1. Economic and Social Conditions in Africa ECA Presentation to the Committee of Experts 29-30 May 2003 Addis Ababa

2. Overview Economic growth in 2002 Trade---commodity prices Finance---ODA, FDI HIV/AIDS Poverty Medium-term Outlook

3. African economic performance was below expectations

4. Distribution of GDP growth rates of Africa, 1998-2003 (Number of countries)

5. Real GDP growth rates, the top 10 and the bottom 5 African countries, 2002 (%)

6. Unfavorable weather stunted agriculture In Kenya flooding affected 30,000 people. In Northern Senegal flooding killed 500,000 livestock, destroyed 20,000 homes, and damaged 2,500 hectares of crops. Algeria agricultural output fell by 3.2% in 2002, partly because of flooding in the east in July and August. Tunisia’s agricultural output declined by 14% Botswana, Ethiopia, Lesotho, Malawi, Mauritania, Namibia, Niger, Swaziland, Tunisia, Zambia, and Zimbabwe suffered severe drought.

7. Despite heterogeneous conditions performance was generally even

8. Largest economies--- mixed performance South Africa grew by 3.5% up from 2% ---driven by higher precious metal prices, strong tourism receipts and domestic demand Nigeria contracted by 3% amid oil cutbacks, political uncertainty and excessive government spending that pushed up inflation

9. Largest economies—mixed (contd.) GDP growth in Algeria was weak at 1.9% down from 3% in 2001. GDP dominated by investments in oil sector but constrained by OPEC quota Inflation spiralled upwards and current account worsened to 14% from 8 % in 2001 high youth unemployment and the pace of reforms clouded the outlook.

10. Regional Inflation in check… CPI inflation fell to 7.8% down from 15% in 2001 reflecting increased fiscal discipline across the region However, inflationary pressures remain a concern in Angola, Nigeria, Zambia and Zimbabwe

11. But the external account worsened Regional current account deficit increased to 2% of GDP Due to a decline in the surpluses of Nigeria and Algeria This was offset in part by a current account surplus in South Africa as a result of higher prices for gold and other precious metals

12. …amid heightened global uncertainty U.S. economy slowed appreciably in Q2 In Q3 despite volatile downward spiral in equity prices, consumer and business sentiment deteriorated as new orders for goods and services stagnated

13. U.S. recovery pauses

14. …growth in Europe remained weak

15. Is this a double dip slowdown?

16. World Trade In H1 world trade was slowly recovering from its worst growth performance in two decades Oil prices rose markedly—topping USD 35 at end of 2002 fuelled by war fears Gold was also up by 17% to USD 320/oz Coffee was recovering from its lows thanks to expectations of a lower Brazilian crop.

17. Intra-African trade is low Intra-Africa trade accounts for only 12% of Sub-Saharan exports, up 8% from 1989. Five countries dominate Intra-African trade— Côte d’Ivoire, Nigeria, Kenya, Zimbabwe, and Ghana. Very little or no trade occurs between countries that are geographically distant, such as Nigeria and Tanzania.

18. Aid—Pledges increase European union ---all members should meet or exceed the EU average of 0.33% by 2006 US increased its ODA by 50% through Millennium Challenge Account yielding an extra $15 billion through 2006 Canada—pledged CAN$6 billion over five years

19. ODA by sector shows worrying trends

20. Dramatic drop in FDI $17B $6B

21. 29.4M adults and children live with HIV/AIDS as of end 2002 Total: 42 million Western Europe 570 000 North Africa & Middle East 550 000 Sub-Saharan Africa 29.4 million Eastern Europe & Central Asia 1.2 million South & South-East Asia 6 million Australia & New Zealand 15 000 North America 980 000 Caribbean 440 000 Latin America 1.5 million East Asia & Pacific 1.2 million

22. 2.4M adult and child deaths from HIV/AIDS during 2002 Total: 3.1 million Western Europe 8 000 North Africa & Middle East 37 000 Sub-Saharan Africa 2.4 million Eastern Europe & Central Asia 25 000 East Asia & Pacific 45 000 South & South-East Asia 440 000 Australia & New Zealand<100 North America 15 000 Caribbean 42 000 Latin America 60 000

23. Africa needs 40% of global resources to tackle HIV/AIDS epidemic Global Resources Needed by Region - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 2001200220032004200520062007 Millions of US Dollars Latin America & Carribean Western & Eastern Europe & Central Asia North Africa & Middle East East Asia & Pacific South & South-East Asia Sub-Saharan Africa

24. Increasingly affordable prices Annual cost per person for triple therapy in Africa (US$) $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 1991 1993 1995 1997 19992001 2003 Drug Access Initiative Domestic production Accelerated access initiative February-April 2001 offers

25. Poverty predicted to rise by 2015 Source: World Bank (2001) * * * * * 198719901998 2015 low-case scenario 2015 base case scenario 0 100 200 300 400 500 Millions 20 25 30 35 40 45 50 Percent 217 242 302 426 361

26. But..some are making inroads into poverty

27. Medium Term Outlook Sources of growth---primary commodities and natural resources--- remain fragile and vulnerable to exogenous shocks and subsidies Political determinants of growth---conflict weighing on economic performance and FDI Private sector performance is spotty—strong in South and North and weak elsewhere Agricultural modernization is stalled reducing prospects for poverty reduction Underlying macroeconomic fundamentals continues to improve. Growth of 4 % envisaged

28. Thank you!