Mapping Africa s allure Goolam Ballim* May 211 +27-11-636-291 Goolam.Ballim@standardbank.co.za
1 Page 1. 2 2. 5 3. Political 7 4. 9 5. 11 6. 15 7. 19
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3 Economic growth has been widespread, and inclusive Growth rate, 21 211 average, % More countries are growing at a faster clip Political 25 2 15 1 % Less than 1 to 2.9 3 to 3.9 4 to 4.9 5 to 6.9 7 to 1 5 198s 199s 2s Sources: International Monetary Fund (IMF), Standard Bank Research Sources: Standard Bank Research; IMF, African Development Bank (AfDB)
4 Political Africa s post-recession recovery This time around, Africa s recovery has not lagged the rest of the world 3 25 2 15 1 5 1 2 3 4 5 6 1981-1982 199-1993 1998 21 28-29 Advanced average Sources: Standard Bank Research; Bloomberg, IMF
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6 Improved macroeconomic management has supported growth Inflation structurally lower Maturity in current account balance 198s 2s 198s 2s Political More than 2% 1% to 2% Less than 1% Insufficient data More than 1% deficit 5% to 1% deficit % to 5% deficit Surplus Insufficient data Sources: IMF, Standard Bank Research; Sources: IMF, Standard Bank Research;
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8 Expanded political freedom has deepened participation in economic growth Expanding political freedom Number of electoral democracies Political Partly Free, 15 (32%) Free, 4 (9%) 198 Not Free, 27 (59%) 25 2 15 Free, 1 (21%) 28 Not Free, 15 (31%) 1 5 Partly Free, 23 (48%) 199 1995 2 25 21 Sources: Freedom House, Standard Bank Research Sources: Freedom House, Standard Bank Research;
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195 196 197 198 199 2 21 22 23 24 25 1 Africans have become more wealthy GDP per capita (PPP) growth, 2-21 (%) Africa s population is growing, and urbanising 2 Total population (') 8 Political 16 12 8 4 6 4 2 Less than 1 % Economically active population Dependent population Total fertility rate*(rhs) to 2 2 to 5 5 to 8 8 to 1 1+ Sources: IMF, Economist Intelligence Unit (EIU), Standard Bank Research 8 6 4 2 India Africa China Europe Latin Rural Urban America Sources: United Nations (UN), Standard Bank Research; North America
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China US France Italy Germany Spain India Neth. UK Japan Korea Brazil Belgium SA Turkey Canada UAE Nigeria Portugal Taiwan 12 Emerging markets, led by BRICs, growing in stature Breakdown of Africa s new post-21 trade Africa s top 2 trade partnerships 4 3% 16 USD bn Political 3 25% 14 12 2 Russia Brazil India 2% 1 8 China 6 1 15% 4 Other 2 Nigeria South Africa 1% Developed DevelopingIntra-Africa BRIC Non-BRIC or Africa Growth rate (RHS) Change (LHS) 21 21 28 Sources: IMF, International Trade Centre (ITC),World Trade Organisation (WTO), Standard Bank Research Sources: IMF, ITC, WTO, Standard Bank Research
13 BRIC s have been important players in more inclusive world Africa s exports Africa s imports 6 USD bn 4 USD bn Political 5 35 3 4 25 3 2 2 15 1 1 5 21 22 23 24 25 26 27 28 29 21 US Japan EU-27 Brazil 21 22 23 24 25 26 27 28 29 21 US Japan EU-27 Brazil Russia India China Africa Russia India China Africa Sources: IMF, ITC, WTO, Standard Bank Research Sources: IMF, ITC, WTO, Standard Bank Research
France US China UK Italy South Africa Netherlands Switzerland Brazil India Germany Japan Norway Russia Malaysia Saudi Arabia Portugal UAE Spain Denmark Canada Korea Sweden Thailand 14 Traditional partners clearly still matter, new partners prospects are alluring Traditional partners dominant in investment... But BRICs will accelerate commercial ties 6 FDI stock, USD bn 6 USD bn Political 5 5 4 4 3 3 2 2 1 1-21 215 21 215 Trade FDI China Brazil India Russia Sources: UNCTAD, ITC Standard Bank Research Sources: ITC, Standard Bank Research
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16 Africa s resources potential Commodities in Africa as a % of world total Growth of proved oil reserves, 1989 to 29 Political 9 8 7 2% 15% 1% 5% 116% 6 % 5 4 3 2 1-5% Europe & Eurasia, 136.9 S. & Cent. America Africa, 127.7 Africa N. America, 73.3 Europe & Eurasia Asia Pacific Middle East Proved oil reserves at end 29, bn barrels North America Asia Pacific, 42.2 Middle East, 754.2 25 215E Sources: United States Geological Survey (USGS), Credit Suisse, Standard Bank Research; S. & Cent. America, 198.9 Sources: British Petroleum (BP), Standard Bank Research
17 Agriculture poised for growth World share of unexploited cropland Countries with the largest potentially available cropland Political 2% % of world total Latin America, 31% Others, 8% 16% 12% 8% Sub- Saharan Africa, 61% 4% % Sources: Harmonised Soil Database, Food and Agriculture Organization (FAO), Standard Bank Research Sources: Harmonised Soil Database, Food and Agriculture Organization (FAO), Standard Bank Research
18 Regional integration will propel deeper economic growth Africa s regional groupings Intra-African trade has accelerated Algeria 1 USD bn Political US$16.3 bn Egypt US$218.5 bn 8 6 4 Nigeria US$216.8 bn 2 21 22 23 24 25 26 27 28 29 All other intra-african trade South Africa's trade with Africa WAMZ (West African Monetary Zone) Angola US$85.3 bn WAEMU (West African Economic & Monetary Union) ECOWAS (Economic Community of West African States) CEMAC (Central African Economic & Monetary Community) SACU (Southern African Customs Union) RSA US$357.3 bn EAC (East African Community) SADC (Southern African Development Community) COMESA (Common Market for Eastern & Southern Africa) Sources: IMF, Standard Bank Research Sources: ITC, UN COMTRADE, Standard Bank Research
19 Political Africa and the world Africa s economic resurgence is robust, underpinned by sound structural fundamentals. While challenges clearly persist, Africa is more stable than ever before. Africa s population is growing, and becoming more affluent, creating widespread opportunities. Commercial linkages with the emerging world are accelerating, fundamentally reversing Africa s marginalised position in world trade. Increasingly, Africa s abundant agricultural potential will provide fresh impetus for investment. Meanwhile, the continent s resources potential remains surprisingly dormant. Gaining access to is emerging as a vital tool in negotiating the world s new reality.
2 Goolam Ballim* Chief Economist Contact: +27-11-636-291 Email: Goolam.Ballim@standardbank.co.za
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