1. Diery Seck & Amie Gaye, CREPOL 4 th July 2012

2.  1) Were there distinct impacts of the crisis on Arab Region and Sub-Saharan Africa (SSA)?  2) What are the benefits from collaboration between the two regions?  3) How to optimize global risk-management investment that benefits both regions?

4.  S&P Global Equity Indices of Selected Arab Countries

5.  Evolution of S&P Global Equity Indices of African Stock Market Indices

6.  Both regions’ stock markets declined heavily in 2008  They recovered in 09 but dropped again in 10  Have not reached in 2010 levels of 2007

7.  Growth of Domestic Credit provided by the Banking System (Excl. Government Claims) Country20062007200820092010 Average 2008- 2010 Algeria-0.48-1.852.78-0.30 -0.15 0.78 Bahrain-0.050.200.190.18 n/a 0.19 Djibouti-0.040.100.040.18 n/a 0.11 Egypt, Arab Rep.-0.05-0.09-0.08-0.03 -0.08 -0.06 Iran, Islamic Rep.0.010.09-0.130.12 n/a -0.01 Iraq2.462.310.42-0.34 -0.87 -0.26 Jordan-0.040.05-0.02-0.08 -0.03 -0.04 Kuwait0.010.10-0.060.30 n/a 0.12 Lebanon0.08-0.05-0.07-0.03 0.01 -0.03 Libya0.37-0.06-0.100.32 n/a 0.11 Morocco0.070.160.080.02 0.04 Oman0.000.18-0.110.42 n/a 0.15 Qatar-0.050.190.070.41 n/a 0.24 Saudi Arabia-0.25-0.23-1.23-1.15 -1.25 -1.21 Syrian Arab Republic-0.050.080.050.14 0.09 0.10 Tunisia0.000.010.020.04 0.08 0.05 United Arab Emirates0.150.230.220.33 -0.05 0.17 Yemen, Rep.-0.191.130.100.71n/a0.40 Average0.110.140.120.07-0.22-0.01

9.  Steady annual decline for Arab region  Arab countries that are open suffered the most: Correlation credit vs openness= -0.74  Arab countries have no risk-management strategies: individual (counter-cyclical) or region-wide (pooled recovery funds)  No change for SSA

10.  Current Account Balance as % of GDP of Selected Arab Countries

12. Growth in Exports of Goods and Services (%) of Selected Arab Countries Year20062007200820092010 Average 2009 - 2010 Algeria-2.40-0.601.60-3.04 n.a.-3.04 Egypt, Arab Rep.21.2623.2828.76-14.51-2.98-8.75 Jordan12.472.30-12.05-2.697.592.45 Lebanon-0.9013.8013.731.700.391.04 Morocco11.625.197.26-14.7716.260.75 Syrian Arab Republic20.561.41-2.26-18.985.71-6.64 Tunisia4.3111.802.84-7.604.80-1.40 Average9.568.175.70-8.555.29-1.63

14.  Current account balance and growth of exports declined during the crisis  Exports seem to be the main channel of transmission of the crisis to both regions  Recovery started in 2010 only, but modestly

15. Foreign Direct Investment Net Inflows (% of GDP) Country20062007200820092010 Average 2009 - 2010 Algeria1.51.21.52.01.41.7 Bahrain18.49.58.21.2n/a1.2 Djibouti14.123.023.29.2n/a9.2 Egypt, Arab Rep.9.38.95.83.62.93.2 Iraq0.81.72.12.21.72.0 Jordan22.714.812.59.76.27.9 Kuwait0.1 0.01.0n/a1.0 Lebanon11.913.514.413.812.713.2 Libya3.76.54.42.7n/a2.7 Mauritania3.94.99.4-1.30.4-0.4 Morocco3.63.72.82.21.41.8 Oman4.38.04.93.2n/a3.2 Qatar5.8 3.48.3n/a8.3 Saudi Arabia5.16.38.39.85.07.4 Sudan9.75.24.54.94.74.8 Syrian Arab Republic2.03.12.84.82.33.6 Tunisia10.64.36.53.73.43.5 United Arab Emirates7.86.85.31.7n/a1.7 Yemen, Rep.5.94.25.80.5n/a0.5 Average7.46.96.64.43.84.1

16.  FDI net inflows %

17. Annual GDP per Capita Growth of Selected Arab Countries (in %) 20062007200820092010 Average 2009-2010 Algeria0.51.40.80.61.51.0 Djibouti2.93.13.83.0n/a3.0 Egypt, Arab Rep.4.95.25.3 3.44.3 Iraq3.1-1.56.31.1-2.1-0.5 Jordan5.56.15.30.10.90.5 Lebanon-0.56.58.47.76.27.0 Libya3.7 1.70.3n/a0.3 Mauritania16.2-8.10.9-3.62.5-0.6 Morocco6.61.64.53.92.23.1 Oman2.93.99.6-1.7n/a-1.7 Qatar-0.55.25.9-5.1n/a-5.1 Saudi Arabia0.0-0.81.6-2.21.3-0.4 Sudan8.67.44.21.41.91.6 Syrian Arab Republic2.93.62.43.91.22.5 Tunisia4.65.33.62.02.62.3 United Arab Emirates-5.1-8.5 -11.2n/a-11.2 Yemen, Rep.0.10.20.50.6n/a0.6 Average3.32.03.30.42.01.2

18.  GDP per Capita Annual % Growth

19.  Foreign direct investment declined in both regions but faster in Arab countries  Real GDP per capita also declined with slight recovery in 2010 for Arabs  Real sector mirrors export revenues

21.  Impact on Arab Countries: SectorVariable Year of Initial Impact Impact Financial - Stock market index - Volume of transactions - 2007 - Adverse Money supply - M2/GDP - 2008 - Adverse Domestic credit - Credit to private sector - Credit to public sector - 2008 - Adverse - Persistent downward trend Trade and reserves - Net foreign assets (minus gold) - Current account balance - Degree of openness - Oil revenues as % of GDP - Number of tourist arrivals - 2008 - 2009 - Adverse - Reduced - Adverse Real sector - FDI net inflow - Growth of GDP per capita - 2009 - Adverse

22.  Impact on African Countries: SectorVariable Year of Initial Impact Impact Financial - Stock market index - Volume of transactions - 2008 - None - Adverse - No impact Money supply - M2/GDP - None - No impact Domestic credit - Credit to private sector - Credit to public sector - None - No impact Trade and reserves - Net foreign assets (minus gold) - Current account balance - Degree of openness - Annual growth of exports - Number of tourist arrivals - 2008 - 2009 - None - 2008 - 2009 - Adverse - No impact - Adverse Real sector - FDI net inflow - Growth of GDP per capita - 2009 - 2008 - Adverse

23.  For SSA: 1) Increase FDI, 2) Increase Exports, 3) Reduce vulnerability to global shocks  For Arab region: 1) Increase openness while minimizing global risk, 2) Benefit from SSA’s growth potential, 3) secure commodity sourcing   How to achieve global risk minimization?

25.  Optimization Model: X i,t = rate of growth of export of individual country i for period t, X t = rate of growth of global exports for investor country for period t. X i is the column vector of rates of growth of exports of the S countries w i is the weight of individual country i in country K’s world-wide exports W is a vector of all w i ’s

29.  Arab countries gain from overseas investment in export sectors  SSA is a good investment destination because its exports have low correlation with Arab exports  By investing significantly in SSA instead of its traditional foreign destinations, Arab region increases its openness while minimizing its exposure to global risk  SSA increases its FDI, exports more and is more integrated into world economy.