ECOWAS ECONOMIC OUTLOOK

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ECOWAS ECONOMIC OUTLOOK OPPORTUNITIES

• Dr Ken Ife
• (B.Sc PhDMBALLMC.EngFNSM) kenife_at_aol.com
• EU-Africa Business Forum (Co-Chair, Trade),
  Africa Business Round Table/ NEPAD Business
  Group.
• ECOWAS Trade Investment Conference, Brussels,
  4th -5th June 2009

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OPPORTUNITY ECOWAS THE TIME TO INVEST IS NOW

• HIGHLIGHTS The fundamentals of emerging ECOWAS
  economy are strong
• PEACE DIVIDEND Peace, stability and sustained
  effort at conflict resolution. Steadily
  improving investment climate. Social, economic
  political opportunities for ECOWAS economic
  integration are now positive and convergent.
• DEMOCRACY DIVIDEND Smooth political transition
  Rising macro-economic stability regulatory
  convergence improved economic, political and
  corporate governance. Landmark achievements
  towards regional integration (passport, currency,
  customs union, CET, Common Investment Policy,
  Trade facilitation, stronger engagement with
  private sector etc
• Rapid economic growth - about 5.7(2008) but
  slowing temporarily
• DIASPORA DIVIDEND Rising levels of FDI/ODA-Aid
  flows, Diaspora remittances strong and improved
  performance of the financial sectors
• Rising prices and demand of minerals, raw and
  agricultural materials
• INFRASTRUCTURE challenge - huge investment in
  power, gas pipelines, road rail
• ICT - the fastest growing subscriber base and
  call volume
• Agriculture A case of unfulfilled potential,
  Cote dIvoire is still largest exporter of cocao,
  Ghana exporting 70 of Yam consumption in Europe
• Export Priority- Non Oil export/diversification
• Education largely untapped market
• China is the largest growing economy and Africa
  is its engine of growth

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AFRICA ECONOMIC OUTLOOK ( Africa Development Bank
, May 2009)
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Nigerias prediction, as is West Africa, doesnt
stack up. As an Agrarian economy with Agriculture
contributing over 40 of GDP, you cant ignore
over US3b direct investment in all aspect of
Commercial Agriculture(CBN agric bond N200b,
FMAWR N104b grant, World Bank Commercial Agric
US150m , Budgetary resources of Fed and States
etc), the output of which will felt later this
year. Secondly none of the 25 Nigerian Banks has
succumbed to the financial crisis, instead their
fundamentals are strong and they are positing
huge profits despite the shake-up in share
valuation. Thirdly, domestic capital
mobilisation of our under-banked communities is
continuing unabated and Nigeria currently has 5
of Africa 10 biggest banks with strong capital
base and expanding into the regions and taking on
development finance on competitive rates.
Forthly, Diaspora remittance is consistently at
US10b a year (CBN-2008), and there is a surge of
Diaspora homecoming. Fiftly, the massive
investment in power, which runs into billions of
dollars would raise the contribution of
industrialisation to GDP from the current 3.7
to Indonesias level of 40. Overall, Nigerias
prudent macro-economic reforms, strengthened
fiscal balances and reduced inflation aiming at
single digit by 2010 means that our economy is
more resilient.
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Trade, Investment and Regional integration of
ECOWAS

• Tony Blair Africa should trade itself out of
  poverty....and the only people that will
  develop Africa are Africans.
• Africas share of World trade declined from 10
  (early 60s) to about 2 (2007). ECOWAS share
  less than 1. 1 in trade brings in about US75b.
  But World trade is shrinking by 13.1, the first
  in 60yrs .
• World Bank (2007) suggested that investment of
  US20b in regional infrastructure could bring
  extra US250b in Regional Trade in 10yrs.
• Intra-African trade is 9.5 and about 12 for
  ECOWAS of which manufactured products account for
  42.5, Fuel Mining(35.4) and agric (17.1)
• EU ACP EPA Agreement and EBA protocol duty
  free access and asymmetric trade liberalisation
  allowing 15 yrs policy space
• US AGOA to 2015. Duty free access to US
  13trillion import market
• Transit Corridors Integrated Infrastructure
  paving the way for regional markets
• PPPs in key infrastructure (Rail, Road, ICT
  backbone, Power pool, Water, Gas pipeline)

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INFRASTRUCUTRE - EQUATORIAL SUPER TRANSIT
CORRIDOR- SIZE OF THE ECONOMY
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Trade, Investment and Regional integration

• TRADE- key areas of action is to build
  sustainable Export Trade capacity through
  strengthening institutional, technical and
  organisational capacities)
• Trade Policy
• Trade Agreements
• Infrastructure
• Export Development Strategies
• Standards and Conformity Assessment
• Trade Barriers(NTBs TBTs SPS Tariff barriers
  Subsidies Trade Disputes etc)

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Investment

• Diaspora Dividend. Inflexion (1995 Vs 2005). The
  Nigerian Diaspora remitted US6b (2004)
  US8b(2005) and US4b(2006) but CBN says it is
  10b per year. In 2007, we remitted US3.3b of
  the US11b to Sub-saharan Africa. Remittances
  come to 50 from US/Canada (25) from UK and
  (14) from EU
• Nigerian Banking Sector Emerges as Sub-Saharan
  Leader
• From 89 banks with a total capital base of N293
  million at 2004YE, which was just the size of the
  No. 4 bank in South Africa to now over 7 banks
  with Tier I capital in excess of 1 Billion by
  2008 YE 11 banks now have market capitalization
  ranging between 1 Billion and 5.3 Billion 16
  banks now in the top 1000 in the world 5
  Nigerian banks now rank among the top 10 African
  banks. Not one of these 24 banks have succumbed
  to the financial crisis. The fundamentals are
  strong and they are posting huge profits.

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Remittances The Great Inflexion
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Nigerian Banking Sector Emerges as Sub-Saharan
Leader

• 8 Nigerian banks in top 20 by capital

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Nigerian Banking Sector Leading the way in
Sub-Sahara

• 8 Nigerian banks in top 20 by assets

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Nigerian Banking Show exceptional performance on
ROA

• 9 Nigerian banks in top 20 by ROA

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Nigerian Banking Sector showing strong asset
performance

• The Nigerian banking sector has emerged as
  sub-Sahara African (SSA) leader

Regulatory capital is among top 3 in SSA
Improved asset quality
2008 figures
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Scale and Scope of Nigerian Banks African
Operations

• Geographical Coverage of Nigerian Banks in 2004

• Nigerian Banks were in 3 countries (South Africa,
  Ghana and Cameroon) with only 5 subsidiaries
  shown as pink ( ) colour on the map

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Scale and Scope of Nigerian Banks African
Operations

• Geographical Coverage of Nigerian Banks in 2009

• Nigerian Banks are now in 18 countries with 44
  subsidiaries shown as red ( ) colour on the
  map
• This implies that in 5 years, Nigerian Banks
  spread to 15 other African countries and
  established 39 more subsidiaries

Nigerian Banks in sub-Saharan market
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Regional Integration Infrastructure

• RECs are changing the game(ECOWAS, EAC,SADC,
  COMESA, CEDAC)
• Free movement of people, goods and services
• Common Currency and macro-economic convergence
  criteria are being met
• Common Passport (ECOWAS)
• Customs Union Common External Tariff (EAC
  Close)
• Competition Policy and Common Investment Policy
  and One Stop Shop
• Common Business Law (OHADA)
• Alternative Trade Dispute Resolution(ECO-SOLVIT)
• Transit corridors in top gear with Joint border
  posts
• Trade and Transport facilitation in top gear
• Single Window/Hubs implemented in Dakar, Mombasa
  and Lagos targeted

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ICT Africa has the fastest growth

• Africa Development bank has Infrastructure
  Project Preparation facility which is open to
  private sector
• Average growth rate of mobile phone in Africa is
  58
• NIGERIA Mobile phones grown from 1m lines in
  2000 to 60m lines (2008) and about US20b call
  volume.

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Energy

• Oil, Gas Renewable Energy.
• Regional Power Pool. Huge investment in Power
  generation (Nigeria US6b plus)
• Ghana Nigeria gas pipeline Nigeria Algeria
  gas pipeline and Kenya Uganda pipeline are
  among the regional distribution infrastructure
• Many parts of Africa have substantial oil and gas
  deposits and exploration activities
• Ghana is setting up large Jatropha plantations
  for bio-diesel production and paving the way to
  carbon- free energy future. At least 20 states in
  Nigeria are investing in Jatropha plantation
  with Enugu leading the way with 35,OOO hectares
  and Bio-Diesel Refinery

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Agriculture Increased Private investment in the
agri-food sector needed

• Implications for agri-food chains
• Would be a boost to food security
• Increased concentration in agri-food supply
  chains-integration
• Rapid change in technologies
• Increased importance of food standards for
  national, regional and export markets
• Increased access to international markets
• Increased supply capacity for high-value and
  high-standards food production
• Changes in the governance system of agri-food
  supply chains increased vertical coordination

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WHY ? Because of Nigerias unfulfiled potential

• The share of global trade has declined to the
  point where little of its Agricultural produce is
  seen in the Worlds markets. But the potential
  is enormous and Nigeria is the sleeping giant of
  Africa in Agriculture. It produced 140m Metric
  Tonnes of the first 20 listed food items (approx
  1 Tonne per person FAO 2005) but some 30 to
  35 of food produced do not enter the food
  chain because of post harvest losses. Nigerias
  position is quite strong on a number of crops
•  
• Crop(FAO 2005) Volume (M Tons)
  Position(World Market) Position(Africa)
• Yams 26.5m
  1
  1
• Sweet Potatoes 2.5m
  3
  2
• Pineapples 889,000
  6
  1
• Mangoes 730,000
  9
  1
• Vegetables 4.285m
  3
  1
• Okro 730,000
  2
  1
• Peppers / Chillies 720,000
  7
  1
• FAO 2005

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Private Sector Development

• Promoting good political, economic and corporate
  governance
• Policy Reform to Improve investment Climate
• Promoting Entrepreneurship
• Linking wealth creation to poverty reduction and
  the MDGs
• Meeting the challenges of Globalisation and
  competitiveness
• Encouraging innovation and technology transfer
• Promoting Public-Private Sector Partnership and
  De-regulation
• Promoting Corporate Social Responsibility
  alongside Social, Economic and Environmental
  Sustainabilty

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Education

• NIGERIA has 97 Universities (more than those of
  sub-saharan Africa put together) but a far cry to
  US 2,600 Universities for a population of 280m
  compared to Nigerian population of 148m
• Currently less than 200,000 undergraduates are
  admitted each year and 1m are dissappointed
• Great opportunity for Private sector led
  On-line/Distance learning collaborative open
  Universities

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Tourism

• Eastern and Southern Africa very strong in Eco
  Tourism
• North Africa coastal Tourism
• West Africa developing cultural heritage(Ghana)
  and coastal Tourism(Gambia.
• At least 2 states of Nigeria, Enugu and Plateau
  State are planning to build Game Park and
  integrated Leisure complex, the one of Enugu to
  include Nollywood Film villages

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Mining Extractive Metallurgy

• Wide range of minerals exploited from virtually
  all countries in Africa but face severe
  transport, rail and road challenges
• Africa now the engine for the largest world
  growing economy - China.
• In Zambia, china had to climb down to extend the
  copper value-chain into manufacturing.