Vincent Palmade

World Bank

Africa Open for Business

Africa as the next growth pole?

2

Recovery from crisis: Projected GDP growth

Source: Africa Action Plan

Growth has been widespread

Primary school enrollment ratesPopulation living under $1.25/day

Child mortality rates Maternal mortality ratio

Progress in Human Development in Africa

Source: Laeven and Valencia (2010)

Africa has come a long way in terms of improving financial stability . . .

WORLD BANK’S DOING BUSINESS RANKINGS 2011

Source: Doing Business 2011

Rwanda was the world’s top doing business reformer in 2009SSA was the most active among all regions in enacting reforms

aimed atfacilitating start-ups and registering property in 2010 SSA had some of the most comprehensive investor protection

reforms e.g. Botswana, Mozambique, Rwanda, Sierra Leone, Swaziland,

Tanzania

Business climate is improving across the continent

Dynamic and Transformative Private Sector

5 game-changers

New heavy-hitting investors offer critical mass

Brazil, China, Brazil;private investors, foundations

1 2Regionalization is creating new large-scale marketsIntra-regional trade growing; new regional common markets

Greater macro stability and increased voice makes Africa more attractive for investorsDemocratic elections gaining ground; conflicts steadily declining

3Spread and growth of ICT offer significant productivity gains

World’s fastest mobilephone penetration

4Climate change creates opportunities for a green economy

Africa has low carbon legacy; chance for green leadership

5

• Mining resources could finance power and

transport infrastructure

• Urban development to fuel economic

transformation, not slums

• Africa to become the world’s food basket 75% of cultivable land unused

• ICT to play a transformative role (remote

services, e-government)

• Wages five times lower than in China –

manufacturing could come

• Unique cultural and natural tourism assets

waiting to be leveraged

ICT

Light manufacturing

Mining

Agribusiness

Construction

Tourism

6 Key Export Industries

Leveraging Mining

• Expanding established areas – e.g. Zambia, Nigeria

• Large new emerging areas – e.g. Mozambique, Guinea, DRC

• Good prospects – e.g. Burkina Faso, Cameroon

• Opportunity to develop infrastructure through mining

Normalized units

Sub Saharan Africa-Low Income Countries

Other Low Income Countries

Paved Road Density 31 134 Total road density 137 211 Main line density 10 78 Mobile density 55 76 Internet density 2 3 Generation Density 37 326 Electricity Coverage 16 41 Improved water 60 72 Improved sanitation 34 51

Africa’s Infrastructure Gap

0.0

1.0

2.0

3.0

4.0

5.0

2000-04 2001-05 2002-06 2003-07 2004-2008

Real Agricultural GDP (28 countries value weighted)

48 5

34

#of countries > 5%/yr

Growth in Agricultural Productivity

Source: WITS, and Whitaker and Kolavalli, “The how to technological change for faster growth in floriculture in Kenya, October 2004 .

424

479

538

570

607

283

350

403

473

528

166

196211

245

299

100

200

300

400

500

600

700

2002 2003 2004 2005 2006 2007

Exp

ort

s, m

illio

n U

S$

Coffee, tea, matï andspices.

Cut flowers and otherplants

Edible vegetables andcertain roots

• Smart Support: Government facilitated arrival of strategic investors.

• Spillovers: Success of foreign companies in floriculture led to entry of other investors, including Kenyans.

• Deregulations: Compared to the highly regulated agricultural sector

• Trade Logistics: Leverage of Kenya Airways

Kenya horticulture story

14

Source: Mallika Shakya, A note on Lesotho success story .

• Key bottleneck: Land acquisition for foreign investors is difficult and cumbersome.

• Policies to address the bottleneck: Industrial zones and serviced factory shells.

• On the job training of workers: Similar productivity at lower wages than in Asia.

• Trade Logistics: Leverage of Durban port

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

1995

1996

1997

1998

1999

2000

2001

2003

2004

2005

2006

Mill

ion

Mal

oti

Non-manufacturedexports

Manufactured exports(of which 60% onaverage are apparels)

Lesotho apparel story

Gorilla tourism in Rwanda

Opportunities in Health

World Bank Group

International Bank for Reconstruction and Development (IBRD)

1944

International Development Association (IDA)

1960

International Finance Corporation

1956

Multilateral Investment Guarantee Agency

1988

International Center for the Settlement of Investment Disputes

1966

Knowledge

Finance

Partnerships

Leveraging:•Domestic res.•IDA, IBRD, IFC,MIGA•PCGs, enclaves, etc.

•Link analysis to policy•Political economy•Evidence to nourish public debate

-Governments-AfDB, AU, RECs- Civil society- Private sector- Development partners

18

World Bank’s Support to Africa

South AfricaICT sectorX% job growth

The World Bank - AFTFP 2010

Public-private partnerships (PPP) Address the infrastructure deficit

Entrepreneurship, knowledge and skills: Raise productivity and create new markets

Finance for development: Increase access to finance and supply long-term capital, especially for SMEs

1

2

3

4

Business environment reforms: Reduce cost and risk of doing business

Focusing World Bank Support on Main Opportunities

Beyond Infrastructure:•Agricultural research•Health•Trade integration

Public Health Laboratory Network in East Africa

High-impact projects:• West Africa Power Pool• Inga 3 hydro-project • North-South Corridor

Regional solutions