AFRICAN ECONOMIC OUTLOOK

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African Economic Outlook 2003/2004 Paris, 7 July
2004
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Background Information

• This is the third issue of the AEO
• A joint project by ADB and OECD Development
  Centre
• Structure Overview
• Country Notes
• Statistical Annex

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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

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Coverage 22 African countries
North Africa Algeria, Egypt, Morocco and
Tunisia West Africa Burkina Faso, Côte dIvoire,
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
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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 years focus
• Energy Supply in Africa

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Africa growth in 2003 the highest in 4 years
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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.
• Africas exports in value terms increased by some
  17 and 4.8 in volume.
• Increase in ODA and Debt Relief under HIPCs

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Total net ODA to Africa jumped by 35 in value
between 2001/02. The upward trend is expected to
continue
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Inflation in decline
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Fiscal Deficits Under Control(Percentage of GDP)
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The MDG on income poverty will not be met on
present trends
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On present trends most of MDGs will not be
achieved by many countries
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The satisfactory performance ratio is highest in
the case of equality in primary education
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Country Highlights
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Average growth rates of African countries
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Best and worst performers
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Western Africa
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Southern Africa
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Eastern Africa
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Fiscal situation of many countriesis still
weakFiscal balance as of GDP, 2003 estimate
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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

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The impact of the depreciation Rand zone and
CFA zone
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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
• Howeverstrong 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

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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

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Governance and economic performance
Political tensions
Côte d'Ivoire
Mali
Burkina Faso
Economic performance
Mali
Burkina Faso
Côte d'Ivoire
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Governance and economic performance
Political tensions and hardening
Zimbabwe Hardening
Zimbabwe Tensions
Regional Average Tensions
Economic performance
Regional Growth
Zimbabwe
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2003/2004 focus Energy supply in Africa
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Huge potential under or badly exploited

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

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Hydroelectric power
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Oil and NGL, largely exploited 7.3 of world
reserves, 10.6 of world production
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But mostly exported
3.6 of world refining capacity
Supply of motor gasoline in Nigeria (2001)
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Gas flaring and shrinkage7.5 of world reserves,
5.5 of world production
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Energy consumption in Africa (2001)
Coal 7
Gas 16
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Electrification rates
World average
Developing countries average
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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

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Thank you