The African Economic Outlook 2008
Measuring the Pulse ofAfrica
Federica Marzo
OECD Development Centre
27th May 2008
FASID

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1Macroeconomic Outlook: Challenges and Opportunities

2Skills Development: Investing in African Youth2UNECAGrowthAfrica continues steady growth
Real GDP growth expected to exceed
5% for the sixth consecutive year in2008 , and reach 5.9%

Real GDP GrowthAfrica•2007: 25 countries over 5%•2008: 31 countries over 5%•2007: 13 countries between 3‐5%
•2008: 16 countries between 3‐5%
Total OECD

Growth in 2009 will remainsustained at 5.9%

Source: OECD Development Centre / African Development Bank, 2008

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Commodities

The commodity boom: a key driver for Africa
Global commodity prices 2001‐2009

Source: OECD Development Centre / World Bank, 2008

4UNECAChina /India

A new driver for African growth

Source: OECD Development Centre / UN Comtrade, 2008

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Drivers

Improved macroeconomic framework

Fiscal Balance % GDP

Current account % GDP

Average
2000‐04

Average
2005‐09**

Central
East
North
South

1.6
‐2.2
‐1.2
‐2.5

8.6
‐3.2
6
1.6

CentralEast
NorthSouth‐3.2
‐4.3
5.6
‐1.2

3.2
‐7.5
13.2‐1.7

West‐0.5

4.5

West‐2.7

AFRICA‐1.5

3.4

AFRICA

0.8Inflation

Average Average
2000‐04 2005‐09**

Average
2000‐04

Average
2005‐09**

CentralEastNorth
South*

14.6
6
2.6
14.4

4.6
8.7
5.2
6.8

3.3

West

10.3

7.8

3.8

AFRICA*86.4

Source: OECD Development Centre / African Development Bank, 2008

* Excluding Zimbabwe** Estimations for 2007 and predictions for 2008/09
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Drivers

Record investment in 2007: a new driver?

Public and Private Investment% of GDP

Source: OECD Development Centre / UNCTAD, 2008

Source: OECD Development Centre / EPFR, 20087UNECA

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GrowthOil exporters and importers: divergent paths?
Real GDP Growth• Growth rates for oil importerand oil exporter countries
diverged significantly in 2007
and 2008• However, this difference is
set to narrow in 2009, due to:‐ Slower growth of oil
production in Angola‐ Growth recovery in Kenya
and South Africa

Source: OECD Development Centre / African Development Bank, 2008

Net Oil exporters: Algeria, Angola, Cameroon, Chad, Congo,
Côte d'Ivoire, Congo DRC, Egypt, Equatorial Guinea, Gabon,Libya, Nigeria, SudanUNECA

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Oil ‐ X

Sustained growth in oil‐producing countries

Outstanding achievers:
Angola: 11.8% average growth 2000‐07
Algeria: 4% average growth 2000‐07
Assets:• Sustained and prolonged growth• Improving macro management• Rising Investment in non‐oil sectors
Liabilities:• Poor diversification• Structural declining productivity of old oil fields• Poor governanceSource: AfDB/OECD Development Centre, 2008

9UNECA*: African Economic Outlook forecasts

Oil ‐ M

Good growth but of what quality?

Best performers, average growth 2000‐07 :Tanzania: 6.7 %Ghana: 5.2 %Tunisia: 4.9 %Assets:• Sustained and prolonged growth• Prudent macroeconomic policies• Good Diversification• Decreasing poverty
Poor quality growth:• Poverty stagnating•Vulnerability to climatic and priceshocks
Source: AfDB/OECD Development Centre, 2008

10UNECA*: African Economic Outlook estimate

Food Prices Significant food price inflation over past year
• Rising grain prices : an international andlocal trend• Sub‐ Saharan Africa is a net cereal
importer• But vulnerability varies among countries• Need for long term concerted solutions

African Cereal Production (million tonnes)

AfricaNorth Africa
Western Africa
Central Africa
Eastern Africa
Southern Africa

2006(e)2007(e)

144.1
36
49.1
3.6
33.9
21.5

135.6
28.9
47.4
3.5
33.9
21.9

Change 20062007 (%)
-5.9
-19.8
-3.5
-2.7
0
2.1

Source: OECD Development Centre / Thomson Datastream, 2008

Source: OECD Development Centre / FAO, 2008

11UNECAStability

Is long term decline in political instability
continuing ?

Regime Hardening(LHS)

Qualitative data obtained from Marchés Tropicaux et Méditerranéens. Data is used to construct two indicators referring to:
Political instability: occurrence of strikes, demonstrations, violence and coup d’état.
Hardening of the political regime : incarcerations of opponents, measures threatening democracy such as dissolution ofpolitical parties, violence perpetrated by the police and the banning of demonstrations or public debates.

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Source: OECD Development Centre “Moving towards
political stability? Monitoring political instability,governments response and economic performance inAfrican countries” forthcoming article, April 2008.

12Outlook

Oil exporter & importers: different challenges
ahead?
GrowthFiscal Balance

Trade Balance

Inflation*

Oil and Mineral exporters
Challenges:• Capitalise on windfall gains• Maximise spillover to rest of theeconomy• Avoid Dutch Disease

Oil importers
Challenges:• Contain fiscal deficit• Finance widening trade deficit• Streamline spending to prioritisepoverty reduction

Inflation is a challenge forthe entire continent
Source: OECD Development Centre, African Economic Outlook, 2008

* Oil Importers exclude Zimbabwe
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Diversification

Common challenges: diversify to raise exports• Between 2002 and 2006 29 african countries
have further specialised.
• The 10 less diversified countries are all oilexporters• The 5 most diversified are Morocco, Tunisia,South Africa, Tanzania and Senegal

In 2007, only 12 out of 35 AEO countries
increased export volume by 5 per cent or
more
Diversification should be fostered tosustain growth and fight against rising
import costs

Source: OECD Development Centre, UN Comtrade, 2008

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Energy•

Common challenges: Energy crises harmprospects
Countries Vulnerable to Energy Shortages

The installed capacity in
SSA is largely insufficent torespond to high growth
rates and increasing
demandTunisia

MoroccoLibya

Mauritania
Cape verdeNiger
ChadGuinea

25 countries are currently
experiencing severeenergy shortages.

EgyptMali

SenegalGambiaGuinea-Bissau•

Algeria

Côted'Ivoire
Liberia

Sierra Leone

EritreaSudan

Djibouti

Burkina
Faso
Nigeria

Ethiopia

Togo
Ghana
Cameroon

Central African
Republic
Somalia
UgandaEquatorial Guinea
Congo
Gabon

Kenya

RwandaDem.Rep.
Congo

BurundiSeychelles

Tanzania

Angola•Malawi
ZambiaThe crisis has been
worsened by South Africa
shortages, Kenya politicalcrises, droughts and highoil prices.

Mozambique
Zimbabwe
Madagascar
Namibia

Natural causes
Oil price shock

Botswana

SwazilandLesothoSouth
AfricaConflict
High growth/low
investment/structural issue
Source: Briceno‐Garmendia (2006); Eberhard and others (2008).

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Subprime

African economies safe from U.S downturn?
Due to a low share of external trade with the U.S,
Africa is less vulnerable to effects of U.S subprime woes

Source: OECD Development Centre / UN Comtrade, 2008.
(data on Nigeria corresponds to last available year, 2003)

Note: The “Others” category includes Latin America,Middle East. East Asia and South Asia.
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AidForeign aid as a catalyst for development

Source: OECD Development Centre / African Development Banks, 2008

17UNECAMDGs

Slow progress, despite growth

Goal 1
Goal 2
Goal 3
Goal 4
Goal 5
Goal 6
Goal 7

Source: OECD Development Centre / African Development Bank, 2008

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1

Macroeconomic Outlook: Challenges and Opportunities

2Skills Development: Investing in African Youth

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AEO

Technical and Vocational Skills Development(TVSD)

Key questions
 Which role for TVSD in Africa today?
 What is the status of skills development? Which providers
and what access?
 Are skills gaps being adequately addressed? What are theconstraints
 and what are the lessons learnt from recent reforms ?

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Definition

Technical and vocational skills development

Acquisition of knowledge,
practical competences & knowhow

Public orprivate TVET
schools

FormalDual
Training

Workplacetraining inenterprises

Degree of formalizationof labour market

InformalApprenticeshipInformal

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Role of TVSD

Key Facts¾ Sustained economic growth …but:• World’s lowest productivity (25% of world average, 1/12th of theaverage of industrialized countries, slow progress) partly due tolimited technical skills• Increasing youth unemployment (20% on average)• Large informal sector (on average, more than 80% of totalemployment)¾ Notable improvement in primary education, …but:• Big pressure on secondary schools and TVET systems• High drop out rates

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Role of TVSD

Achieving the MDGs

MDG 1:
Eradicate Extreme
Poverty andHunger

Decent Workstrategies for youth

Info & counselling

MDG 7:
Environmental
Sustainability

MDG 3:

Primary Education

Improve Gender
Equality in Educ.

GINI ↓SMEs
development

MDG 8: Develop

MDG 2: Expand

Elimination ofchild labour

Better jobs
for parents

Technical andVocational Skills
Development
Water & soil
mgt

Empowering Rural WomenMDG 4: Lower
Mortality Rates
For community
health workers

MDG 5:MDG 6: Combat
HIV/AIDS, Malaria,
etc.

Enhance
Reproductive
Health23

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Access

Enrolment in Secondary Technical and Vocational
Training in formal systems – International
Comparison
Percent, average 2002‐2006

20%
18%
16%
14%
12%
10%
8%6%
4%
2%
0%

South Eastern Latin America Eastern Asia
Asia& Caribbean

OECD

Sub‐Saharan North Africa
AfricaSource: OECD Development Centre / UNESCO‐UIS (2006), 2008

24UNECAAccess

Formal Training, what else?

The percentage of total secondary students enrolled intechnical and vocational programmes in 2005
Tunisia

MoroccoAfrican countries can begrouped in three
categories:

Algeria
Libya

Mauritania

EgyptGroup I: Proportion of
TVET enrolment > 10%.

NigerMali

SenegalChadSudan

EritreaGambiaGuinea-Bissau

Djibouti

Burkina
Faso

GuineaNigeria
Sierra Leone

Côte
d'Ivoire

Ethiopia

Togo

Central African
Republic

Ghana

Liberia

Cameroon
Somalia
UgandaEquatorial Guinea

Group II: Proportion ofTVET enrolment between
5 % and 9%.

CongoGabon

Group I:Group II:Group III:
Others:Kenya

RwandaDem.Rep.
Congo

BurundiGroup III: Proportion ofTVET enrolment <5%.

Tanzania

AngolaMalawi
ZambiaMozambique
Zimbabwe
Madagascar

Namibia

Botswana

Others: Data notavailable

SwazilandSouthAfrica

Lesotho

Source: OECD Developemnt Centre / UNESCO,
Global Education Digest, 2007

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Constraints

Financing is a major problem!

Challenges

Needs•The training system in Africa is largely
underfinanced (only 2 to 6% of national edu.
budget).

•Donors’ support to training has been erratic &insufficient to upgrade the quality and accessto training.

•Many enterprises undertrain their staff.

•

Funding is fragmented: Countries must makebetter use of existing funds•

Access remains more problematic for the poorand vulnerable: the State has to design
support mechanisms for them.

• Greater
diversification offunding sources forTVSD,• Development ofprivate training
markets,• Increased
competition between
public and private
TVSD providers,• Encourage more andhigher quality
enterprise training.
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Constraints

Constraints on TVSD’s impact & expansion

TVSDMissing links

National
development
policyWeak links

Industry skills needs

Post‐secondary
and tertiary
institutions

Firm‐basedand informal
training

Lack of a coherent strategic
approach29
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Lessons
learntSuccessful reforms: what are the lessons
learnt?

1.

Adopting an integrated vision and clear lines of authorities

2.

Improving Forecasting and Planning for Skills Needs

3.

Improving the quality of TVSD

4.

Addressing the informal sector’s skill needs (and those of vulnerable
groups)5.

Setting up accompanying measures

6.

Foster Partnership with All stakeholders

7.

Involving Local Communities and Strengthening Local Managementof TVSD
30UNECATo sum up...

1. Coherent vision and governance to TVSD
2. Make TVSD bankable: Strategies, action planand identification of objectives & resources
needed3. Increase awareness about benefits of TVSD
among firms and parents
4. Foster evaluation and monitoring mechanisms
To be fully effective, TVSD strategies must be integrated into
comprehensive employment policies and focus on sectors experiencing
employment growth and skill shortages
31UNECAThank you!
どうも有難う。
For more information:www.oecd.org/dev/aeo
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