OVERVIEW OF ECONOMIC AND SOCIAL CONDITIONS IN AFRICA IN 2008 by The Economic Commission for Africa & The African Union Commission

2 1.Global crisis hits hard on African economies 2.Strong growth prior to crisis because of policy and institutional reforms, less conflict, and favourable external conditions 3.Yet, not much more diversification. Agriculture remains key sector, but low productivity. Food crisis is still there Main Messages

3 Global Economic Crisis and Implications for Africa The medium term outlook for the world economy remains bleak –World economy will shrink in 2009 –Sharply declining world trade –Commodity prices have come down –Increased cost of borrowing and falling private capital flows (FDI) –Weakening aid flows Implications for Africa: –Severe economic deceleration –Lower export revenues –Falling government revenue –Setbacks in poverty reduction and MDG achievement –Differences across countries

4 Africa’s economic growth rate down in 2009

5 Factors Influencing Strong African Growth Performance before Crisis (1) Strong demand for African commodities, resulting in high export prices up to mid 2008 Improved macroeconomic management –Improved macroeconomic stability despite pressure from oil and food prices in the first half of 2008 –Lower levels of official external debt through debt relief (though larger private external debt) –Greater fiscal and debt sustainability especially for oil exporters; this is still a challenge for most oil importers in the region. Increased capital inflows (especially ODA and FDI) Institutional reforms and improved opportunities for private sector development Post-conflict recovery (Sierra Leone, Liberia, and others) and in a number of countries where peace was consolidated (Kenya). General decline of countries in conflict

6 Factors Influencing Strong African Growth Performance before Crisis (2) Strong performance in key sectors –Agriculture: main driver of growth in many countries, especially export agriculture. Yet food shortages remain due to weak supply capacity and poor resilience against weather shocks –Mining and primary exports: strong growth supported by high commodity prices (till mid 2008) –Niche-sectors: some manufacturing (textiles), services (tourism), agriculture (cut flowers, vegetables). Yet all very fragile to swings in global markets No real diversification: production structure of African economies even more unbalanced than 45 years ago.

7 Regional growth mainly driven by oil economies and varied substantially across sub-regions Oil-exporters contributed 53.3% and 61.4% to the continent’s total GDP and GDP growth rate in 2008 respectively. East Africa, a non-oil sub-region with limited mineral exports, continued to lead economic performance in Africa for the fourth consecutive year. Central Africa lagged behind all other regions over the same period despite resource abundance.

8 Progress in social development has been mixed Some concrete gains in such areas as primary school enrolment, measles vaccination, the use of insecticide-treated bed nets, reductions in HIV prevalence rates in some countries and on some aspects of gender equality. Very limited headway on poverty, eradicating hunger, maternal mortality and on addressing disparities due to gender, income, and disability Trends in social development

9 Poverty and unemployment Both poverty & unemployment remain high. Especially among vulnerable groups(women, the disabled etc.) Key challenges to inclusion of vulnerable groups include –lack of implementation of the commitments and policies; –inadequate financial resources to support spending on social programmes; –technical capacity constraints & lack of relevant data to support policies; – war and conflicts

10 Poverty and unemployment Africa needs to promote the social inclusion of the vulnerable and marginalized groups and to strengthen social protection systems especially in the context of the recent food crises and the global economic recession

Education Remarkable increases in primary school enrolment rates Although the primary enrolment rate has been improving, the primary completion rate is an area of concernespecially for girls. Between 1999 and 2006, the completion rate improved from 49 per cent to 60 per cent in SSA, and from 86 per cent to 92 per cent in North Africa. The gross enrolment ratio (GER) in secondary education in SSA increased from only 25 per cent in 1999 to 32 per cent in 2006 The major challenges affecting secondary and tertiary education include shortage of trained teachers, and lack of resources to cover the cost of education. 11

12Health Mixed progress in combating HIV/AIDS and other epidemics and reducing infant, child and maternal mortality rates HIV/AIDS remains the leading cause of adult morbidity and mortality on the continent. Overall trends in tuberculosis (TB) incidence, prevalence and deaths have been on the increase in SSA as opposed to North Africa Malaria is still the leading cause of child mortality in Africa and of anaemia in pregnant women Preventable diseases and malnutrition are still the leading causes of the high infant and under-five mortality rates. However, the continent has witnessed a decline in both infant and under-five mortality rates

13 Globally concerted actions towards recovery Improved macroeconomic management; when applicable use commodity reserves to boost investment in infrastructure, human capital development, public services delivery and enhance reforms. Coordinated action by donors and development partners, to sustain ODA flows, additional debt relief, and adequate liquidity financing Strengthen regional coordination for successful conclusion of trade negotiations, resist protectionist measures, fulfilment of Aid for Trade commitments Sustain focus on achieving the MDGs & the inclusion of vulnerable & marginalized groups Policy Recommendations – Policies for Recovery and Growth

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