Description
Asian-african Engagement Turnaroundengagement Turnaround Time
Asian Asian--African African
Engagement: Turnaround Engagement: Turnaround
Time Time
Asian Asian--African African
Engagement: Turnaround Engagement: Turnaround
Time Time
Razia Khan, Regional Head of Economics, Africa
[email protected]
Time Time
Entrepreneurship & Private Sector Entrepreneurship & Private Sector
Development in Africa Development in Africa
AfDB Annual Meeting AfDB Annual Meeting
May 2007 May 2007
Shanghai Shanghai
Time Time
Entrepreneurship & Private Sector Entrepreneurship & Private Sector
Development in Africa Development in Africa
AfDB Annual Meeting AfDB Annual Meeting
May 2007 May 2007
Shanghai Shanghai
African growth outpaces
global growth
Global and Sub Saharan African GDP compared (%)
3
4
5
6
7
SSA
World
Source: IMF
-3
-2
-1
0
1
2
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06e 07f
Redefining the role of the State –
Part 1
Average inflation is lower
Fiscal Policy has improved
Gross National Savings as % of GDP
0
5
10
15
20
25
90 91 92 93 94 95 96 97 9899 00 01 02 03 04 05 06 07f
Inflation, Annual % change, SSA
0
10
20
30
40
50
60
70
Commodities boom fuels interest in Africa
Debt relief has added to the attractiveness
of economies
90 91 92 93 94 95 96 97 9899 00 01 02 03 04 05 06 07f
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06e07f
10
20
30
40
50
60
70
80
External Debt as % of GDP, SSA
0
90 91 92 93 94 95 96 97 9899 00 01 02 03 04 05 06 07f
100
150
200
250
300
350
400
450
0
50
CRB commodities index
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07f
Source: IMF
Macro reform Vs. Micro reform
Africa’s private sector still to emerge
Economic Freedom By Region
MENA
SSA
World
Economic Freedom vs Per Capita GDP
Source: Economic Freedom Index 2007
Heritage Foundation
0 10 20 30 40 50 60 70 80
Asia Pacific
Europe
Americas
Redefining the role of the
State Part 2
A vibrant private sector is vital for sustained
economic growth, job creation & income
generation.
Improvement: Africa now in 3
rd
place in terms of reform
intensity
Business Environment Reform Intensity
(average number of reforms)
Source: World Bank ‘Doing Business’ Database,
data for 2004
Where Africa ranks…
Total tax rate (% profit)
42.2
56
49.1
40.8
47.8
45.1
71.2
50
60
70
80
42.2
40.8
0
10
20
30
40
50
East Asia &
Pacific
Europe &
Central Asia
Latin
America &
Caribbean
Middle East
& North
Africa
OECD South Asia Sub-
Saharan
Africa
Source: World Bank ‘Doing Business’ Database 07
Easy wins still available
Cost of starting a business % of per capita income
162.8
100
120
140
160
180
42.8
14.1
48.1
74.5
5.3
46.6
0
20
40
60
80
100
East Asia
Pacific
Europe &
Central Asia
LatAm
&
Caribbean
Middle East
& North
Africa
OECD South Asia Sub-
Saharan
Africa
Source: World Bank ‘Doing Business’ Database 07
Trading Across Borders
Region or Economy
Documents
for export
(number)
Time
for
export
(days)
Cost to
export
(US$ per
container)
Documen
ts for
import
(number)
Time
for
import
(days)
Cost to
import
(US$
per
contain
er)
East Asia & Pacific 6.9 23.9 884.8 9.3 25.9 1,037.10
Europe & Central Asia 7.4 29.2 1,450.20 10 37.1 1,589.30 Europe & Central Asia 7.4 29.2 1,450.20 10 37.1 1,589.30
Latin America &
Caribbean
7.3 22.2 1,067.50 9.5 27.9 1,225.50
Middle East & North
Africa
7.1 27.1 923.9 10.3 35.4 1,182.80
OECD 4.8 10.5 811 5.9 12.2 882.6
South Asia 8.1 34.4 1,236.00 12.5 41.5 1,494.90
Sub-Saharan Africa 8.2 40 1,561.10 12.2 51.5 1,946.90
Source: World Bank ‘Doing Business’ Database 07
Although Africa’s trade has
grown in absolute terms…
its share of global trade has declined
175
200
225
250 World
Developing Asia
Africa
Middle East
Exports of goods and services, Index (1996 =100)
Asia 1,249bn (2005)
Middle East 328bn (2005)
75
100
125
150
175
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
World 11,167bn (2005)
Africa 212bn (2005)
Middle East 328bn (2005)
Source: IMF
Africa’s trade: increasingly
oriented away from OECD
countries. . .
Direction of trade for selected African countries in 1995
60%
80%
100%
Source: OECD - IMF Direction of Trade (DOTS)
0%
20%
40%
to industrial countries to India to China (mainland) Others
…in favour of Asian economies
Direction of trade for selected African countries in 2004
60%
80%
100%
Source: OECD, IMF Direction of Trade (DOTS)
0%
20%
40%
to industrial countries to India to China (mainland) Others
Africa’s trade with China in
particular is growing rapidly
China-Africa & Africa-EU trade compared (USDbn)
40
50
60
150
200
250
Source: IMF DoTS, SCB Research
0
10
20
30
95 96 97 98 99 00 01 02 03 04 05 06
0
50
100
China -Africa trade EU-Africa Trade (RHS)
…driven by strong demand for
commodities
1996 1997 1998 1999 2000 2001 2002 2003
Copper (refined, th tonnes)
World total 12,399 13,017 13,353 14,038 15,177 14,682 15,065 15,457
Asia Pacific, % consumption 37% 36% 34% 36% 37% 40% 44% 45%
China, % consumption 10% 10% 11% 11% 13% 16% 18% 20%
Aluminium(refined, th tonnes)
World total 20,684 21,870 21,889 23,356 25,059 23,721 25,338 27,369
Asia Pacific, % consumption 34% 34% 31% 34% 35% 35% 36% 39%
China, % consumption 10% 10% 11% 13% 14% 15% 16% 19%
Tin (refined, th tonnes) Tin (refined, th tonnes)
World total 239 244 242 249 276 281 280 309
Asia Pacific, % consumption 46% 45% 40% 43% 46% 47% 47% 50%
China, % consumption 18% 16% 14% 16% 19% 22% 19% 24%
Zinc (slab, th tonnes)
World total 7,533 7,620 7,985 8,391 8,893 8,807 9,326 9,464
Asia Pacific, % consumption 40% 38% 39% 40% 41% 43% 44% 47%
China, % consumption 13% 10% 14% 14% 16% 17% 18% 21%
Crude Oil (mn tonnes)
World total 3,323 3,398 3,417 3,485 3,526 3,538 3,563 3,637
Asia Pacific, % consumption 27% 27% 27% 27% 28% 28% 28% 29%
China, % consumption 5% 5% 6% 6% 7% 7% 7% 8%
Source: World Bureau of Metal Statistics (BP)
African exports still have a African exports still have a
heavy commodity heavy commodity
concentration, leaving the concentration, leaving the
continent vulnerable continent vulnerable
Economic Diversification is Economic Diversification is
key…. key….
The traditional argument: fewemployment gains The traditional argument: fewemployment gains
fromFDI in extractive industry. Limited benefits fromFDI in extractive industry. Limited benefits
However, China’s impact on However, China’s impact on
Africa goes beyond demand Africa goes beyond demand
for commodities for commodities
…It is …It is fundamentally transformational fundamentally transformational
Consider this
135.4
70.9
24.7
86.2 *
47.2
Hong Kong
Malaysia
Thailand
Indonesia
Philippines
Dec-97 Mar-07
FX Reserves of Asian Central Banks (USDbn)
Source: Bloomberg
1202.0
888.0
267.5
243.9
191.9
137.5
135.4
0 100 200 300 400 500 600 700 800 900 1000 1100 1200
China
Japan
Taiwan
South Korea
India
Singapore
Hong Kong
Low long term yields drive investor
risk appetite
US 10 yr TSY
3m Libor
5
6
7
8
9
Source: Bloomberg
0
1
2
3
4
5
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
. . . helping to attract greater
portfolio flows to Africa
15
20
25
Net Direct Investment
Net Private Capital Flows
Net Private Portfolio Flows
USDbn
Net Private Portfolio Flows now a lot higher
-5
0
5
10
15
2002 2003 2004 2005e
Source: IMF
The impact
South African repo
Nigerian 3m T-bill rate
0
5
10
15
20
25
30
Jan
00
Jul
00
Jan
01
Jul
01
Jan
02
Jul
02
Jan
03
Jul
03
Jan
04
Jul
04
Jan
05
Jul
05
Jan
06
Jul
06
0
2
4
6
8
10
12
14
16
Jan
00
Jul
00
Jan
01
Jul
01
Jan
02
Jul
02
Jan
03
Jul
03
Jan
04
Jul
04
Jan
05
Jul
05
Jan
06
Jul
06
Zambian 3m T-bill rate
Ghana 3m T-bill rate
00 00 01 01 02 02 03 03 04 04 05 05 06 06
0
10
20
30
40
50
60
Jan
00
Jul
00
Jan
01
Jul
01
Jan
02
Jul
02
Jan
03
Jul
03
Jan
04
Jul
04
Jan
05
Jul
05
Jan
06
Jul
06
0
10
20
30
40
50
Jan
00
Jul
00
Jan
01
Jul
01
Jan
02
Jul
02
Jan
03
Jul
03
Jan
04
Jul
04
Jan
05
Jul
05
Jan
06
Jul
06
Source: IFS, Standard Chartered Africa Global Markets
Africa’s Private Sector
Financial Intermediation Private Sector Growth
Infrastructure Agriculture
Rising Disposable
Income
&Consumption
Vast potential, still untapped
• China has a key role to play in the development of
manufacturing and services infrastructure
• It has already influenced African Capital Markets
• & has helped to correct the undervaluation of African
assets
• ….but Africa must maintain the momentum of reform
doc_523716312.pdf
Asian-african Engagement Turnaroundengagement Turnaround Time
Asian Asian--African African
Engagement: Turnaround Engagement: Turnaround
Time Time
Asian Asian--African African
Engagement: Turnaround Engagement: Turnaround
Time Time
Razia Khan, Regional Head of Economics, Africa
[email protected]
Time Time
Entrepreneurship & Private Sector Entrepreneurship & Private Sector
Development in Africa Development in Africa
AfDB Annual Meeting AfDB Annual Meeting
May 2007 May 2007
Shanghai Shanghai
Time Time
Entrepreneurship & Private Sector Entrepreneurship & Private Sector
Development in Africa Development in Africa
AfDB Annual Meeting AfDB Annual Meeting
May 2007 May 2007
Shanghai Shanghai
African growth outpaces
global growth
Global and Sub Saharan African GDP compared (%)
3
4
5
6
7
SSA
World
Source: IMF
-3
-2
-1
0
1
2
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06e 07f
Redefining the role of the State –
Part 1
Average inflation is lower
Fiscal Policy has improved
Gross National Savings as % of GDP
0
5
10
15
20
25
90 91 92 93 94 95 96 97 9899 00 01 02 03 04 05 06 07f
Inflation, Annual % change, SSA
0
10
20
30
40
50
60
70
Commodities boom fuels interest in Africa
Debt relief has added to the attractiveness
of economies
90 91 92 93 94 95 96 97 9899 00 01 02 03 04 05 06 07f
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06e07f
10
20
30
40
50
60
70
80
External Debt as % of GDP, SSA
0
90 91 92 93 94 95 96 97 9899 00 01 02 03 04 05 06 07f
100
150
200
250
300
350
400
450
0
50
CRB commodities index
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07f
Source: IMF
Macro reform Vs. Micro reform
Africa’s private sector still to emerge
Economic Freedom By Region
MENA
SSA
World
Economic Freedom vs Per Capita GDP
Source: Economic Freedom Index 2007
Heritage Foundation
0 10 20 30 40 50 60 70 80
Asia Pacific
Europe
Americas
Redefining the role of the
State Part 2
A vibrant private sector is vital for sustained
economic growth, job creation & income
generation.
Improvement: Africa now in 3
rd
place in terms of reform
intensity
Business Environment Reform Intensity
(average number of reforms)
Source: World Bank ‘Doing Business’ Database,
data for 2004
Where Africa ranks…
Total tax rate (% profit)
42.2
56
49.1
40.8
47.8
45.1
71.2
50
60
70
80
42.2
40.8
0
10
20
30
40
50
East Asia &
Pacific
Europe &
Central Asia
Latin
America &
Caribbean
Middle East
& North
Africa
OECD South Asia Sub-
Saharan
Africa
Source: World Bank ‘Doing Business’ Database 07
Easy wins still available
Cost of starting a business % of per capita income
162.8
100
120
140
160
180
42.8
14.1
48.1
74.5
5.3
46.6
0
20
40
60
80
100
East Asia
Pacific
Europe &
Central Asia
LatAm
&
Caribbean
Middle East
& North
Africa
OECD South Asia Sub-
Saharan
Africa
Source: World Bank ‘Doing Business’ Database 07
Trading Across Borders
Region or Economy
Documents
for export
(number)
Time
for
export
(days)
Cost to
export
(US$ per
container)
Documen
ts for
import
(number)
Time
for
import
(days)
Cost to
import
(US$
per
contain
er)
East Asia & Pacific 6.9 23.9 884.8 9.3 25.9 1,037.10
Europe & Central Asia 7.4 29.2 1,450.20 10 37.1 1,589.30 Europe & Central Asia 7.4 29.2 1,450.20 10 37.1 1,589.30
Latin America &
Caribbean
7.3 22.2 1,067.50 9.5 27.9 1,225.50
Middle East & North
Africa
7.1 27.1 923.9 10.3 35.4 1,182.80
OECD 4.8 10.5 811 5.9 12.2 882.6
South Asia 8.1 34.4 1,236.00 12.5 41.5 1,494.90
Sub-Saharan Africa 8.2 40 1,561.10 12.2 51.5 1,946.90
Source: World Bank ‘Doing Business’ Database 07
Although Africa’s trade has
grown in absolute terms…
its share of global trade has declined
175
200
225
250 World
Developing Asia
Africa
Middle East
Exports of goods and services, Index (1996 =100)
Asia 1,249bn (2005)
Middle East 328bn (2005)
75
100
125
150
175
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
World 11,167bn (2005)
Africa 212bn (2005)
Middle East 328bn (2005)
Source: IMF
Africa’s trade: increasingly
oriented away from OECD
countries. . .
Direction of trade for selected African countries in 1995
60%
80%
100%
Source: OECD - IMF Direction of Trade (DOTS)
0%
20%
40%
to industrial countries to India to China (mainland) Others
…in favour of Asian economies
Direction of trade for selected African countries in 2004
60%
80%
100%
Source: OECD, IMF Direction of Trade (DOTS)
0%
20%
40%
to industrial countries to India to China (mainland) Others
Africa’s trade with China in
particular is growing rapidly
China-Africa & Africa-EU trade compared (USDbn)
40
50
60
150
200
250
Source: IMF DoTS, SCB Research
0
10
20
30
95 96 97 98 99 00 01 02 03 04 05 06
0
50
100
China -Africa trade EU-Africa Trade (RHS)
…driven by strong demand for
commodities
1996 1997 1998 1999 2000 2001 2002 2003
Copper (refined, th tonnes)
World total 12,399 13,017 13,353 14,038 15,177 14,682 15,065 15,457
Asia Pacific, % consumption 37% 36% 34% 36% 37% 40% 44% 45%
China, % consumption 10% 10% 11% 11% 13% 16% 18% 20%
Aluminium(refined, th tonnes)
World total 20,684 21,870 21,889 23,356 25,059 23,721 25,338 27,369
Asia Pacific, % consumption 34% 34% 31% 34% 35% 35% 36% 39%
China, % consumption 10% 10% 11% 13% 14% 15% 16% 19%
Tin (refined, th tonnes) Tin (refined, th tonnes)
World total 239 244 242 249 276 281 280 309
Asia Pacific, % consumption 46% 45% 40% 43% 46% 47% 47% 50%
China, % consumption 18% 16% 14% 16% 19% 22% 19% 24%
Zinc (slab, th tonnes)
World total 7,533 7,620 7,985 8,391 8,893 8,807 9,326 9,464
Asia Pacific, % consumption 40% 38% 39% 40% 41% 43% 44% 47%
China, % consumption 13% 10% 14% 14% 16% 17% 18% 21%
Crude Oil (mn tonnes)
World total 3,323 3,398 3,417 3,485 3,526 3,538 3,563 3,637
Asia Pacific, % consumption 27% 27% 27% 27% 28% 28% 28% 29%
China, % consumption 5% 5% 6% 6% 7% 7% 7% 8%
Source: World Bureau of Metal Statistics (BP)
African exports still have a African exports still have a
heavy commodity heavy commodity
concentration, leaving the concentration, leaving the
continent vulnerable continent vulnerable
Economic Diversification is Economic Diversification is
key…. key….
The traditional argument: fewemployment gains The traditional argument: fewemployment gains
fromFDI in extractive industry. Limited benefits fromFDI in extractive industry. Limited benefits
However, China’s impact on However, China’s impact on
Africa goes beyond demand Africa goes beyond demand
for commodities for commodities
…It is …It is fundamentally transformational fundamentally transformational
Consider this
135.4
70.9
24.7
86.2 *
47.2
Hong Kong
Malaysia
Thailand
Indonesia
Philippines
Dec-97 Mar-07
FX Reserves of Asian Central Banks (USDbn)
Source: Bloomberg
1202.0
888.0
267.5
243.9
191.9
137.5
135.4
0 100 200 300 400 500 600 700 800 900 1000 1100 1200
China
Japan
Taiwan
South Korea
India
Singapore
Hong Kong
Low long term yields drive investor
risk appetite
US 10 yr TSY
3m Libor
5
6
7
8
9
Source: Bloomberg
0
1
2
3
4
5
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
. . . helping to attract greater
portfolio flows to Africa
15
20
25
Net Direct Investment
Net Private Capital Flows
Net Private Portfolio Flows
USDbn
Net Private Portfolio Flows now a lot higher
-5
0
5
10
15
2002 2003 2004 2005e
Source: IMF
The impact
South African repo
Nigerian 3m T-bill rate
0
5
10
15
20
25
30
Jan
00
Jul
00
Jan
01
Jul
01
Jan
02
Jul
02
Jan
03
Jul
03
Jan
04
Jul
04
Jan
05
Jul
05
Jan
06
Jul
06
0
2
4
6
8
10
12
14
16
Jan
00
Jul
00
Jan
01
Jul
01
Jan
02
Jul
02
Jan
03
Jul
03
Jan
04
Jul
04
Jan
05
Jul
05
Jan
06
Jul
06
Zambian 3m T-bill rate
Ghana 3m T-bill rate
00 00 01 01 02 02 03 03 04 04 05 05 06 06
0
10
20
30
40
50
60
Jan
00
Jul
00
Jan
01
Jul
01
Jan
02
Jul
02
Jan
03
Jul
03
Jan
04
Jul
04
Jan
05
Jul
05
Jan
06
Jul
06
0
10
20
30
40
50
Jan
00
Jul
00
Jan
01
Jul
01
Jan
02
Jul
02
Jan
03
Jul
03
Jan
04
Jul
04
Jan
05
Jul
05
Jan
06
Jul
06
Source: IFS, Standard Chartered Africa Global Markets
Africa’s Private Sector
Financial Intermediation Private Sector Growth
Infrastructure Agriculture
Rising Disposable
Income
&Consumption
Vast potential, still untapped
• China has a key role to play in the development of
manufacturing and services infrastructure
• It has already influenced African Capital Markets
• & has helped to correct the undervaluation of African
assets
• ….but Africa must maintain the momentum of reform
doc_523716312.pdf