sud

Botswana

Zimbabwe

Namibie

Zambie

Swaziland

Lesotho

Malawi

Ouganda

BurundiRwanda

Madagascar

Senegal

Gambie

Maroc

Maurice

North Africa: Algeria, Egypt, Morocco and Tunisia

West Africa: Burkina Faso, Côte d’Ivoire, Ghana, Mali, Nigeria and Senegal

Central Africa: Cameroon and Gabon

East Africa: Ethiopia, Kenya, Mauritius, Uganda and Tanzania

Southern Africa: South Africa, Botswana, Mozambique, Zambia and Zimbabwe

Coverage: 22 African countries

Contents of the Overview

• International Conditions Impacting on Africa

• Macroeconomic performance, 2003 and outlook for 2004/05– Monetary management– Fiscal policy

• Progress towards achieving the MDGs

• Governance/Political issues• This year’s focus:

– Energy Supply in Africa

Africa growth in 2003: the highest in 4 years

0.8

1.8

-0.1

2.63.1

5.3

4.0

2.8

1.4

0.3

5.7

2.5

3.82.9

3.6

3.23.03.23.5

0.7

3.63.6

3.53.3

3.7

2.82.9

3.13.0

3.2

1.5

3.2

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004(p) 2005(p)

Africa AEO Countries Linear (Africa)

Improved growth performance in 2003 explained by domestic and

external factors• Internally:

– Most African governments continued to follow prudent macroeconomic policies

– Restoration of peace in some parts of Africa, albeit fragile.

• Externally:– Improvements in the prices of major primary

commodities.– Africa’s exports in value terms increased by

some 17% and 4.8% in volume.– Increase in ODA and Debt Relief under HIPCs

Total net ODA to Africa jumped by 35% in value between 2001/02. The upward trend is expected to continue

0

5

10

15

20

25

1996 1997 1998 1999 2000 2001 2002

US

$ b

illi

ons

0

10

20

30

40

per

cen

tag

e

ODA to Africa Africa's share in ODA

Inflation in decline

3.9

2.9

5.4

5.04.4

3.73.4 3.4

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2002 2003 (e) 2004 (p) 2005 (p)

Inflation- Average Inflation- Median

The MDG on income poverty will not be met on present

trends

46.7

39.3

23.9

47.7

0

25

50

1990 1995 2000 2005 2010 2015

SSA Actual SSA projected SSA path to goal

On present trends most of MDGs will not be achieved by many countries

The satisfactory performance ratio is highest in the case of equality in primary education

Country Highlights

Average growth rates of African countries

REGION AVERAGE 1996-2001

2002 2003(E) 2004(P) 2005(P)

Central 2.7 4.1 4.2 7.1 7.0

East 4.3 1.7 2.4 4.9 4.6

North 4.5 3.3 4.9 3.5 4.2

South 2.8 3.3 1.8 2.8 3.1

West 3.5 1.0 4.5 3.9 4.0

Total 3.6 2.7 3.6 3.6 4.0

Best and worst performers

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

50.02004

2003

Central East North South West

Gabon

Equatorial Guinea

Madagascar

Zimbabwe

AngolaMozambique

Cote d'Ivoire

Sierra Leone

Chad

Seychelles

Ethiopia

Ethiopia

Western Africa

-5

0

5

10

Gambia

Sierra LeoneSenegal

Burkina Faso Mali

BeninGhana

Nigeria

Cape VerdeNigerGuinea

Togo

Guinea Bissau

Côte d'Ivo

ire

growth2003

growth2004

Southern Africa

-20

-15

-10

-5

0

5

10

15

growth2003

growth2004

Eastern Africa

-5

0

5

10

growth2003

growth2004

Fiscal situation of many countries

is still weak

Fiscal balance as % of GDP, 2003 estimate

-12%

-9%

-6%

-3%

0%

3%

6%

9%

Central East North South West

Gabon

Seychelles

Algeria

Sao Tome EthiopiaEgypt

Zambia Sierra Leone

Guinea Bissau

Angola Togo

The impact of high oil prices

• Higher growth in oil exporters- Strong fiscal gains- First increase in Gabon oil production

since 1997 due to vigorous investment in oil sector

• More inflation elsewhere– Burkina Faso (increased transport cost)– Ethiopia, Zambia in spite of good harvest

The impact of the $ depreciation: Rand zone and

CFA zone

40

50

60

70

80

90

100

110

120

Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04

Euro

Rand

The impact of the $ depreciation: Rand zone and

CFA zone• Western Africa was partly shielded from

the depreciation of dollar– Most trade with Euro zone – Little competitive industry– However…strong negative fiscal impact

• South Africa in front line: fall in competitiveness but less inflation and moderate fiscal impact

• Other Southern Africa in the shadow of South Africa: Intra regional trade Imported inflation

Agriculture: still a matter of vulnerability

Despite good 2003/04 harvest, East and Southern Africa continue to suffer from a structural food crisis

Food aid needed by: – 5 ml people (39% pop) in Zimbabwe– 7ml people (10% pop) in Ethiopia– 1 ml people (3% pop) in Kenya

Governance and economic performance

-5

0

5

10

15

20

25

30

1997 1998 1999 2000 2001 2002 2003

-6-4-202468

101214

1997 1998 1999 2000 2001 2002 2003 (e)

Côte d'Ivoire

Political tensions

Economic performance

Mali

Mali

Côte d'Ivoire

Burkina Faso

Burkina Faso

Governance and economic performance

0

5

10

15

20

1997 1998 1999 2000 2001 2002 2003

-20

-15

-10

-5

0

5

10

1997 1998 1999 2000 2001 2002 2003

Political tensions and hardening

Economic performance

Zimbabwe Hardening

Zimbabwe Tensions

Regional Average Tensions

Regional Growth

Zimbabwe

2003/2004 focus: Energy supply in Africa

Improving

people's lives

Efficiency of

public

intervention

Development

of economic

activity

Energy plays a significant role in poverty alleviation and development

Huge potential… under or badly exploited

- Under-utilisation of potential sources- Exports rather than national consumption- Mismanagement of resources

Hydroelectric power

0

1000

2000

3000

4000

5000

6000

Asia SouthAmerica

Europe Africa NorthAmerica

Oceania MiddleEast

TWh/

year

technically exploitable capability actual power generation

Oil and NGL, largely exploited 7.3% of world reserves, 10.6% of world production

0

10

20

30

40

50

MiddleEast

SouthAmerica

Africa Asia Oceania Europe NorthAmerica

mill

ion

barr

els/

day

0

20

40

60

80

100

year

s of

pro

duct

ion

production reserves/production ratio

But mostly exported

3.6% of world refining capacity

Supply of motor gasoline in Nigeria (2001)

74%

26%

Consumed locally Exported

60%

40%

Local production Import

Gas flaring and shrinkage7.5% of world reserves, 5.5% of world production

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Total Africa

Total South America

Total Middle East

Total North America

Total Oceania

Total Asia

Total Europe

Energy consumption in Africa (2001)

Coal 7 %

World structure:

Biomass 14%

Electricity 16%

Petroleum 44 %

Gas 16%Biomass

59%

Electricity8%

Coal4%

Petroleum25%

Gas4%

Electrification rates

0102030405060708090

100

OE

CD

Tra

ns

itio

ne

co

no

mie

s

Mid

dle

Ea

st

La

tin

Am

eri

ca

De

ve

lop

ing

As

ia Afr

ica

Su

b-

Sa

ha

ra

No

rth

Afr

ica

World average

Developing countries average

Challenges for developing the electricity sector

• Serving a scattered, rural population• Repairing and modernising power

facilities• Extending the network• Achieving effective, sequenced

reforms• Co-ordinating at regional and

continental level towards integrated power pools

Thank you