Macroeconomic Policy questions, Trade and Regional Market Integration: Presentation to the 2nd Committee Dialogue Ms. Vera Songwe, Executive Secretary Economic Commission for Africa

Regional Growth Rates Africa’s growth is expected to decline slightly to 3.6% in 2018 Africa’s growth trajectory has been a roller coaster in the past decade. However, supported by strong domestic demand and relatively strong commodity prices; growth prospects are brighter for the year 2018 and 2019 The slow growth in Africa’s largest economies of Angola, Nigeria and RSA has weighed significantly on the continent’s growth. SOURCE: UNDESA 2018 www.uneca.org

Sub-regional Growth Rates East Africa is expected to achieve the highest growth Supported by strong domestic demand and relatively strong commodity prices; However, slow growth in Africa’s largest economies of Angola, Nigeria and RSA has weighed significantly on the continent’s growth. SOURCE: UNDESA 2018 www.uneca.org

The savings – Investment gap is widening SOURCE: Calculations based on World Bank 2018 data www.uneca.org

Current account and fiscal balances have mainly been affected by external factors The economic crisis and the decline in commodity prices seem to have a significant negative effect on the current account and fiscal deficits SOURCE: Calculations based on EIU 2018 data www.uneca.org

Total debt, external debt and debt service are on the rise again Due to increased borrowing to fund some investments e.g. infrastructure. SOURCE: Based on IMF 2018 www.uneca.org

But the debt story is not the same for all African countries (2015 – 2017 Averages) 30% Due to increased borrowing to fund some investments e.g. infrastructure. SOURCE: Based on IMF 2018 www.uneca.org

Tax-GDP has been declining: There is room to mobilise more domestic resources to address fiscal challenges, and to finance SDGs African has an average Tax to GDP ratio of 15.6. While a number of countries are closer to average, there are also significant disparities ranging from 4.6 percent in Nigeria to 34 percent in Lesotho. Average Tax-GDP-Ration on the continent has been declining and has generally not recovered to pre-2012 levels. The hardest hit countries have been mostly commodity exporters. Not withstanding, there is significant room for raising domestic revenue, especially for middle income countries. SOURCE: IMF data REO Data www.uneca.org

Opportunities in Trade and Regional Integration: Compared to other regions, Africa currently trades less with itself Intra and extra-group merchandise for selected regions (percentage, average 2012-2016) Eliminating tariffs and removing non-tariffs barriers, such as cumbersome border procedures and significant infrastructure bottlenecks is critical in critical to addressing this. This is precisely the overarching objective of the recently signed Agreement Establishing the African Continental Free Trade Area (AfCFTA), which is championed by the African Union Commission (AUC) and the eight Regional Economic Communities (RECs). Source: Based on data from UNCTADStat (http://unctadstat.unctad.org), accessed on 27/08/2018 www.uneca.org

Opportunities in Trade and Regional Integration: Africa trades with itself more on manufactured goods than on primary commodities Intra-African Exports as a share of total exports: primary commodities and manufactured goods (percentage, 2012─2016) Source: Based on data from UNCTADStat www.uneca.org

Africa trades with itself more on Non-Extractive (mostly manufactured goods) than with the Rest of the World Structure of Intra-African exports compared to exports to the Rest of the World www.uneca.org

The importance of the AfCFTA for Africa’s growth, trade and regional integration ECA has been and will continue to be strongly engaged in the AfCFTA processes. It is estimated tariff elimination on goods under AfCFTA could increase the share of intra-African trade between 40% to over 50%. The increase would be much larger if liberalization of trade in services and non-tariff barriers were to be tackled within Africa. www.uneca.org

The importance of the AfCFTA for Africa’s growth, trade and regional integration In 2015, African countries spent about US$63 billion on food imports, largely from outside the continent. ECA projects that under AfCFTA, intra-African trade in agricultural products will be between 20% and 30% higher in 2040. www.uneca.org

Inclusive Development AfCFTA also offers a platform for continental cooperation and progress in other areas Inclusive Development Job creation Infrastructure Impetus of regional energy and infrastructure projects Digital Economy Opportunity for MSMEs who constitute 80% of African businesses www.uneca.org

ECA is also leveraging AfCFTA momentum for Digital Identification on the continent Continental Digital ID Framework E-commerce Interoperability Data Governance Inclusion www.uneca.org

Cooperation for Domestic Resource Mobilization ECA will partner with OECD on the The Global Forum on Transparency and Exchange of Information for Tax Purposes where: countries commit to tackle tax-related IFFs related through Exchange of Information (EOI) and improved international tax cooperation. Only 27 African countries are members of the Global Forum Only 20 have signed the related Yaoundé Declaration www.uneca.org

THANK YOU! www.uneca.org