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African Economic Outlook 2003/2004 Paris, 7 July 2004

This report delves into key economic issues facing Africa, covering growth trends, fiscal policies, energy sector analysis, governance, and progress towards the MDGs. It highlights the impact of external factors, such as inflation, ODA, and debt relief, on the continent's development. The report also focuses on specific countries and regions, addressing their economic performance and challenges. Key points include the impact of high oil prices, currency depreciation, and food crises in East and Southern Africa.

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African Economic Outlook 2003/2004 Paris, 7 July 2004

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  1. African Economic Outlook 2003/2004 Paris, 7 July 2004

  2. AEO Challenges • Making the AEO a reference point for individual country analysis • Making the AEO an important background document for the African Peer Review Mechanism • Monitoring progress towards the MDGs • Improve knowledge on strategic issues for Africa: • Privatization 2002/03 • Energy Sector 2003/04

  3. Coverage: 22 African countries Tunisie Maroc Algerie Other Countries AEO Countries Lybie Egypte Mauritanie Niger Mali Senegal Tchad Soudan Erytree Gambie GuinneeBissau Burkina faso Djibouti Guinee Togo Nigeria Ethiopie Côte d'Ivoire Serrea Leone Republique Centraafricaine Liberia Cameroun Ghana Somalie Guineequatoriale Ouganda Congo Gabon Kenya Rwanda Burundi Republique Democratique du Congo Tanzanie Angola Malawi Zambie Mozambique Zimbabwe Maurice Madagascar Namibie Botswana Swaziland Lesotho Afrique du Sud North Africa: Algeria, Egypt, Morocco and Tunisia West Africa: Burkina Faso, Côte d’Ivoire, Ghana, Mali, Nigeria and Senegal Central Africa: Cameroon and Gabon East Africa: Ethiopia, Kenya, Mauritius, Uganda and Tanzania Southern Africa: South Africa, Botswana, Mozambique, Zambia and Zimbabwe

  4. Contents of the Overview • International Conditions Impacting on Africa • Macroeconomic performance, 2003 and outlook for 2004/05 • Monetary management • Fiscal policy • Progress towards achieving the MDGs • Governance/Political issues • This year’s focus: • Energy Supply in Africa

  5. Africa growth in 2003: the highest in 4 years

  6. Improved growth performance in 2003 explained by domestic and external factors • Internally: • Most African governments continued to follow prudent macroeconomic policies • Restoration of peace in some parts of Africa, albeit fragile. • Externally: • Improvements in the prices of major primary commodities. • Africa’s exports in value terms increased by some 17% and 4.8% in volume. • Increase in ODA and Debt Relief under HIPCs

  7. Total net ODA to Africa jumped by 35% in value between 2001/02. The upward trend is expected to continue

  8. Inflation in decline

  9. The MDG on income poverty will not be met on present trends

  10. On present trends most of MDGs will not be achieved by many countries

  11. The satisfactory performance ratio is highest in the case of equality in primary education

  12. Country Highlights

  13. Average growth rates of African countries

  14. Best and worst performers

  15. Western Africa

  16. Southern Africa

  17. Eastern Africa

  18. Fiscal situation of many countriesis still weakFiscal balance as % of GDP, 2003 estimate

  19. The impact of high oil prices • Higher growth in oil exporters - Strong fiscal gains - First increase in Gabon oil production since 1997 due to vigorous investment in oil sector • More inflation elsewhere • Burkina Faso (increased transport cost) • Ethiopia, Zambia in spite of good harvest

  20. The impact of the $ depreciation: Rand zone and CFA zone

  21. The impact of the $ depreciation: Rand zone and CFA zone • Western Africa was partly shielded from the depreciation of dollar • Most trade with Euro zone • Little competitive industry • However…strong negative fiscal impact • South Africa in front line: fall in competitiveness but less inflation and moderate fiscal impact • Other Southern Africain the shadow of South Africa: Intra regional trade Imported inflation

  22. Agriculture: still a matter of vulnerability Despite good 2003/04 harvest, East and Southern Africa continue to suffer from a structural food crisis Food aid needed by: • 5 ml people (39% pop) in Zimbabwe • 7ml people (10% pop) in Ethiopia • 1 ml people (3% pop) in Kenya

  23. Governance and economic performance Political tensions Côte d'Ivoire Mali Burkina Faso Economic performance Mali Burkina Faso Côte d'Ivoire

  24. Governance and economic performance Political tensions and hardening Zimbabwe Hardening Zimbabwe Tensions Regional Average Tensions Economic performance Regional Growth Zimbabwe

  25. 2003/2004 focus: Energy supply in Africa

  26. Huge potential… under or badly exploited • Under-utilisation of potential sources • Exports rather than national consumption • Mismanagement of resources

  27. Hydroelectric power

  28. Oil and NGL, largely exploited 7.3% of world reserves, 10.6% of world production

  29. But mostly exported 3.6% of world refining capacity Supply of motor gasoline in Nigeria (2001)

  30. Gas flaring and shrinkage7.5% of world reserves, 5.5% of world production

  31. World structure: Biomass 14% Electricity 16% Petroleum 44 % Energy consumption in Africa (2001) Coal 7 % Gas 16%

  32. Electrification rates World average Developing countries average

  33. Challenges for developing the electricity sector • Serving a scattered, rural population • Repairing and modernising power facilities • Extending the network • Achieving effective, sequenced reforms • Co-ordinating at regional and continental level towards integrated power pools

  34. Thank you

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