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2. AEO is:
Comprehensive, independent analysis
Short-term macroeconomic forecasts
Special annual focus
AEO is:
Comprehensive, independent analysis
Short-term macroeconomic forecasts
Special annual focus
3. INTRO: PAST STORY + OVERVIEW
After more than a half decade of consecutive year of sustained growth, real gdp growth is expected to slump to 3% in 2009, as the crisis hits.
While the crisis effects the entire world and developed countries fall into recession, the picture for Africa, while fragile, is not without hope.
Clearly there will be serious effects of the global crisis on Africa, yet we must not forget the continent’s outstanding growth performance of recent years, it’s improved governance and the credibilty of macro policies adopted throughout the continent.
While Africa is at risk, it has made enormous progress since past crises, and is much more resilient and much better endowed than it once was.
Two points:
1. Africa is better prepared for the crisis than ever before
2. Growth will be resumed faster
After an excellent run, the macro environment has become much more challenging…? “growth is on pause” but will start again.
ISSUES: how can African countries finance the countercyclical policies they need? To what extent will the crisis affect aid? What will be the extent of impact on political instability?
? As this graph amply shows, even with the crisis, Africa is still beating OECD on growth hands down…INTRO: PAST STORY + OVERVIEW
After more than a half decade of consecutive year of sustained growth, real gdp growth is expected to slump to 3% in 2009, as the crisis hits.
While the crisis effects the entire world and developed countries fall into recession, the picture for Africa, while fragile, is not without hope.
Clearly there will be serious effects of the global crisis on Africa, yet we must not forget the continent’s outstanding growth performance of recent years, it’s improved governance and the credibilty of macro policies adopted throughout the continent.
While Africa is at risk, it has made enormous progress since past crises, and is much more resilient and much better endowed than it once was.
Two points:
1. Africa is better prepared for the crisis than ever before
2. Growth will be resumed faster
After an excellent run, the macro environment has become much more challenging…? “growth is on pause” but will start again.
ISSUES: how can African countries finance the countercyclical policies they need? To what extent will the crisis affect aid? What will be the extent of impact on political instability?
? As this graph amply shows, even with the crisis, Africa is still beating OECD on growth hands down…
4.
African countries need the full support of donors to continue investing in infrastructure and structural reforms through the crisis.
An important risk for many of LDCs is the potential impact of that the crisis may have on aid budgets in future years.
This is a source of significant fragility for countries heavily dependent on aid, such as Burundi, Rwanda, Mozambique (…) where most of the budget is financed by aid.
To effectively support public finances in african countries, donor countries must also be used countercyclically, to absorb fluctuations in private capital flows and government revenues. This will help sustain big infrastructure plans in the continent, whether they be financed by public, or private, capital. It will also help governments maintain public expenditures in crucial sectors for poverty reduction etc.
African countries need the full support of the donor community to continue investing in infrastructure and structural reform through the crisis, or run the risk of jeopardizing a decade of gains in growth and poverty reduction.
Africa can continue to grow despite the crisis, and gains must be preserved by pursuing structural reforms, infrastructure development and sustaining efforts in poverty reduction.
African countries need the full support of donors to continue investing in infrastructure and structural reforms through the crisis.
An important risk for many of LDCs is the potential impact of that the crisis may have on aid budgets in future years.
This is a source of significant fragility for countries heavily dependent on aid, such as Burundi, Rwanda, Mozambique (…) where most of the budget is financed by aid.
To effectively support public finances in african countries, donor countries must also be used countercyclically, to absorb fluctuations in private capital flows and government revenues. This will help sustain big infrastructure plans in the continent, whether they be financed by public, or private, capital. It will also help governments maintain public expenditures in crucial sectors for poverty reduction etc.
African countries need the full support of the donor community to continue investing in infrastructure and structural reform through the crisis, or run the risk of jeopardizing a decade of gains in growth and poverty reduction.
Africa can continue to grow despite the crisis, and gains must be preserved by pursuing structural reforms, infrastructure development and sustaining efforts in poverty reduction.
5.
African countries need the full support of donors to continue investing in infrastructure and structural reforms through the crisis.
An important risk for many of LDCs is the potential impact of that the crisis may have on aid budgets in future years.
This is a source of significant fragility for countries heavily dependent on aid, such as Burundi, Rwanda, Mozambique (…) where most of the budget is financed by aid.
To effectively support public finances in african countries, donor countries must also be used countercyclically, to absorb fluctuations in private capital flows and government revenues. This will help sustain big infrastructure plans in the continent, whether they be financed by public, or private, capital. It will also help governments maintain public expenditures in crucial sectors for poverty reduction etc.
African countries need the full support of the donor community to continue investing in infrastructure and structural reform through the crisis, or run the risk of jeopardizing a decade of gains in growth and poverty reduction.
Africa can continue to grow despite the crisis, and gains must be preserved by pursuing structural reforms, infrastructure development and sustaining efforts in poverty reduction.
African countries need the full support of donors to continue investing in infrastructure and structural reforms through the crisis.
An important risk for many of LDCs is the potential impact of that the crisis may have on aid budgets in future years.
This is a source of significant fragility for countries heavily dependent on aid, such as Burundi, Rwanda, Mozambique (…) where most of the budget is financed by aid.
To effectively support public finances in african countries, donor countries must also be used countercyclically, to absorb fluctuations in private capital flows and government revenues. This will help sustain big infrastructure plans in the continent, whether they be financed by public, or private, capital. It will also help governments maintain public expenditures in crucial sectors for poverty reduction etc.
African countries need the full support of the donor community to continue investing in infrastructure and structural reform through the crisis, or run the risk of jeopardizing a decade of gains in growth and poverty reduction.
Africa can continue to grow despite the crisis, and gains must be preserved by pursuing structural reforms, infrastructure development and sustaining efforts in poverty reduction.
6. Trade has collapsed im Q3-2009 and will probably suffer the worst fall in the last 60 years in 2009
Nominal export growth has raced ahead by an annualised 34% over 2003-07, driven by commodity price increases from 2004
Trade (commodities) are a key of the sources of growth for Africa (both for mineral and non-exporters). Both traditional and non-traditional exports have collapsed due to the fall in (1) World Demand (2) Trade finance
Trade has collapsed im Q3-2009 and will probably suffer the worst fall in the last 60 years in 2009
Nominal export growth has raced ahead by an annualised 34% over 2003-07, driven by commodity price increases from 2004
Trade (commodities) are a key of the sources of growth for Africa (both for mineral and non-exporters). Both traditional and non-traditional exports have collapsed due to the fall in (1) World Demand (2) Trade finance
7. Mineral exporters (especially oil) are those suffering the most BUT the collapse is not as bad: most of prices are at 2005 levels
Copper prices have decreased by 63% between July08 – Jan09 (? Impact Zambia)
Petroleum prices have decreased 68% (? impact Angola etc.)
Aluminium prices have decreased by 51% (? Mozambique, South Africa)
Gold has maintained itself, because it is a ‘refuge’ commodity in a crisis. (this is good for South Africa and gold exporters)
For agricultural exports cocoa prices will remain high whereas cotton will probably continue to benefit from the fall in US production due to the replacement of cotton by biofuel crops.
Mineral exporters (especially oil) are those suffering the most BUT the collapse is not as bad: most of prices are at 2005 levels
Copper prices have decreased by 63% between July08 – Jan09 (? Impact Zambia)
Petroleum prices have decreased 68% (? impact Angola etc.)
Aluminium prices have decreased by 51% (? Mozambique, South Africa)
Gold has maintained itself, because it is a ‘refuge’ commodity in a crisis. (this is good for South Africa and gold exporters)
For agricultural exports cocoa prices will remain high whereas cotton will probably continue to benefit from the fall in US production due to the replacement of cotton by biofuel crops.
8. L’investissement comme moteur de croissance n’est plus la – au mieux ca va stagner…
African -in general- has not been affected by the financial crisis but is suffering indirect consequences. This idea was fed by the observation that African banks keep their loans on their balance sheets, derivative markets are small and that (BANKING CHANNEL) foreign ownership is low (5%) in the two largest countries, Nigeria and South Africa. However, Africa has been increasingly relying on foreign private capital flows to finance BoP, now at risk with the global pullback of capital currently underway.
Stock prices have fallen (private capital was a large share of market assets) Nigeria’s Stock exchange has fallen 60%, Kenya’s 40%.
Ghana and Kenya have postponed their sovereign bond offerings (worth $800 million).
M&A: according to latest UNCTAD (Jan09) M&A in developing countries rose by 16% in 2008, and by 152% in Africa, from a very low base (07: 10 billion, 08: 26 billion USD)
REMITTANCES: are estimated to be slowing, and to currently stand at $20 billion (World Bank). Annual percentage growth in remittances to SSA 2008 6.3% 2009 from -4.4% to -7.9% (low case forecast) ? latest WB data march09
MENA 2008 +7.6% 2009 -1.4% to -5.2%
75% of Africa’s remittances come from US and Western Europe.
STOCK MARKETS: Nigeria’s stock market has fallen by 60% : the steepest drop by any stock market in the world
South –South Investment could be a way to resolve this issue: China has continued to invest in 2009
MESSAGE: perhaps time to refocus drivers to domestic ones? Tap domestic saving and financing rather than reliance on foreign investment which is subject to pullback.L’investissement comme moteur de croissance n’est plus la – au mieux ca va stagner…
African -in general- has not been affected by the financial crisis but is suffering indirect consequences. This idea was fed by the observation that African banks keep their loans on their balance sheets, derivative markets are small and that (BANKING CHANNEL) foreign ownership is low (5%) in the two largest countries, Nigeria and South Africa. However, Africa has been increasingly relying on foreign private capital flows to finance BoP, now at risk with the global pullback of capital currently underway.
Stock prices have fallen (private capital was a large share of market assets) Nigeria’s Stock exchange has fallen 60%, Kenya’s 40%.
Ghana and Kenya have postponed their sovereign bond offerings (worth $800 million).
M&A: according to latest UNCTAD (Jan09) M&A in developing countries rose by 16% in 2008, and by 152% in Africa, from a very low base (07: 10 billion, 08: 26 billion USD)
REMITTANCES: are estimated to be slowing, and to currently stand at $20 billion (World Bank). Annual percentage growth in remittances to SSA 2008 6.3% 2009 from -4.4% to -7.9% (low case forecast) ? latest WB data march09
MENA 2008 +7.6% 2009 -1.4% to -5.2%
75% of Africa’s remittances come from US and Western Europe.
STOCK MARKETS: Nigeria’s stock market has fallen by 60% : the steepest drop by any stock market in the world
South –South Investment could be a way to resolve this issue: China has continued to invest in 2009
MESSAGE: perhaps time to refocus drivers to domestic ones? Tap domestic saving and financing rather than reliance on foreign investment which is subject to pullback.
9. Fiscal balance 08 09 10 (according to OECD interim report March 2009)
US -5.8 -10.2 -11.9
Japan -2.6 -6.8 -8.4
Euro area -1.8 -5.4 -7.0
Total OECD -3.0 -7.2 -8.7
Nevertheless, fiscal space to adopt countercyclical policies is very limited in many countries
Fiscal balance 08 09 10 (according to OECD interim report March 2009)
US -5.8 -10.2 -11.9
Japan -2.6 -6.8 -8.4
Euro area -1.8 -5.4 -7.0
Total OECD -3.0 -7.2 -8.7
Nevertheless, fiscal space to adopt countercyclical policies is very limited in many countries
10. Africa is not ‘insulated’ from the crisis, but it is much better prepared than it once was
However the extent and severity of the crisis in OECD countries will be crucial to test the robustness of Africa and its capacity to tackle crisis
Two key issues to underline: (1) China and India in Africa and (2) better governments
Africa is not ‘insulated’ from the crisis, but it is much better prepared than it once was
However the extent and severity of the crisis in OECD countries will be crucial to test the robustness of Africa and its capacity to tackle crisis
Two key issues to underline: (1) China and India in Africa and (2) better governments
11. *-23% GDP = Angola : from 15.8 % growth to a -7.2% contraction for 2009
*-23% GDP = Angola : from 15.8 % growth to a -7.2% contraction for 2009
12. For the first time in many years, oil importers growing more than exporters
Oil exporters are suffering a negative terms of trade shock
Oil importers suffered positive shock due to either the fall on oil prices or the combination of lower oil prices and better behaviour of non-mineral commodities
Most negative ToT shocks in 2008: Seychelles -13.90 Eritrea -11.68 Togo -7.79 Cape Verde -7.25 Senegal -7.07
Most positive T0T shocks in 2008: Nigeria 22.92 Gabon 28.23 Congo, Rep. 30.53 Angola 34.77 Equatorial Guinea 49.12
Most negative ToT shocks in 2009: Equatorial Guinea -26.05 Angola -19.00 Congo, Rep. -17.15 Gabon -15.69 Nigeria -13.01
Most positive T0T shocks in 2009: Ethiopia 1.39 Mauritius 2.44 Togo 3.44 Eritrea 3.39 Seychelles 5.92
For the first time in many years, oil importers growing more than exporters
Oil exporters are suffering a negative terms of trade shock
Oil importers suffered positive shock due to either the fall on oil prices or the combination of lower oil prices and better behaviour of non-mineral commodities
Most negative ToT shocks in 2008: Seychelles -13.90 Eritrea -11.68 Togo -7.79 Cape Verde -7.25 Senegal -7.07
Most positive T0T shocks in 2008: Nigeria 22.92 Gabon 28.23 Congo, Rep. 30.53 Angola 34.77 Equatorial Guinea 49.12
Most negative ToT shocks in 2009: Equatorial Guinea -26.05 Angola -19.00 Congo, Rep. -17.15 Gabon -15.69 Nigeria -13.01
Most positive T0T shocks in 2009: Ethiopia 1.39 Mauritius 2.44 Togo 3.44 Eritrea 3.39 Seychelles 5.92
13. Oil exporters has expected to run budget deficits of more than 7% of GDP in 2009 and 2009.
The dramatic fall in revenues and the difficulties in cutting expenditures will remain a big challenge. The length of the crisis and the recovery oil prices by end 2009 early 2010 will be instrumental to know if some countries will face budget problems
Message: if things worsen do not be surprise in some countries (especially those who did not save) run into serious problems
Of course, prices will undoubtedly shoot back up, offering good prospects for the middle term. Nevertheless, this crisis should serve as a warning to exporting countries to better manage their resources.Oil exporters has expected to run budget deficits of more than 7% of GDP in 2009 and 2009.
The dramatic fall in revenues and the difficulties in cutting expenditures will remain a big challenge. The length of the crisis and the recovery oil prices by end 2009 early 2010 will be instrumental to know if some countries will face budget problems
Message: if things worsen do not be surprise in some countries (especially those who did not save) run into serious problems
Of course, prices will undoubtedly shoot back up, offering good prospects for the middle term. Nevertheless, this crisis should serve as a warning to exporting countries to better manage their resources.
15. What is lost through crisis may take years to claw back
Progress in the achievement of the millennium development goals remain limited and SSA Africa is unlikely to achieve them. 2008 is an important year because it is mid-way from the target of 2015. In regional terms, SSA is the only region in the world where the number of poor has increased in the last decade.
Of course there are remarkable exceptions: Tanzania and Ghana have made dramatic progress in reducing poverty, especially the latter. Madagascar, Malawi, Tanzania and Eritrea in reducing child mortality (where progress overall have been the most disappointing), a lot of countries have increase access to primary education to over 90 per cent and progress has also been achieved in the gender balance in education and in politics (in Rwanda 49% of parliamentarians are women); As for the reduction of maternal mortality, Maurice has achieved the goal and 14 countries are on track. Water and Sanitation: Senegal, Malawi and Uganda.
However, a lot more need to be done.
What is lost through crisis may take years to claw back
Progress in the achievement of the millennium development goals remain limited and SSA Africa is unlikely to achieve them. 2008 is an important year because it is mid-way from the target of 2015. In regional terms, SSA is the only region in the world where the number of poor has increased in the last decade.
Of course there are remarkable exceptions: Tanzania and Ghana have made dramatic progress in reducing poverty, especially the latter. Madagascar, Malawi, Tanzania and Eritrea in reducing child mortality (where progress overall have been the most disappointing), a lot of countries have increase access to primary education to over 90 per cent and progress has also been achieved in the gender balance in education and in politics (in Rwanda 49% of parliamentarians are women); As for the reduction of maternal mortality, Maurice has achieved the goal and 14 countries are on track. Water and Sanitation: Senegal, Malawi and Uganda.
However, a lot more need to be done.
16. African countries need the full support of donors to continue investing in infrastructure and structural reforms through the crisis.
An important risk for many of LDCs is the potential impact of that the crisis may have on aid budgets in future years.
This is a source of significant fragility for countries heavily dependent on aid, such as Burundi, Rwanda, Mozambique (…) where most of the budget is financed by aid.
To effectively support public finances in african countries, donor countries must also be used countercyclically, to absorb fluctuations in private capital flows and government revenues. This will help sustain big infrastructure plans in the continent, whether they be financed by public, or private, capital. It will also help governments maintain public expenditures in crucial sectors for poverty reduction etc.
African countries need the full support of the donor community to continue investing in infrastructure and structural reform through the crisis, or run the risk of jeopardizing a decade of gains in growth and poverty reduction.
Africa can continue to grow despite the crisis, and gains must be preserved by pursuing structural reforms, infrastructure development and sustaining efforts in poverty reduction.
African countries need the full support of donors to continue investing in infrastructure and structural reforms through the crisis.
An important risk for many of LDCs is the potential impact of that the crisis may have on aid budgets in future years.
This is a source of significant fragility for countries heavily dependent on aid, such as Burundi, Rwanda, Mozambique (…) where most of the budget is financed by aid.
To effectively support public finances in african countries, donor countries must also be used countercyclically, to absorb fluctuations in private capital flows and government revenues. This will help sustain big infrastructure plans in the continent, whether they be financed by public, or private, capital. It will also help governments maintain public expenditures in crucial sectors for poverty reduction etc.
African countries need the full support of the donor community to continue investing in infrastructure and structural reform through the crisis, or run the risk of jeopardizing a decade of gains in growth and poverty reduction.
Africa can continue to grow despite the crisis, and gains must be preserved by pursuing structural reforms, infrastructure development and sustaining efforts in poverty reduction.
17. African countries need the full support of donors to continue investing in infrastructure and structural reforms through the crisis.
An important risk for many of LDCs is the potential impact of that the crisis may have on aid budgets in future years.
This is a source of significant fragility for countries heavily dependent on aid, such as Burundi, Rwanda, Mozambique (…) where most of the budget is financed by aid.
To effectively support public finances in african countries, donor countries must also be used countercyclically, to absorb fluctuations in private capital flows and government revenues. This will help sustain big infrastructure plans in the continent, whether they be financed by public, or private, capital. It will also help governments maintain public expenditures in crucial sectors for poverty reduction etc.
African countries need the full support of donors to continue investing in infrastructure and structural reforms through the crisis.
An important risk for many of LDCs is the potential impact of that the crisis may have on aid budgets in future years.
This is a source of significant fragility for countries heavily dependent on aid, such as Burundi, Rwanda, Mozambique (…) where most of the budget is financed by aid.
To effectively support public finances in african countries, donor countries must also be used countercyclically, to absorb fluctuations in private capital flows and government revenues. This will help sustain big infrastructure plans in the continent, whether they be financed by public, or private, capital. It will also help governments maintain public expenditures in crucial sectors for poverty reduction etc.
18. ICT is an endogenous source of growth, ICT is particularly valuable in a time of external crisis
The current crisis should be a wake-up call for
Africa is the first continent in the world to implement free roaming, allowing any user in a foreign country to receive and send calls and messages at local rates.
Mobile banking is lowering transaction costs
ICTs must continue to be nurtured, that they continue contributing to market development, overcoming traditional infrastructure constraints and reducing business costs.
ICT is an endogenous source of growth, ICT is particularly valuable in a time of external crisis
The current crisis should be a wake-up call for
Africa is the first continent in the world to implement free roaming, allowing any user in a foreign country to receive and send calls and messages at local rates.
Mobile banking is lowering transaction costs
ICTs must continue to be nurtured, that they continue contributing to market development, overcoming traditional infrastructure constraints and reducing business costs.
19. Closing the AEO’s infrastructure cycle, after energy in 2004, transport in 2006 and water and sanitation in 2007.
Figure:
By looking at the figure, it can be seen that 4 out of 10 African have a mobile phone by 2009 (light green) –of course this average hides important heterogeneities: in the figure, the average of 4 out of 10 Africans having a mobile phone, closely reflects what is happening in Sub-Saharan Africa resource-rich and Sub-Saharan Africa resource-scarce coastal countries. However, in North Africa more than 90 per cent of the population have access to mobile phones; in Sub-Saharan Africa resource-scarce landlocked countries less than 20 per cent have access.
Even though having access to mobile phones for 4 out of 10 Africans is still lower than in other regions in the world (light green), the continent is quickly catching up with the highest growth rates worldwide in Sub-Saharan Africa (dark green) – In Sub-Saharan Africa growth rates of around 40 per cent double those in any other regions.
Link with following slides:
Before moving onto innovative products and business models, we first present where Africa stands in terms of ICT infrastructure which is the needed condition to deliver these innovative solutions.
Closing the AEO’s infrastructure cycle, after energy in 2004, transport in 2006 and water and sanitation in 2007.
Figure:
By looking at the figure, it can be seen that 4 out of 10 African have a mobile phone by 2009 (light green) –of course this average hides important heterogeneities: in the figure, the average of 4 out of 10 Africans having a mobile phone, closely reflects what is happening in Sub-Saharan Africa resource-rich and Sub-Saharan Africa resource-scarce coastal countries. However, in North Africa more than 90 per cent of the population have access to mobile phones; in Sub-Saharan Africa resource-scarce landlocked countries less than 20 per cent have access.
Even though having access to mobile phones for 4 out of 10 Africans is still lower than in other regions in the world (light green), the continent is quickly catching up with the highest growth rates worldwide in Sub-Saharan Africa (dark green) – In Sub-Saharan Africa growth rates of around 40 per cent double those in any other regions.
Link with following slides:
Before moving onto innovative products and business models, we first present where Africa stands in terms of ICT infrastructure which is the needed condition to deliver these innovative solutions.
20. Introducing the slide:
Even if ICTs (as we have seen with mobile phones in the previous slide) are performing well, this could be only the tip of the iceberg with ICT infrastructure connecting Africa to the world increasing largely and with international prices decreasing sharply by 4-10 times by late 2010.
As of March 2009 (1st picture):
In the West coast there is the fibre optic submarine cable, Sat3, which is not functioning on open access: It is available at very high prices and has currently unused capacity. In the East coast there is the so-called “missing link”, no submarine cable connecting this coast to the world (only high price satellite connections now).
As of July 2010 (2nd picture):
Seacom (red) and Teams (green) are private initiatives to deliver fibre optic submarine cables that will connect the East coast to the world for the first time –Eassy (blue), which is a non private initiative, is suffering long delays in comparison due to the inability of parties to reach consensus on the solution to be implemented--. Up to seven projects have been announced for the West coast beyond Sat3 (not all appear in the figure). The most relevant ones are WACS (purple), MainOne (brown) and Glo1 (yellow). Both in the West and East coast initiatives will be on open access and this implies that wholesale prices will drop from $2000-$10000 through Sat3 and $3000-$5000 through satellite to $500-$1000.
Ending the slide:
For the decrease in prices to reach users, wholesalers will need to pass on price cuts to users and inland networks will need to be built (in the next slide it will be seen that there are indeed sunny prospects in terms of inland high capacity networks).Introducing the slide:
Even if ICTs (as we have seen with mobile phones in the previous slide) are performing well, this could be only the tip of the iceberg with ICT infrastructure connecting Africa to the world increasing largely and with international prices decreasing sharply by 4-10 times by late 2010.
As of March 2009 (1st picture):
In the West coast there is the fibre optic submarine cable, Sat3, which is not functioning on open access: It is available at very high prices and has currently unused capacity. In the East coast there is the so-called “missing link”, no submarine cable connecting this coast to the world (only high price satellite connections now).
As of July 2010 (2nd picture):
Seacom (red) and Teams (green) are private initiatives to deliver fibre optic submarine cables that will connect the East coast to the world for the first time –Eassy (blue), which is a non private initiative, is suffering long delays in comparison due to the inability of parties to reach consensus on the solution to be implemented--. Up to seven projects have been announced for the West coast beyond Sat3 (not all appear in the figure). The most relevant ones are WACS (purple), MainOne (brown) and Glo1 (yellow). Both in the West and East coast initiatives will be on open access and this implies that wholesale prices will drop from $2000-$10000 through Sat3 and $3000-$5000 through satellite to $500-$1000.
Ending the slide:
For the decrease in prices to reach users, wholesalers will need to pass on price cuts to users and inland networks will need to be built (in the next slide it will be seen that there are indeed sunny prospects in terms of inland high capacity networks).
21. In the Connect Africa Summit was organized by the International Telecommunication Union (ITU), the African Union (AU), the World Bank Group (WB) and the United Nations Global Alliance for ICT and Development (UN-GAID), in partnership with the African Development Bank (AfDB), the African Telecommunication Union (ATU), the United Nations Economic Commission for Africa (UNECA) and the Global Digital Solidarity Fund (DFS);
The 55 billion commitment was made by Heads of State and Government and Ministers from African countries, by international organisations (AFDB, UNECA, AU, ITU, WB, UN-GAID, ATU & DFS) and by private companies
Some complementary information on the 3 major initiatives:
The Eastern & Southern Africa regional backbone: World Bank Group effort with AfDB, AFD, DBSA, DFID, EIB, EU, KfW and SIDA. By the end of the program, all capitals and major cities in E&SA should be linked to the global ICT through competitively priced high-bandwidth connectivity. The policy & regulatory framework needed to encourage private sector investment in the backbone is known as the Kigali Protocol and was signed in 2006 by 12 countries. It was formally launched in August 2007, with Phase 1 focusing on Burundi, Kenya and Madagascar. The second phase is a $24 million grant to Rwanda.
Central Africa Backbone (CAB): World Bank-AfDB program endorsed by the CEMAC heads of state is expected to decrease the prohibitive costs of ICT in landlocked countries. It aims at providing broadband connections in Central Africa by using optical fiber already deployed along the Chad-Cameroon pipeline. International connectivity is provided through submarine cable landing station in Cameroon. Phase 1 of the CAB Project will focus on Chad, Cameroon and CAR with US$30m financing. Phase 2 of CAB Project will include other Central African Countries as well as Nigeria with US$130m financing.
Western Africa Backbone: It is a project promoted by ECOWAS and telcos. 6 ECOWAS countries are already connected through 13 links to the international fibre optic cable SAT-3. New cable systems that we saw in the previous slide will double now the number of landing stations on the African West Coast. With INTELCOM II 32 links (8,800 km) have been identified as the second ECOWAS priority programme for the development of ICT. This programme was approved and endorsed by NEPAD and a backbone planning study has been funded by the AFD.In the Connect Africa Summit was organized by the International Telecommunication Union (ITU), the African Union (AU), the World Bank Group (WB) and the United Nations Global Alliance for ICT and Development (UN-GAID), in partnership with the African Development Bank (AfDB), the African Telecommunication Union (ATU), the United Nations Economic Commission for Africa (UNECA) and the Global Digital Solidarity Fund (DFS);
The 55 billion commitment was made by Heads of State and Government and Ministers from African countries, by international organisations (AFDB, UNECA, AU, ITU, WB, UN-GAID, ATU & DFS) and by private companies
Some complementary information on the 3 major initiatives:
The Eastern & Southern Africa regional backbone: World Bank Group effort with AfDB, AFD, DBSA, DFID, EIB, EU, KfW and SIDA. By the end of the program, all capitals and major cities in E&SA should be linked to the global ICT through competitively priced high-bandwidth connectivity. The policy & regulatory framework needed to encourage private sector investment in the backbone is known as the Kigali Protocol and was signed in 2006 by 12 countries. It was formally launched in August 2007, with Phase 1 focusing on Burundi, Kenya and Madagascar. The second phase is a $24 million grant to Rwanda.
Central Africa Backbone (CAB): World Bank-AfDB program endorsed by the CEMAC heads of state is expected to decrease the prohibitive costs of ICT in landlocked countries. It aims at providing broadband connections in Central Africa by using optical fiber already deployed along the Chad-Cameroon pipeline. International connectivity is provided through submarine cable landing station in Cameroon. Phase 1 of the CAB Project will focus on Chad, Cameroon and CAR with US$30m financing. Phase 2 of CAB Project will include other Central African Countries as well as Nigeria with US$130m financing.
Western Africa Backbone: It is a project promoted by ECOWAS and telcos. 6 ECOWAS countries are already connected through 13 links to the international fibre optic cable SAT-3. New cable systems that we saw in the previous slide will double now the number of landing stations on the African West Coast. With INTELCOM II 32 links (8,800 km) have been identified as the second ECOWAS priority programme for the development of ICT. This programme was approved and endorsed by NEPAD and a backbone planning study has been funded by the AFD.
22. The objective of this slide is to show that ICTs in Africa remain attractive to investors and hence that all together with the public initiatives on high capacity backbones (some of the projects on the 2 previous slides) , the current enhancement of ICTs in Africa can be used to spillover other sectors as means to overcome the crisis through innovative products and business models that promote growth (developed in next slides).
Figure: Africa is the least affected region by crisis and continues attracting mobile investors, e.g., Ebitda margin in late 2008 is larger in Africa than in any other regions while operational costs are moderate.
Bid deals have continued: In late 2008 and early 2009 - despite the crisis - there have been several deals successfully concluded in Africa, such as the divestiture of Ghana Telecom in August 2008, ONATEL in Burkina Faso in December 2008 and SOTELMA in Mali in January 2009, Millicom’s new licence in Rwanda in November 2008, Orange’s new licence in Togo in November 2008 and in Uganda in October 2008, and the purchase of Cell One Namibia by Orascom Telecom in January 2009.
Capital expenditures are decreasing since Q12008: Growth rates in mobile phone subscriptions have dropped from 60 percent in Q12008 to 40 percent in Q42008, but remain higher than international growth rates. Sub-Saharan Africa is the least affected: It is North Africa the most affected, dropping from 40 per cent Q1 2008 to 20 per cent Q4 2008 which is consistent with the fact that they have mature markets (over 80 per cent of penetration).
Transnational cash-rich operators will consolidate their presence: Zain (present in 15 countries), MTN (13), Orange (12), Tigo (6) and Moov (5). By late 2008.
The objective of this slide is to show that ICTs in Africa remain attractive to investors and hence that all together with the public initiatives on high capacity backbones (some of the projects on the 2 previous slides) , the current enhancement of ICTs in Africa can be used to spillover other sectors as means to overcome the crisis through innovative products and business models that promote growth (developed in next slides).
Figure: Africa is the least affected region by crisis and continues attracting mobile investors, e.g., Ebitda margin in late 2008 is larger in Africa than in any other regions while operational costs are moderate.
Bid deals have continued: In late 2008 and early 2009 - despite the crisis - there have been several deals successfully concluded in Africa, such as the divestiture of Ghana Telecom in August 2008, ONATEL in Burkina Faso in December 2008 and SOTELMA in Mali in January 2009, Millicom’s new licence in Rwanda in November 2008, Orange’s new licence in Togo in November 2008 and in Uganda in October 2008, and the purchase of Cell One Namibia by Orascom Telecom in January 2009.
Capital expenditures are decreasing since Q12008: Growth rates in mobile phone subscriptions have dropped from 60 percent in Q12008 to 40 percent in Q42008, but remain higher than international growth rates. Sub-Saharan Africa is the least affected: It is North Africa the most affected, dropping from 40 per cent Q1 2008 to 20 per cent Q4 2008 which is consistent with the fact that they have mature markets (over 80 per cent of penetration).
Transnational cash-rich operators will consolidate their presence: Zain (present in 15 countries), MTN (13), Orange (12), Tigo (6) and Moov (5). By late 2008.
23. Roaming is the possibility to use mobile phones in a third party network abroad, which implies roaming agreements between the customer’s own mobile phone service provider and at least one network provider in the country visited. Now that several operators are active in a large number of African countries, providing roaming services free of charges has become possible.
Zain is providing the service in 12 countries and soon in 3 more. Vodacom Tanzania, MTN Uganda and Safaricom Kenya and MTN Rwanda often the service in between their users. MTN has launched pilots to develop an equivalent network to Zain in 4 countries and is planning to scale up to 9 more.Roaming is the possibility to use mobile phones in a third party network abroad, which implies roaming agreements between the customer’s own mobile phone service provider and at least one network provider in the country visited. Now that several operators are active in a large number of African countries, providing roaming services free of charges has become possible.
Zain is providing the service in 12 countries and soon in 3 more. Vodacom Tanzania, MTN Uganda and Safaricom Kenya and MTN Rwanda often the service in between their users. MTN has launched pilots to develop an equivalent network to Zain in 4 countries and is planning to scale up to 9 more.
24.
Following the success of M-Pesa in Kenya, several solutions are being deployed in South Africa through MTN banking, Wizzit, ABSA, NedBank and FNB in Zambia, Democratic Republic of Congo and Tanzania through Celpay and in Côte d’Ivoire through Orange. In total projects are working or are announced in 10 Sub-Saharan and in 3 North African countries by Zain, Orange, Globacom, Orascom, Tag Attitude and Monitise.
Orascom and Vodafone pan-African operators have announced agreements with Western Union on remittances: Orascom in October 2008 by and Vodafone by December 2008, which is a major development knowing that these amounts are similar in magnitude to ODA flows in many African countries. Note: The Vodafone -Western Union agreement to send remittances between UK and Kenya is currently blocked and being analysed by the Kenyan authorities.
The M-Pesa service in Kenya allows mobile phone users to send money inside of the country to owners of other mobile phones. This payment system has formalised Sente’s informal practice in Uganda, where money is send from one person to another by using public phone kiosks and trusted networks. This Sente practice works as follows. Take Arthur, for example, who wants to send 5,000 Ugandan Shillings (about 2 euros) to his sister Winnie. He will buy a prepaid card for that amount and call the local phone kiosk operator in Winnie’s village who will charge this credit on his own phone. Then, he will take a commission between 10 and 30 per cent and pass the rest onto Winnie in cash. The kiosk operator can then resell the airtime at a profit which is after all his business.
Following the success of M-Pesa in Kenya, several solutions are being deployed in South Africa through MTN banking, Wizzit, ABSA, NedBank and FNB in Zambia, Democratic Republic of Congo and Tanzania through Celpay and in Côte d’Ivoire through Orange. In total projects are working or are announced in 10 Sub-Saharan and in 3 North African countries by Zain, Orange, Globacom, Orascom, Tag Attitude and Monitise.
Orascom and Vodafone pan-African operators have announced agreements with Western Union on remittances: Orascom in October 2008 by and Vodafone by December 2008, which is a major development knowing that these amounts are similar in magnitude to ODA flows in many African countries. Note: The Vodafone -Western Union agreement to send remittances between UK and Kenya is currently blocked and being analysed by the Kenyan authorities.
The M-Pesa service in Kenya allows mobile phone users to send money inside of the country to owners of other mobile phones. This payment system has formalised Sente’s informal practice in Uganda, where money is send from one person to another by using public phone kiosks and trusted networks. This Sente practice works as follows. Take Arthur, for example, who wants to send 5,000 Ugandan Shillings (about 2 euros) to his sister Winnie. He will buy a prepaid card for that amount and call the local phone kiosk operator in Winnie’s village who will charge this credit on his own phone. Then, he will take a commission between 10 and 30 per cent and pass the rest onto Winnie in cash. The kiosk operator can then resell the airtime at a profit which is after all his business.
25. E-Governance is very important for donor support.
Since the Paris Declaration in 2005, donors are no longer providing financial support through projects but through national budgets.
Financial management information systems are hence very useful for donors to monitor the allocation of their financial support on national budgets.
These systems are being used in the countries..
But e-governance is a larger concept: it also has to do with all the exchanges between governments and citizens.
In the case of Cape Verde there are going completely paperless in this type of exchanges.
Another example is that electronic taxation, where for example in South Africa currently, almost 50 % of tax payers are using electronic income tax returns.
However, there is still much to do in terms of government ICT skills, online presence and ICT access.
As we can see in this picture, SSA is performing the worse in these features.
Having presented these applications that make use of new technologies, I would like now to hand the floor over to Aida opoku-Mensah, who will explains to us how all these applications have been possible.
Aid Management Systems (AMS) provide useful information regarding the volume, sources and uses of aid flows and ensure appropriate planning, monitoring and reporting/accountability. AMS have been successfully established in Ethiopia, Egypt, Rwanda, Sudan, Tanzania and Zambia. However, AMS are not always integrated with national FMIS.
E-Governance is very important for donor support.
Since the Paris Declaration in 2005, donors are no longer providing financial support through projects but through national budgets.
Financial management information systems are hence very useful for donors to monitor the allocation of their financial support on national budgets.
These systems are being used in the countries..
But e-governance is a larger concept: it also has to do with all the exchanges between governments and citizens.
In the case of Cape Verde there are going completely paperless in this type of exchanges.
Another example is that electronic taxation, where for example in South Africa currently, almost 50 % of tax payers are using electronic income tax returns.
However, there is still much to do in terms of government ICT skills, online presence and ICT access.
As we can see in this picture, SSA is performing the worse in these features.
Having presented these applications that make use of new technologies, I would like now to hand the floor over to Aida opoku-Mensah, who will explains to us how all these applications have been possible.
Aid Management Systems (AMS) provide useful information regarding the volume, sources and uses of aid flows and ensure appropriate planning, monitoring and reporting/accountability. AMS have been successfully established in Ethiopia, Egypt, Rwanda, Sudan, Tanzania and Zambia. However, AMS are not always integrated with national FMIS.
26. The figure illustrates the use of mobile phones for agriculture: A farmer in Niger living in Bakin Birgi could go to its own home market to sell its products. He could also invest its time to go to Zinder’s market on Thursday in a 3 hour travel --65 km--, or to Tanout’s market on Friday in an hour travel--20 km--. He would not go to Niamey market on Sunday since it is 750 km away.
Because mobile phones are now present in Bakin Birgi, he can now verify, by a 2 min call, prices in Zinder and in Niamey and choose the place that is best to sell its products. He still needs to travel to Tanout if he wants to access information since mobile phone coverage is still not present there.
The figure illustrates the use of mobile phones for agriculture: A farmer in Niger living in Bakin Birgi could go to its own home market to sell its products. He could also invest its time to go to Zinder’s market on Thursday in a 3 hour travel --65 km--, or to Tanout’s market on Friday in an hour travel--20 km--. He would not go to Niamey market on Sunday since it is 750 km away.
Because mobile phones are now present in Bakin Birgi, he can now verify, by a 2 min call, prices in Zinder and in Niamey and choose the place that is best to sell its products. He still needs to travel to Tanout if he wants to access information since mobile phone coverage is still not present there.
27. What you can see on the graph on the left is that mobile phone operators contribute around 7% on average to government revenues
While this is a legitimate way of raising taxes since the authorities are able to reach a large amount of population in countries where on average 70 per cent of the labour force are in the informal sector, private investment has not to be neglected for this strategy to be sustainable,
You can see on the right a figure with the ICT regulatory environment, you can think of it as the business climate for ICT. You can indeed that the environment is very bad, except for Nigeria where it is roughly above neutral.
There is indeed many progress to be done on regulation so as to further attract private investment.
What you can see on the graph on the left is that mobile phone operators contribute around 7% on average to government revenues
While this is a legitimate way of raising taxes since the authorities are able to reach a large amount of population in countries where on average 70 per cent of the labour force are in the informal sector, private investment has not to be neglected for this strategy to be sustainable,
You can see on the right a figure with the ICT regulatory environment, you can think of it as the business climate for ICT. You can indeed that the environment is very bad, except for Nigeria where it is roughly above neutral.
There is indeed many progress to be done on regulation so as to further attract private investment.
28. A fundamental issue in terms of infrastructure, is whether Africa will ever be connected to internet.
CLICK. The situation now as you can see on the graph on the left is quite negative since there are only around 3 % lines per inhabitants in Sub-Saharan Africa, only around 7 % of this population has access to low speed internet.
At the same time, it is becoming more and more costly for fixed operators to give service to users.
Mobile networks have increasing traffic and hence decreasing costs
However, fixed line networks, have decreasing traffic –since it is switching to mobile- and then increasing costs
What should we do then in a context were right now 1)there are many fixed line networks in Africa that have been for some years in red numbers and are close to bankruptcy, 2)where their costs are even increasing and 3)where we know that high speed internet can only be delivered through fixed line?
There is an urgent need to attract private investment and knowhow to fixed line operators! A fundamental issue in terms of infrastructure, is whether Africa will ever be connected to internet.
CLICK. The situation now as you can see on the graph on the left is quite negative since there are only around 3 % lines per inhabitants in Sub-Saharan Africa, only around 7 % of this population has access to low speed internet.
At the same time, it is becoming more and more costly for fixed operators to give service to users.
Mobile networks have increasing traffic and hence decreasing costs
However, fixed line networks, have decreasing traffic –since it is switching to mobile- and then increasing costs
What should we do then in a context were right now 1)there are many fixed line networks in Africa that have been for some years in red numbers and are close to bankruptcy, 2)where their costs are even increasing and 3)where we know that high speed internet can only be delivered through fixed line?
There is an urgent need to attract private investment and knowhow to fixed line operators!
29. Policies on science, technology, and innovation (STI) are not presently well integrate in broader development strategies. Innovation and ICT are not at present effectively integrated into the sector policy areas prioritised by the donor community (after the Paris Declaration) and the MDGs do not take into account innovation explicitly. Current Poverty Reduction Strategy Papers (PRSPs) which indicate how debt relief and donor support will be used, fail to integrate innovation in its full dimension unless there is some strong local support. In Ghana, for example, with the support of the Kwame Nkrumah University of Science and Technology, innovation was included in the PRSP. Support from development partners will continue to be important in strengthening national ICT policies in most African countries.
Convergent licensing regimes: It refers to a new type of licence where mobile, fixed and internet services can be provided altogether under this same licence. It enables fixed-line operators to use the best adapted technologies whenever these are wireless. These licences are increasingly present in Africa : Botswana, Egypt, Mali, Mauritius, Morocco, Nigeria, Tanzania, Uganda and South Africa.
Symmetric regulation of termination charges: Traditionally, there was worldwide an asymmetric regulation of termination charges, where these internconnection charges where higher from fixed line to mobile networks than vice versa. The idea was that fixed line operators compensated mobile operators in their initial investments. However, nowadays it makes little sense since mobile operators have networks that are substantially larger than fixed-line networks.
With many fixed-line operators close to bankruptcy due to decreasing traffic and increasing marginal costs, governments must attract private investment and knowhow to the fixed-line sector Policies on science, technology, and innovation (STI) are not presently well integrate in broader development strategies. Innovation and ICT are not at present effectively integrated into the sector policy areas prioritised by the donor community (after the Paris Declaration) and the MDGs do not take into account innovation explicitly. Current Poverty Reduction Strategy Papers (PRSPs) which indicate how debt relief and donor support will be used, fail to integrate innovation in its full dimension unless there is some strong local support. In Ghana, for example, with the support of the Kwame Nkrumah University of Science and Technology, innovation was included in the PRSP. Support from development partners will continue to be important in strengthening national ICT policies in most African countries.
Convergent licensing regimes: It refers to a new type of licence where mobile, fixed and internet services can be provided altogether under this same licence. It enables fixed-line operators to use the best adapted technologies whenever these are wireless. These licences are increasingly present in Africa : Botswana, Egypt, Mali, Mauritius, Morocco, Nigeria, Tanzania, Uganda and South Africa.
Symmetric regulation of termination charges: Traditionally, there was worldwide an asymmetric regulation of termination charges, where these internconnection charges where higher from fixed line to mobile networks than vice versa. The idea was that fixed line operators compensated mobile operators in their initial investments. However, nowadays it makes little sense since mobile operators have networks that are substantially larger than fixed-line networks.
With many fixed-line operators close to bankruptcy due to decreasing traffic and increasing marginal costs, governments must attract private investment and knowhow to the fixed-line sector
30. Should help contribute to increase both transparency and governance, and serve as a window to promote African thinking on economic issues and governance etc.
Non-Resident Fellows: Voices from the South.
Building on its worldwide network of high-level contacts in policy making circles and think tanks, the Development Centre has invited leading experts from emerging and developing countries to steer the GDO through its Advisory Panel. These Non-Resident Fellows guide our thinking and help us enter into a global dialogue with decision makers.
Currently 3 African non-resident fellows: South Africa, Ghana and Benin.Should help contribute to increase both transparency and governance, and serve as a window to promote African thinking on economic issues and governance etc.
Non-Resident Fellows: Voices from the South.
Building on its worldwide network of high-level contacts in policy making circles and think tanks, the Development Centre has invited leading experts from emerging and developing countries to steer the GDO through its Advisory Panel. These Non-Resident Fellows guide our thinking and help us enter into a global dialogue with decision makers.
Currently 3 African non-resident fellows: South Africa, Ghana and Benin.
