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SIMILARITIES AND DIFFERENCES BETWEEN THE AFRICAN NATIONS

Week 2

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Theme Topics for discussion Theme objectivesFacts on AfricaSimilarities and Differences: Macroeconomic governance

and performanceSimilarities and Differences: Economic development

classificationSimilarities and Differences: Regional Economic

Communities in AfricaSimilarities and Differences: Farming systems in Sub-

Saharan Africa –SSASummary and discussionsReflection exercise: Questions

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Theme Objectives• To show the macroeconomic fundamentals for Africa

• To the similarities and differences between African countries,

• To show the economic development classifications for African countries

• To show the farming system practiced in Africa

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Background on Africa• Africa is a continent about

• 5,000 miles from North to South• 4,600 miles from east to west at it widest point• There are about 3,000 distinct ethnic groups in Africa

• Nigeria has about 370 recognized tribes and • Namibia has about 11

• There are over 2,000 languages spoken in Africa • Arabic has the highest number of speakers• 170 million people in North and the horn of Africa

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Background on Agriculture in Africa• World Bank 2006b:11,135; Diao et al. 2007:5, 9:

• Mention that the agricultural sector can be the engine for economic growth and improved livelihoods in Africa.

• Diao et al. 2007:1 mentions that • majority of the population in Sub-Saharan Africa lives in rural areas • and depends directly or indirectly on agriculture.

• In fact, agriculture contributes about 17% to the Gross Domestic Product (GDP) of many of these countries and

• accounts for 40% of their exports, apart from contributing to employment creation.

• Thus, it has the potential of reducing poverty which has been a great area of concern in many parts of the continent.

• Statistics reveal that the number of people living below the poverty line in SSA • is over 180 million and is expected to exceed 300 million by the year 2020

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Background on Agriculture in Africa• Despite the great potential for agricultural production in Africa,

• UNDP states that about 73% of the poor people living in rural areas subsist on less than a dollar a day.

• In addition, the continent has about 200 million of the world’s hungry people (Millennium Development Goals (MDGs) Technical Support Centre.

• Furthermore, available statistics suggest that about one third of the continent’s population is malnourished.

• Africa is also the only continent where food production has been falling over the years.

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Goals and targets for Africa• Africa, like the rest of the world, needs to attain the United Nation’s

Millennium Development Goals (MDGs)

• And the World Food Summit (WFS) goals to reduce the number of hungry people from 790 million to 400 million by 2015.

• There is suggestion that to reduce poverty by 50% by 2015, African economies need to grow at 7% per annum.

• Another target requires that a national strategy for sustainable development be in place in every country

• to ensure the reversal of current trends in the loss of environmental resources at both national and global levels by 2015 (ECA 2005).

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Macroeconomic governance and Performance

• Many African economies appear to have turned the corner and moved to a path of faster and steadier economic growth.• Increasing GDP growth• Reduction in inflation• Significant improvement of the debt-to-GDP ratio• These appear to have slowed down as the 2000s have progressed

• Economic output for Africa as a whole expanded rapidly,

• From a low annual average growth rate of 1.6 percent in 1990–95 to 3.6 percent in 1995–2003 and to 5.03 percent in 2003–09.

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Macroeconomic governance and Performance

• For the purpose of distinguishing African countries based on the similarities and differences;

• We use Diao et al 2007 and World bank 2010:

• LI – 1: Low Income, more favorable agricultural conditions and mineral rich Countries, consists of 6 countries

• LI – 2: Low Income, more favorable agricultural conditions, non-mineral rich, consists of 14 countries

• LI – 3: Low Income and less favorable agricultural conditions, consists of 9 countries

• MI: Middle income countries, consisting of 24 countries

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Macroeconomic governance and Performance

The rate of expansion in GDP increased over 2003–09 For the eastern Africa region 0.1 percent For LI-1 about 0.1 percentFor LI-2 about 0.3 percentage points, respectively.

Notable outliers driving growth trends in their respective regions include Equatorial Guinea of central Africa,

where oil revenue caused GDP to more than double

Liberia - one of the LI-1 countries, with more favorable agriculture and mineral resources—which grew at annual

rates above 20 percent between its two civil wars.

Oil exporting African countries—such as Nigeria and Angola—are currently benefiting from resumption of the demand for oil,

though they remain vulnerable to fluctuations in international oil prices (IMF 2010a)

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Macroeconomic governance and Performance

Two other important economic indicators offer additional insight into the evolution of the enabling environment for African agriculture:

inflation, and debt as a share of GDP

Africa as a whole experienced relatively low inflation levels over the periods 1990–95 and 1995–2003,

at an average of 1.3 and 0.5 percent respectively;

inflation increased however to an average of 8.3 percent over 2003–09

This pattern, observed at the continental level, is reflected in the regions to differing degrees.

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Macroeconomic variable: Inflation• Comoros, Eritrea, Mauritius, and Sudan drove the increase

in the eastern region,

• While Libya, Morocco, Algeria, and Mauritania drove the increase in the northern region.

• Overall, inflation was under greater control following 2003 than in preceding years.

• With the exception of the LI-2 economic development group—favorable to agriculture but mineral poor—each group experienced an annual average decrease in inflation over 2003–09.

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Macroeconomic variable: debit-to-GDP ratio

• In both geographic and economic aggregations:

• For Africa as a whole, government debt as a percent of GDP declined

• from an annual average of 71.12 percent over 2000–03 to 54.86 percent over 2003–09

• Southern Africa is the least indebted region as a fraction of its GDP, at 45.55 percent in 2000–03 and 33.46 percent in 2003–09

• Mineral-rich group (LI-1) is the most indebted relative to output,

• Still standing at a hefty 120.46 percent in 2003–09, with Congo and Guinea driving this trend

• The significant reductions in debt have been driven by debt forgiveness under two initiatives—heavily indebted poor countries (HIPC) and the multilateral debt relief initiative (MDRI) (IMF 2010; Ricksecker 2001)

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Economic Development Classification LI - 1

Low income (29)

These countries are more favorable agricultural regions:

Central African Republic Congo, Dem. Guinea Liberia Sierra Leone Zambia Benin Burkina Faso Ethiopia Gambia, The Ghana Guinea Bissau Kenya Madagascar Malawi Mozambique Tanzania Togo Uganda Zimbabwe

Middle income (24) (MI)

Algeria Rep. Angola Botswana Cameroon Cape Verde Congo, Rep. of Cote d’Ivoire Djibouti Egypt Equatorial Guinea Gabon Lesotho Libya Mauritius Morocco Namibia Nigeria

LI - 1

LI - 2

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Distinguishing Characteristics• North Africa has characteristics that distinguish it from Sub-Saharan

Africa.

• For instance, oil revenue is an influential factor in the economies of North African countries, such as Algeria and Libya.

• The service sector contributes most to GDP growth in the region, followed by industry, then agriculture.

• This increase in industrial production in the region, the achievement has been at the expense of agricultural sectors.

• Socio-political implications will eventually force governments to invest in agricultural services to help poor rural population (ECA 2006a).

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Economic Development Classification…..

Low income (29)

These countries are less favorable agricultural regions; Burundi Chad Comoros Eritrea Mali Mauritania Niger Rwanda Somalia

Diao et al. 2007, Dixon, Gulliver, and Gibbon 2001, and

Middle income (24) (MI)

Sao Tome & PrincipeSenegalSeychellesSouth AfricaSudanSwazilandTunisia

The World Bank 2010

LI - 3

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Economic Development Classification

Mineral rich LI countries

Central African Republic Congo, Dem.Guinea Liberia Sierra LeoneZambia

None-mineral rich LI countries

Benin Burkina Faso Ethiopia Gambia, The Ghana Guinea Bissau Kenya Madagascar Malawi Mozambique Tanzania Togo Uganda Zimbabwe

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Regional Economic Communities (RECs)

oThere are eight (8) regional groupings in Africa:

CEN-SAD: is the Community of Sahel-Saharan States= (27 countries)

COMESA: is the Common Market for Eastern and Southern Africa= (19 countries)

EAC: is the East African Community=(5 countries)

ECCAS: is the Economic Community of Central African States= (11 countries)

ECOWAS: is the Economic Community of West African States= (15 countries)

IGAD: is the Intergovernmental Authority for Development= (7 countries)

SADC: is the Southern Africa Development Community = (15 countries)

UMA: is the Union du Maghreb Arabe = (5 countries)

• Sources: AU 2011; CEN-SAD 2011; COMESA 2010; EAC 2011; ECOWAS 2010; IGAD 2011; NEPAD 2010b; SADC 2010; UMA 2011.

Role of RECs in AgricultureAgriculture is a crucial and dynamic sector in the regionThe formation of the RECs is expected to result in:

Economies of scale, Enlargement of markets, Develop specialization according to comparative advantage, Attract foreign investment, and Improve international bargaining position.

The impact of free trade will be felt both on the import and export sides.

The sector is an important employer.

In fact, large proportion of people in the SSA region live in rural areas and derive their livelihood from agriculture and related activities

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Geographic Scope in Africa

GhanaNigeria

AMUAMU

ECOWASECOWAS

WAEMUWAEMU

São Tomé & Príncipe

Egypt

Burundi*Rwanda*

DR Congo

Malawi*Zambia*Zimbabwe*

Comoros*Madagascar*

Mauritius*Seychelles*

ECCASECCASCOMESACOMESA

SADCSADC

SACUSACU

CEMACCEMAC

Mano River Union

IGADIGAD

Mozambique

IOCIOC

Tanzania1*

Kenya*Uganda*

EACEAC

EthiopiaEritreaSudan

Somalia

South AfricaBotswanaLesotho

Namibia*Swaziland*

LiberiaSierra Leone

CameroonCentral African Rep.GabonEquat. GuineaRep. Congo

ChadCape VerdeGambia

Guinea-Bissau

Benin TogoCôte d’Ivoire

NigerBurkina Faso

MaliSenegal

Conseil de l’Entente

Guinea

CILSSCILSS

Angola

Nile Basin Initiative

* CBI* CBI

AlgeriaLibyaMoroccoTunisia Mauritania

GEOGRAPHIC SCOPE: RIAs in AFRICA

ACRONYMSAMU: Arab Maghreb UnionCBI: Cross Border InitiativeCEMAC: Economic and Monetary Community of Central AfricaCILSS: Permanent Interstate Committee on Drought Control

in the SahelCOMESA: Common Market for Eastern and Southern AfricaEAC: East African CommunityECCAS: Economic Community of Central African StatesECOWAS: Economic Community of Western African StatesIGAD: Inter-Governmental Authority for DevelopmentIOC: Indian Ocean CommissionSACU: Southern African Customs UnionSADC: Southern African Development CommunityWAEMU: West African Economic and Monetary Union

Reunion

Djibouti

1/ Tanzania is also a member of theNile Basin Initiative

15 SADC countries and their Location

Agricultural dualism and stability in SSA..

Subsistence farming, subject to erratic rainfall, is significant as a form of agriculture in many countries in the region,

Mainly characterized by rearing of cattle, sheep, goats and crop cultivation.

Commercial agriculture is also very pronounced in the region, with large commercial farms and estates being major assets

The agricultural potential in countries such as Angola and Mozambique were devastated by prolonged civil wars.

Peace and reforms are sweeping across Sub-Saharan Africa, bringing greater stability to the sector.

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African farming systems• Agro-pastoral (millet and sorghum)

system

• Cereal and root crop mixed system

• Coastal fishing system

• Forest based system

• Highland perennial system

• Irrigated system

• Upland system

• Large commercial and smallholder system

• Maize mixed with other crops

• Pastoral system

• Rice-tree crops system

• Root crops system

• Sparse (arid) areas

• Tree crops

• Water bodies

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Farming system in Sub-Saharan Africa-SSA

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In summary:• African countries differs in terms of the resource endowment, income per

capita and population growth

• Agriculture plays a major role in low income, non mineral countries

• Agriculture can be an engine for economic growth in all African countries

• Macroeconomic conditions are improving in most part of Africa

• Sub-Saharan African countries are lagging behind Northern Africa

• African countries have RECs and overlapping memberships to regional bodies

• There are different farming system practices in Africa

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Any Questions for discussion• Contributions are welcomed……

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Review Questions: 100 points1. How many languages are spoken in Africa? 10 points

2. Which country has the most languages? 2 points

3. How many distinct ethnics are in Africa? 10 points

4. Which language is mostly spoken on the continent? 3 points

5. On average, how much does agriculture contribute to GDP in most African countries?5 points

6. How many people are estimated to be living under the poverty line in Africa? 5 points

7. What is the percent of people living in rural area in Africa? 5 points

8. What is the target percent for poverty reduction to reached by the year 2015? 5 points

9. On what basis are African countries classified? 5 points

10. List the major classification. 10 points

11. How many regional economic groupings are in Africa? list them. 5 points

12. Name the regional groupings to which Namibia belongs? 5 points

13. Are there any overlapping in membership? 5 points

14. What are the perceived role of RECs in Africa? 10 points

15. How many farming systems are practiced in SSA? 10 points

16. In which countries would you find “large commercial and smallholder” farming system being practiced? 5 points