1. Africa: Enhancing growth and reducing poverty in a volatile world ShantaDevarajan World Bank http://blogs.worldbank.org/africacan

2. Before the global crisis Africa was experiencing sustained, relatively rapid economic growth As fast as all developing countries (except China and India)

3. For the first time in 20 years, Africa’s growth is equal to that of developing countries (except China and India)

4. Before the global crisis Africa was experiencing sustained, relatively rapid economic growth As fast as all developing countries (except China and India) Broad-based: 22 non-oil countries had 4+ percent average GDP growth from 1998-2008

5. Source: World Development Indicators, World Bank

6. Before the global crisis Africa was experiencing sustained, relatively rapid economic growth Broad-based: 22 non-oil countries had 4+ percent average GDP growth from 1998-2008 Due to Higher commodity prices Increases in aid, debt relief and capital flows Improved macroeconomic policies

7. Inflation in Africa 140 45 2 2 2 40 3 4 5 120 6 6 6 7 7 35 13 13 Inflation>20% 100 30 10%<inflation<=20% 80 25 Number of Countries Average Inflation Rate % Inflation<=10% 20 60 33 33 33 32 31 31 31 Median inflation rate 30 15 29 28 27 40 24 10 17 20 5 0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

8. Although least integrated, Africa may be the worst hit by the crisis Private capital flows

9. Source: IMF, World Economic Outlook, 2008

10. If FDI flows, more important recently, were to fall, growth would suffer Source: World Bank, Global Economic Prospects 2010: Crisis, finance, and growth

11. Although least integrated, Africa may be the worst hit by the crisis Private capital flows Remittances

12. Remittances Source: Ratha and Mahopatra (2009)

13. Although least integrated, Africa may be the worst hit by the crisis Private capital flows Remittances Tourism

14. Tourist arrivals(compared with equivalent period in 2008) Source: World Bank staff estimates

15. Although least integrated, Africa may be the worst hit by the crisis Private capital flows Remittances Tourism Primary commodity prices

16. Terms of trade shocks(change in trade balance as percentage of 2006 GDP)

17. Note: 2008 includes 2008/09 fiscal year; 2009 includes 2009/10 fiscal year Source: Regional Economic Outlook, IMF (October 2009)

18. Although least integrated, Africa may be the worst hit by the crisis Private capital flows Remittances Tourism Primary commodity prices Foreign aid

19. Foreign aid? Source: David Roodman, Center for Global Development

20. Impact: Decline in growth Source: African Economic Outlook database

21. Result: Growth declines Per capita income declines For the first time in a decade Human crisis 7-10 million thrown into poverty 30-50,000 additional children dying before their first birthday Possible reversals in economic reforms—didn’t happen

22. Revenue, Expenditure and Deficit (relative to earlier projections) Source: Krumm, Dhar and Choi, “Fiscal Response to the Global Crisis in Low Income African Countries”, August 2009

23. Policy responses Time-bound bailout programs E.g., Tanzania’s emergency rescue program limits government guarantees and loans to two years Accelerated reform programs E.g., Nigeria is deregulating its downstream petroleum sector, reducing costly and regressive subsidies

24. Implications Policy environment has never been better External resources are as productive as they have ever been Continued reforms and additional resources could accelerate progress towards the Millennium Development Goals

25. Africa’s medium-term challenges

26. Business climate

27. Low competitiveness Source: World Bank, Doing Business Database

28. Infrastructure deficit Note: Road density is in kilometers per kilometer squared; telephone density is in lines per thousand population; generation capacity is in megawatts per million population; electricity, water and sanitation coverage are in percentage of population

29. Youth unemployment

30. Lagging agricultural productivity

31. Climate Risks and Development: The “Poor Countries’ Danger” Potential Impact of Climate Change on Agriculture: Projected Percentage Change in Agricultural Productivity in 2080 Note: Scenario: SRES A2. Source: Cline 2007.

32. Back to Infrastructure deficit Note: Road density is in kilometers per kilometer squared; telephone density is in lines per thousand population; generation capacity is in megawatts per million population; electricity, water and sanitation coverage are in percentage of population

33. GEOGRAPHICAL SCOPE OF THE STUDY SELECTED CORRIDORS OF THE STUDY

34. THE TRANSPORT PARADOX IN AFRICA (1) A disconnect between low transport costs but high transport prices Transport costs are not excessively high in Africa comparing to France for example However, average transport prices in Africa are high in a global comparison

35. THE TRANSPORT PARADOX IN AFRICA (2) Although low efficiency, profit margins of trucking companies are high An interesting observation: On Central Africa corridor, trucks with lower average yearly mileage have the higher profit margins

36. Example of the impact of market deregulation: the case of Rwanda Average transport prices (constant and current) from Mombasa to Kigali

37. Africa’s time Before the crisis, policies were steadily improving and showing results During the crisis, policies continued to improve Policy environment has never been better Medium-term challenges, while daunting, can also be met with a combination of resources and reform Africa may be poised for sustained, rapid growth, as India was 20 years ago, and China 30 years ago