choices for africa
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Four ‘Mega’ Drivers
African Choices
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Driver One:
PEOPLE
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This is where she lives
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This is where she lives
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This is how she This is how she This is how she has to copehas to copehas to cope
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‘A hungry man is an angry
man’.
Raila Odinga
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The potential The potential The potential for social for social for social
destabilisationdestabilisationdestabilisation existsexistsexists
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Stretching Stretching Stretching government government government capacitycapacitycapacity
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And And And stressing stressing stressing fragile fragile fragile peacepeacepeace
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LOGO HEREResult: by 2025 there will be 30 million
people younger than 24 years in African cities – a most potent political and cultural
force on the continent.
What does this mean for Africa?• Stress on urban infrastructure• Risk of appeal of populism• Need to manage expectations• Need to ensure rural growth
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Yet her generation has
the best chance of
breaking out of poverty
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The demographic dividend
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If they can keep their eyes on the
world –A Critical Juncture
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Picture of the China / factories?
DRIVER II:DRIVER II:The Great The Great
Migration Migration –– 30 years of 30 years of ‘‘economic economic overdriveoverdrive’’
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30 years since Deng Xiaoping launched
his economic reforms, following disasters of Mao’s
Great Leap Forward and Cultural
Revolution. Deng’s reforms unleashed
an explosion of economic
development, since 1981 freeing 600+
million Chinese from extreme poverty.
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THE GLOBAL IMPACT OF THE GREAT MIGRATION• Low prices in manufactured goods reduced
inflation pressure all over the world• Savings in the new economies provided massive
low‐cost funds to the developed world• Chinese workers alone provided the West with
more than $1 trillion in savings since 2000.
Unprecedented Credit BoomHousing, Consumer Spending, Corporate Credit
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LOGO HERE The Link with Africa
Western consumer demand Asian production & savings
Western consumer demand
Commodity demand
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AFRICAN COMMODITIES
BOOM
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500
1961 2005
But it never lasts …
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500
1961 2005
But it never lasts …
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Result• Growth higher …• Regional actors
gain power• Oil a constraint on
growth for most• Diversified power
strategies required for African states
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The decade of easy credit
& low prices
Will it return?
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Driver IIIDriver IIIDriver IIIFOOD AND FOOD AND FOOD AND CLIMATECLIMATECLIMATE
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0
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800Jan‐05
Apr‐05
Jul‐05
Oct‐05
Jan‐06
Apr‐06
Jul‐06
Oct‐06
Jan‐07
Apr‐07
Jul‐07
Oct‐07
Jan‐08
Apr‐08
Selected food prices (US$/t)
US No. 3 Yellow Maize (FOB) Gulf
US No.2 Dark North Spring (14 %) (FOB) Gulf
US No.1 Soybeans (FOB) Gulf
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Potential for social tension, leading to social reactions and eventually even political problems.
Jacques Diouf, FAO
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Angola Ethiopia Niger
Benin Gabon Nigeria
Botswana Gambia Sao Tome and Principe
Burkina Faso Ghana Senegal
Burundi Guinea Seychelles
Cameroon Guinea-Bissau Sierra Leone
Cape Verde Kenya Somalia
Central African Republic Lesotho South Africa
Chad Liberia Sudan
Comoros Madagascar Swaziland
Congo, Dem Republic of Malawi Tanzania, United Rep of
Congo, Republic of Mali Togo
Côte d’Ivoire Mauritania Uganda
Djibouti Mauritius Zambia
Equatorial Guinea Mozambique Zimbabwe
Eritrea Namibia
Africa’s net food importers: 38 of 48
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ResultIf food prices rise sharply over the next decade – could result in differential fortunes for Africa countries.Rise in internal political tensions between city and countryside? Drastic increase in food output requiredAccess to markets is crucialClimate change: Wild Card?
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Driver IVTECHNOLOGY
AND SKILLS
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LOGO HERE Result: Africans, natural connectors, will increasingly have their lives shaped by global
and regional information and financial exchange
What does this mean for Africa?• Impact on expectations• A linked diaspora• Avenue to globalisation, good and bad
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The uneducated fall behind[picture of skills premium point]
Skills Premium – Until Now …
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The uneducated fall behind[picture of skills premium point]
Result
Falling relative wages for the
unskilled
Will this trend reverse?
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FOUR ‘MEGA’ DRIVERSI People: The impact on Africa II The Global Economy: The
African commodities dimensionIII Food and climate
IV Technology and skills
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Impact on Africa:
What are the Choices?
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Choice #1
Save or Squander?
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The Resource Curse is not
Destiny
“Last time we messed up; this time we’re
not going to.”-
Nigerian Minister of Finance
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The Resource
Curse is not Destiny
Avoid Dutch Disease
Use revenue wisely
Build strong & accountable institutionsDeal with corruption
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Choice #2
Bread Basket or Basket
Case?
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0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000Cereal Yields (Kg/Ha) in Developing Countries
Sub‐Saharan Africa
East Asia & Pacific
Latin America & Caribbean
Middle East & North Africa
South Asia
1961 2005
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Choice #2
Bread Basket or Basket
Case?
Green Revolution requires …
Local systems & political will plus international
collaboration Private sector critical
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Choice #3#3#3
A Youth A Youth A Youth Empowered?Empowered?Empowered?
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0
20
40
60
80
100
120
140
1970 1975 1980 1985 1990 1995 2000 2005
%
Gross primary enrollment
East Asia & Pacific
Latin America and Caribbean
Middle East and North Africa
South Asia
Sub‐Saharan Africa
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0
20
40
60
80
100
120
Net Enrollment Rate
Minimum Mastery
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Schooling targets need to move from Schooling targets need to move from Schooling targets need to move from enrollment to completionenrollment to completionenrollment to completion
Improving both quantity and especially qualityImproving both quantity and especially qualityImproving both quantity and especially quality
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Choice #4
Competitive or Costly?
Choice #4Choice #4Choice #4
Competitive Competitive Competitive or Costly?or Costly?or Costly?
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Choice #4
Competitive or Costly?
Choice #4Choice #4Choice #4
Competitive Competitive Competitive or Costly?or Costly?or Costly?
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Choice #4
Competitive or Costly?
Choice #4Choice #4Choice #4
Competitive Competitive Competitive or Costly?or Costly?or Costly?
Global Corruption Perception Index, 2007[1]
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Choice #4Choice #4Choice #4
Competitive Competitive Competitive or Costly?or Costly?or Costly?
If Africa’s Priority is Jobs …
This requires four key actions:• Making the economy – and the currency – cost competitive• Accessing global markets• Making public investments in hard and soft infrastructure• Ensuring stable & predictable policy
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Choice #4Choice #4Choice #4
Competitive Competitive Competitive or Costly?or Costly?or Costly?
World GDP Output, 2007 (By Region)
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Because this is a road well travelled and
understood …
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Singapore’s Path to a Knowledge-Based Economy
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LOGO HERE Conclusion
Long-term trends are driving capital to developing markets especially given population dynamics. Competition between them is likely to increase at least in the short-term. The African growth model remains commodity and governance dependent – and China & India are likely to continue to drive this (as are Viet Nam and others). In the short-term, some African (and other) countries will movefrom fragility to collapse. Ironically we may be shielded. Governments will have to do more with less – and avoid costlypolicy cul-de-sacs.
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THANK YOU