1. OVERVIEW OF ECONOMIC AND SOCIAL CONDITIONS IN AFRICA IN 2009 Adam B. Elhiraika, Chief, Macroeconomic Analysis Section, ECA Meeting of the Committee of Experts of the 3rd Joint Annual Meetings of the AU Conference of Ministers of Economy and Finance and ECA Conference of African Ministers of Finance, Planning and Economic Development 25-28 March 2010, 25-28 March 2010, Lilongwe, Malawi

2. Main Messages 1.Global crisis depressed Africa’s GDP in 2009 and slowed progress towards achieving the MDGs. 2.Economic growth will pick up in 2010, although falling short of what is required to achieve significant gains in social development. 3.The prospects of achieving social development and the overall objectives of NEPAD will be compromised if no bold actions are taken to ensure that African countries embark on paths of high, sustainable and employment-focused growth.

3. Global Economic Recovery and Implications for Africa The world economy is recovering A rebound of the world economy is expected in 2010; Commodity prices are expected to stabilize; Budget deficits widened in developed countries; Aid flows expected to decline further. Implications for Africa: Higher export revenue through increased demand for Africa’s commodity exports; Increased private capital and trade flows from China and India are expected to simulate growth on the continent; Recovery in government revenue; Africa’s growth declined from 4.9 % in 2008 to 1.6 % in 2009, but is expected to recover to 4.3 % in 2010; significant differences across countries and regions.

4. Africa’s economic growth rate expected to recover in 2010

5. Factors Influencing Significant Growth Deceleration in Africa in 2009 Global demand for African commodities dropped significantly, resulting in lower export prices. Low level of economic diversification in the majority of African countries. Declined capital inflows, especially ODA and FDI. Declined remittances inflows.

6. The Impact of the Crisis on African Countries Inflation trended downwards, except in a few countries. Government revenue declined in many countries. Lower export revenue and foreign capital inflows. Fiscal balances worsened in the majority of countries. Real effective exchange rate appreciated in most countries. Current account balances deteriorated in the majority of countries. Employment situation deteriorated, particularly among vulnerable groups. Poverty rates either increased or stagnated at high levels.

7. Growth performance varied across and within sub-regions Oil-exporting countries expanded more vigorously than the oil-importing countries, thanks to favorable initial conditions, including large fiscal and current surpluses, strong external positions and low debt. A few Oil-importing countries showed considerable resilience, posting GDP growth of more than 5% because of a variety of country-specific factors. The fastest growing sub-region in 2009 continued to be East Africa (3.9%), followed by North Africa (3.5%), West Africa (2.4%), Central Africa (0.9%) and Southern Africa (-1.6%).

8. Trends in social development Progress in social development has been very limited. Very limited headway on poverty, eradicating hunger, maternal mortality and on addressing disparities due to gender, income and disability. The number of refugees continued to decline for the eighth consecutive year. 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.

9. Education While Africa is making progress towards achieving universal primary enrolment, there are still about 46 million primary- school-age children who are out of school. The number of children and young people who are out of secondary education is alarmingly high in Sub-Saharan Africa. Overall participation in tertiary education is very low on the continent as only 6% of the tertiary-education-age cohort was enrolled in tertiary institutions in 2007 in Africa compared with the global average of 26%. The major challenges affecting secondary and tertiary education include shortage of trained teachers, and lack of resources to cover the cost of education.

10. Health 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.

11. Poverty and unemployment (Cont’1) Both poverty & unemployment remain high and intensified in many countries, particularly among vulnerable groups (women, the disabled etc.). Key challenges faced by vulnerable groups include: Serious difficulties in accessing food and ensuring food security; Limited access to education; Limited access to employment opportunities; Problems in access to health serious.

12. Poverty and unemployment (Cont’d 2) Africa needs to promote the social inclusion of socially disadvantaged groups and to strengthen social protection systems, especially in the context of the recent food crises and the global economic recession. African countries need to embark on paths of high, sustainable and employment focused- growth and put social development at the forefront of their development agenda.

13. Poverty and unemployment (cont’d 3) Robust and sustainable labor-intensive economic growth along with rising factors’ productivity could be achieved by means of the diversification of production and exports. Care must be taken to ensure that macroeconomic policies place special attention on real objectives, including incentives for private investment in labor- intensive activities.

14. Concluding Remarks The recent global downturn has negatively affected GDP growth, employment and social conditions across Africa, particularly among vulnerable groups. Countries that have relatively done well are those that sustained more broad-based growth. Diversification is key to ensuring high and sustainable growth and meaningful employment gains. Broader economic and social development requires that the concerns of vulnerable groups be put at the forefront of the development agenda on the continent.

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