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Africa Open for Business Vincent Palmade World Bank Recovery from crisis: Projected GDP growth Africa as the next growth pole? 2 Growth has been widespread Source: Africa Action Plan Progress in Human Development in Africa Population living under $1.25/day Child mortality rates Primary school enrollment rates Maternal mortality ratio Africa has come a long way in terms of improving financial stability . . . Source: Laeven and Valencia (2010) Business climate is improving across the continent WORLD BANK’S DOING BUSINESS RANKINGS 2011 Source: Doing Business 2011 Rwanda was the world’s top doing business reformer in 2009 SSA was the most active among all regions in enacting reforms aimed at facilitating start-ups and registering property in 2010 SSA had some of the most comprehensive investor protection reforms e.g. Botswana, Mozambique, Rwanda, Sierra Leone, Swaziland, Tanzania Dynamic and Transformative Private Sector 5 game-changers 3 Greater macro stability and increased voice makes Africa more attractive for investors Democratic elections gaining ground; conflicts steadily declining 1 2 New heavy-hitting investors offer critical mass Regionalization is creating new largescale markets Brazil, China, Brazil; private investors, foundations Intra-regional trade growing; new regional common markets 4 5 Spread and growth of ICT offer significant productivity gains Climate change creates opportunities for a green economy World’s fastest mobile phone penetration Africa has low carbon legacy; chance for green leadership 6 Key Export Industries Mining • Mining resources could finance power and transport infrastructure Construction • Urban development to fuel economic transformation, not slums Agribusiness • Africa to become the world’s food basket 75% of cultivable land unused ICT • ICT to play a transformative role (remote services, e-government) Light manufacturing • Wages five times lower than in China – manufacturing could come Tourism • Unique cultural and natural tourism assets waiting to be leveraged Leveraging Mining • Expanding established areas – e.g. Zambia, Nigeria • Large new emerging areas – e.g. Mozambique, Guinea, DRC • Good prospects – e.g. Burkina Faso, Cameroon • Opportunity to develop infrastructure through mining Africa’s Infrastructure Gap Normalized units Paved Road Density Total road density Main line density Mobile density Internet density Generation Density Electricity Coverage Improved water Improved sanitation Sub Saharan Africa- Other Low Low Income Income Countries Countries 31 137 10 55 2 37 16 60 34 134 211 78 76 3 326 41 72 51 Growth in Agricultural Productivity Real Agricultural GDP (28 countries value weighted) 5.0 4.0 3.0 # of countries > 5%/yr 2.0 1.0 3 4 2000-04 2001-05 8 5 4 0.0 2002-06 2003-07 2004-2008 Kenya horticulture story • Smart Support: Government facilitated arrival of strategic investors. 700 607 570 600 • • • Spillovers: Success of foreign companies in floriculture led to entry of other investors, including Kenyans. Deregulations: Compared to the highly regulated agricultural sector Trade Logistics: Leverage of Kenya Airways Exports, million US$ 538 479 500 528 Coffee, tea, matï and spices. 473 424 Cut flowers and other plants 403 400 300 350 299 283 Edible vegetables and certain roots 245 196 200 166 100 2002 2003 2004 211 2005 2006 2007 Source: WITS, and Whitaker and Kolavalli, “The how to technological change for faster growth in floriculture in Kenya, October 2004 . Lesotho apparel story • Key bottleneck: Land acquisition for foreign investors is difficult and cumbersome. 5000 4500 4000 • Policies to address the bottleneck: Industrial zones and serviced factory shells. On the job training of workers: Similar productivity at lower wages than in Asia. 3500 Million Maloti • 3000 Non-manufactured exports Manufactured exports (of which 60% on average are apparels) 2500 2000 1500 1000 500 • Trade Logistics: Leverage of Durban port 0 95 996 997 998 999 000 001 003 004 005 006 19 1 1 1 1 2 2 2 2 2 2 Source: Mallika Shakya, A note on Lesotho success story . 14 Gorilla tourism in Rwanda Opportunities in Health World Bank Group International Bank for Reconstruction and Development (IBRD) 1944 International Development Association (IDA) 1960 International Finance Corporation 1956 Multilateral Investment Guarantee Agency 1988 International Center for the Settlement of Investment Disputes 1966 World Bank’s Support to Africa Partnerships 18 -Governments -AfDB, AU, RECs - Civil society - Private sector - Development partners Knowledge •Link analysis to policy •Political economy •Evidence to nourish public debate Finance Leveraging: •Domestic res. •IDA, IBRD, IFC,MIGA •PCGs, enclaves, etc. Focusing World Bank Support on Main Opportunities 1 Business environment reforms: Reduce cost and risk of doing business 2 Public-private partnerships (PPP) Address the infrastructure deficit 3 Entrepreneurship, knowledge and skills: Raise productivity and create new markets 4 Finance for development: Increase access to finance and supply long-term capital, especially for SMEs The World Bank - AFTFP 2010 Regional solutions High-impact projects: • West Africa Power Pool • Inga 3 hydro-project • North-South Corridor Beyond Infrastructure: •Agricultural research •Health •Trade integration Public Health Laboratory Network in East Africa