Address by Hon. T. Biti, MP Minister of Finance From Hopelessness to Hope: Africa on the Rise Carleton University, Ottawa 8 January 2013
Outline 1. Background: Africa a Hopeless Case Prior 1990 2. Africa Arising from Deep Slumber: 1990-2010 3. Outlook: Unleashing Africa s Potential as a Pole for Global Growth 4. Conclusion
Background: Africa a Hopeless Case Prior 1990 Weak institutions rule of law property rights corruption Conflicts/ Political Instability/Coups Unstable macroeconomic policies Low investment and savings High Inflation Balance of Payment deficits Unsustainable external debt position Low growth rates
Source: World Bank (1994b) Average Annual per-capita GDP growth by region:1965-1985 Region Growth Rate (%) East Asia and Pacific 5.0 Latin America and Caribbean 2.6 South Asia 1.6 Sub-Saharan Africa 0.9
Economic characteristics o Asia and Africa: 1960-1989 (%) East Asia Africa Investment /GDP 23 17 Inflation rate 12 31 Exports/GDP 32 23 Black market exchange premium 13 57 Primary School enrolment 90 54 Secondary School enrolment 30 10 Source(Fischer, 1993)
What did this mean High disease prevalence Civil strife & Misery High levels of poverty Hopelessness
Africa Arising from Deep Slumber: 1990-2010 African economies are on the move. Most African countries have made significant progress Key macroeconomic fundamentals continue to score positively
Economic Performance of Africa Real GDP growth for Africa over the period 2000-2010 averaged 5% above global average 10 8 6 4 2 0 North Africa Sub-Saharan Africa Advanced Economies Emerging and Developing Economies -2-4
Economic Performance of Africa cont d Average Annual GDP Growth Rate: 2000-2010 Developed economies World Central and East Europe Latin America Middle East Africa Emerging Asia 0 2 4 6 8 10 Real GDP (%)
Economic Performance of Africa cont d Africa s economic growth accelerated after 2000, making it the world s second-fastest-growing region Rising investment levels from an average of 18% in 1990 to 22% in 2009 Growth in exports from 26% of GDP in 1990 to 30% in 2009 Improvement in doing business indicators
Foreign Direct Investment FDI in Africa rose from US$9 billion in 2000 to US$50 billion in 2010. FDI has helped to boost sustainable economic growth in many African countries. In principle, FDI help to augment productive capacity, employment, and exports
Foreign Direct investment Flows
Political and economic stability Progress towards the key Millennium Development Goals has also been satisfactory Literacy rates increased Life expectancy improved Child mortality dropped Slow new HIV infections Increased gender representation
Outlook: Unleashing Africa s Potential as a pole for Global Growth What does Africa needs to do to sustain the current boom: Improve economic and political governance Investing in research and development Human capital development Value Addition Intensify efforts to remove obstacles to trade, including intra-regional trade and promote regional integration Invest in regional infrastructure ICT, road, rail, water Continue efforts to improve the investment climate
Demographic Dividend The continent is poised to reap a demographic dividend, courtesy of its young and rapidly growing workforce and declining dependency ratio. Africa will add 122 million people to its labour force between 2010 and 2020. By 2035, the continent s labour force will be larger than that of any nation, including China or India.
Infrastructure Requirements Limited infrastructure, including regional infrastructure remains a key bottleneck to intraregional trade and economic growth. As such, there is need for massive investment in infrastructure rehabilitation and development United Nations Economic Commission for Africa (2012) estimates total infrastructure requirements of US$67.9 billion
Sector Infrastructure Requirements Cost (US$ billion) Transport 24.4 Energy 40.3 Water 1.7 ICT 0.5 TOTAL 67.9
REGION Regional Infrastructure requirements Cost (US$ Billion) Continental 3.0 North Africa 1.3 West Africa 6.2 Central Africa 21.5 Southern Africa 12.6 East Africa 23.3 TOTAL 67.9
Infrastructure bonds Loan guarantees Domestic Resources Financing Strategy
Key Assumptions a major paradigm shift in pursuit of a united common vision under a stable democratic, political dispensation with strong leadership is required Strong regional economic linkages Good economic policies Democratic institutions
Conclusion Africa can not continue to have a permanent seat of the world s bottom billion. There is hope that Africa, right from Cape of Good Hope to Cairo will rebound from the bottom billion We need The Audacity of Hope: & Thoughts of Reclaiming Africa for African Renaissance to work. To President Obama I say not reclaiming thoughts for America this time. Africa can not continue to be a basket case anymore.
I Thank You.