10 Years of African Economic Outlook 1

The OECD Development Centre SPOTLIGHT ON AFRICA

OCD_ A5_AFRICA_1702012.indd 1 17/02/12 10:50 1 10 YEARS10 OF AFRICAN ECONOMIC OUTLOOK

1 Original text by Economist Lucia Wagner, AEO project manager at the OECD Development Centre, 2001-2009.

The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 2 17/02/12 10:50 TABLE OF CONTENTS

INTRODUCTION 04

FROM AFRO-PESSIMISM TO AFRICAN RENAISSANCE 05

2001-11: THE AWAKENING OF THE SLEEPING GIANT 06 Stronger economic policy implementation 08

Slow but steady governance improvement 08 1 10 YEARS OF AFRICAN ECONOMIC OUTLOOK Better donor partnership for better aid 09 New technology: opportunity for growth and poverty reduction 10

New actors of change: a new generation of policy makers and entrepreneurs 10

PRESENT CHALLENGES OF AFRICA: OUR PROPOSALS 11 Mobilise domestic resources 12 Finance small and medium enterprises, the “missing middle” 13 Develop transport infrastructure 14 Improve access to water and sanitation 15 Create new skills: investing in African youth 17

THE ROAD AHEAD: BUILDING INFORMED SOCIETIES 20

REFERENCES 21

The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 3 17/02/12 10:50 A chronology of the African Economic Outlook project Coverage of individual African countries by successive annual editions, 2002-2011 in percentage of number of African countries, population and GDP

Special Annual Themes 2002: (no theme) 2009: Innovation and ICT 2003: Privatisation 2010: Public Resource Mobilisation 2004: Energy and Aid 2005: SME Financing 2011: Africa’s Emerging Partners 2006: Transportation 2012: (forthcoming) Promoting Youth 2007: Water and sanitation Employment 2008: Technical & vocational skills

Notes: * The ﬁ rst edition of the AEO was published in 2002. It was launched at the OECD by H.E. Abdoulaye Wade, President of Senegal and one of the initiators of New Partnership for African Development (NEPAD). A few weeks later, NEPAD leaders were invited to the OECD Ministerial meeting, where the NEPAD-OECD collaboration was started. * The UN Economic Commission for Africa (ECA) and the UN Development Program (UNDP) became partners alongside the African Development Bank and OECD Development Centre for the 2008 and 2011 editions respectively. * Since 2009, the AEO content is accessible free-of-charge at www.africaneconomicoutlook.org in three languages.

The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 4 17/02/12 10:50 Introduction

An unprecedented change in Africa’s the European Commission, has been economic performance, and with it monitoring in great detail a shift in the way the world sees the the economic pulse of Africa, continent, has occurred since capturing drivers and actors of independence. This note looks back change, highlighting progress at the main features of the continent’s and challenges, as well as proposing economic transformation and shows policy options to Africans and their how partners in the African Economic development partners. In ten years, Outlook (AEO) have accompanied this the African Economic Outlook, a process by stimulating policy dialogue, unique source of detailed analysis on identifying good practices and African economies, has grown into an encouraging policy reform. Since 2002, online platform, accessible the AEO, a joint project by the OECD free-of-charge at Development Centre and the African www.africaneconomicoutlook.org. Development Bank, with support from By spreading knowledge, the AEO helps broker an informed dialogue on African economies and build a critical mass of informed citizens, the actors of change in today’s Africa.

The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 5 17/02/12 10:50 should no longer be looked at as a monolithic entity; the different dynamics From in countries and their effect across the region had to be recognised. It Afro- seemed necessary to spotlight “success stories” which illustrated pessimism contributing factors to a possible African economic emergence.

to African In 1996, the OECD Development Assistance Committee launched a renaissance series of goals for combating poverty. These goals formed the basis of the Millennium Development Goals agreed After independence, most African at the Millennium Summit of the United economies enjoyed more than a Nations in September 2000. decade of steady growth. Between the 1970s and the late 1980s, To support this effort, a year later, the however, many African economies OECD Development Centre launched actually slowed down or, more often the Emerging Africa project, starting than not, regressed dramatically. The from the basic assumption that there African crisis was due to a combination can be no real poverty reduction in of external factors (sharp ﬂ uctuations in African countries without economic oil prices, soaring interest rates, take-off. Its aim was to highlight the burgeoning debt burdens, as well progress of six emerging countries: as growing protectionism of wealthy Burkina Faso, Ivory Coast, Ghana, countries) and domestic ones Mali, Tanzania and Uganda. Each had (widespread political instability and experienced growth acceleration in political repression, excessive state the second half of the 1990s, and the intervention and economic project’s aim was to identify the factors mismanagement). Over these two that could inﬂ uence long-term, decades, grim predictions of sustainable growth. The Japanese “Afro-pessimism” became the norm. model, followed in the 1960s by Korea and other dynamic East Asian However, in the mid 1990s, several economies, showed that, even in African economies timidly began to situations of extreme poverty, rebound, feeding hopes of an “African instituting the right policies can revive renaissance”. This process was not the economy and reduce poverty. uniform across all regions though, and By examining “emerging” Africa, some countries began to take the lead. the belief was that these initial This required a fresh approach: Africa successes could create a ripple

The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 6 17/02/12 10:50 effect across regions and eventually all democracy and political governance, of Africa. The Emerging Africa project confl ict reduction and prevention, revealed that what Africa does not do health and education investment, for itself cannot be done by others. private investment growth, and Mobilising the resources necessary anti-corruption action. for development requires, above all, improvements in governance and institutional structures – which will not happen without real political leadership. Without these, there is a substantial risk that Africa’s greatest assets will be wasted by corruption. 2001-11: The events that followed proved that the OECD Development Centre was the awakening right in its analysis. The year 2001, when the Emerging Africa project ended, was a turning point in Africa’s of the approach to its development. Africa’s most infl uential countries – Algeria, sleeping giant Egypt, Nigeria, Senegal and South Africa – launched the New Partnership for African Development (NEPAD), an overarching vision and policy In the 2000s, the slight recovery framework for accelerating economic experienced in the 1990s accelerated co-operation and integration among further, and for some countries it African countries. This was the fi rst turned into an outright boom. Prior to time that such an economic recovery the 2009 global economic crisis, Africa plan had been jointly proposed by the enjoyed over 5% annual growth for continent’s leaders and endorsed by nearly a decade. The break from the the African Union. It represented an past was clear. The novelty was not important step in Africa’s determination the pace of economic expansion, to take charge of its own future. but that it was sustained, encompassed many more countries The NEPAD initiative was also seen by and accompanied by improved the G8 countries as the basis for a new policies. intensive partnership between Africa and the developed world. At the 2001 Against a background of increased Genoa summit, G8 leaders forged an political commitments by African action plan to support the key themes leaders alongside renewed attention of the NEPAD initiative, including: by the G8 on Africa’s prospects, it

The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 7 17/02/12 10:50 became even more urgent to provide attempt to comprehensively analyse African policy makers and donors with economic, social and political trends, a monitoring tool which would identify highlighting African countries’ new factors and actors behind growth. distinctive histories, resources, The tool would differentiate between and political systems in order to the specifi cities of each country while understand the drivers of the countries’ suggesting where policy action could performance and short-term best make a difference. outlook. To better grasp the reality of the countries, the project has That is why, in 2001, convinced that a become deeply rooted in the continent. reliable and shared knowledge base is An increasing number of African think required for productive policy dialogue, tanks and research centres have been the OECD Development Centre and involved in drafting the report and in the African Development Bank (AfDB), providing data to feed the forecasting with the support of the European exercise. In addition, in 2008 and 2010 Commission, launched the African respectively, the United Nations Economic Outlook project. The project, Economic Commission for Africa which celebrated its tenth anniversary and the United Nations Development in 2011, was a trailblazer in fi lling the Programme joined the African information gap of comparative data Development Bank and the OECD and analysis of African countries (from Development Centre as partners on 22 countries in the fi rst edition to 51 in the project. 2011). Most importantly, it was the fi rst

Africa’s performance from 1962 to 2012: growth of real GDP (in percent)

Notes: Three-year moving average; 2010 estimated; 2011-12 predicted. Source: Authors’ calculations based on OECD/AfDB African Economic Outlook and World Bank data.

The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 8 17/02/12 10:50 The fi rst edition of the African STRONGER Economic Outlook was launched in February 2002 at the third OECD ECONOMIC POLICY Development Centre/African Development Bank International Forum IMPLEMENTATION on African Perspectives in Paris, in the Twenty years ago, nearly all African presence of H.E. Abdoulaye Wade, economies were effectively bankrupt, President of the Republic of Senegal with large budget defi cits, double-digit and so-called godfather of NEPAD. infl ation and growing debt burdens. This marked the fi rst visit of an African Coupled with their fi scal woes, head of state to the OECD. A year black markets were thriving, basic later, Mozambican President Joaquim commodities were in short supply, and Chissano welcomed the second poverty was rampant and growing. edition of the report. Chissano Economic mismanagement and state noted the OECD Development heavy-handedness scared off many Centre’s contribution to “the investors, provoked capital fl ight, and strengthening of co-operation led to stagnation. In the last decade, between Africa and the industrialised many countries including Burkina Faso, countries in the interest of African Mali, Mozambique, Namibia, South development”. He said that such Africa, Tanzania and Uganda have co-operation was “essential to implemented much stronger economic strengthening the NEPAD, especially policies, as shown by their control of in the areas of peace, democracy and infl ation, improved public fi nances and good governance”. building-up of reserves. For instance, infl ation for the 38 African oil-importing At fi rst sight, when looking at the countries declined from 12.7% from strong performance of the continent 1997-2003 to 7% in 2007. These over the last decade, oil and other prudent economic policies helped most natural resource producers seem to countries mitigate the impact of the have had the lion’s share of economic 2009 crisis. success. But the turnaround of Africa is not a temporary phenomenon – or simply the result of favourable SLOW BUT STEADY commodity prices. Some countries experienced steady economic growth, GOVERNANCE a deepening of democracy and IMPROVEMENT poverty reduction, which allowed them to weather the 2009 global economic There is an impression that confl ict is crisis. This reveals that some more endemic in Africa and that any profound factors were at work over the improvement in the political climate past ten years. can only be temporary. However, the

The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 9 17/02/12 10:50 focus on war and anecdotal evidence BETTER DONOR has hidden real progress towards more stable and open political systems in PARTNERSHIP Africa. In Sub-Saharan Africa, the last decade has seen a downward FOR BETTER AID trend in political instability. Political The debt crisis that hit African countries demonstrations and dissent particularly hard during the 1980s is re-emerged during the 2007-08 food fi nally winding down. Following the crisis; rather than being violent signs of success of the Jubilee 2000 campaign a more serious crisis, they were in pushing debt relief onto the G8’s evidence of a deepening of democracy agenda, the Heavily Indebted Poor and strengthening of civil society. Country (HIPC) initiative was launched. Political repression has lessened as In 2005, to help accelerate progress well in the past decade, as more toward the Millennium Development governments have adhered to basic Goals, the G8 launched the political and civil rights, have Multilateral Debt Relief Initiative (MDRI). accepted more freedom of the press, The MDRI provides 100% relief on and have built stronger political eligible debts by three multilateral institutions. Countries such as Benin, institutions – the International Monetary Ghana, Mauritius, Namibia and South Fund, the World Bank and the African Africa have made important progress Development Fund – for countries also in ensuring respect of the rule of completing the HIPC initiative process. law, fi ghting corruption and improving Of the 40 countries eligible for HIPC, citizens’ safety. debt reduction packages have so far been approved for 32 countries. The systematic screening of political Financial resources released by debt events and African government’s relief were increasingly channelled into reaction to the African Economic poverty reduction spending, which Outlook has allowed greater increased for HIPC countries from understanding of the breadth of this 5.5% of GDP in 1999 to 9% in 2005. change. However, democratic progress has been uneven and remains More importantly, relations with incomplete. This makes the need donors improved substantially. for close and continued monitoring Structural adjustment programmes of political events all the more have been replaced by country-led important as it allows for comparisons poverty reduction strategies, paving the both with other African countries way for increasing aid quality. and with each society’s own past, In the spirit of the 2002 Monterrey and ultimately empower the many International conference on Financing people striving for improvement. for Development, donors made specifi c pledges on improving aid effectiveness

The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 10 17/02/12 10:50 and managing for development results. 2009; by the end of 2012, it will be six These commitments were reinforced out of ten. The African Economic Out- by the 2005 Paris Declaration on Aid look 2009 focused on information and Effectiveness and the Accra High Level communication technologies (ICT) in Forum of 2009. Donors have begun to Africa as drivers of economic growth. simplify procedures and adopt Data and analysis on ICT sector sector-wide approaches and performance on a country-by-country budget support, which have allowed basis revealed that innovation in for greater reliance on national systems telecommunication can dramatically and improved donors’ co-ordination. change the lives of poor people. In the However, evidence from the countries most remote corners of the surveyed by the African Economic countryside, cell phones are relaying Outlook reveals that progress has information on prices and shipments of been uneven, especially in terms of goods in real time and facilitating the ownership, transparency and transfer of funds with simple text accountability. AEO country analyses messages. Transaction costs of suggest that greater attention is domestic payment have been cut by needed in aligning aid with national 10% in Kenya thanks to mobile priorities and improving transparency. payments. Despite this progress, the There are still substantial spread of Internet has been far slower, discrepancies between the funds dis- and general access to ﬁ xed telephone bursed by donors and the information lines is much lower than in the rest of recorded in the recipient’s budget. The the world. In order for the African successful experiences of Mozam- telecom revolution to fully materialise, bique, Tanzania and Uganda show better regulation is a prerequisite for that budget support bears fruit only attracting private investment and, in when there is strong mutual trust and turn, acquiring the technological accountability between both donors know-how to upgrade networks. and recipients. Ultimately, ICT and innovation should be integrated into countries’ development strategies; donors and the private sector should increase their NEW TECHNOLOGY: support for implementation. With this in OPPORTUNITY FOR mind, NEPAD is working on an African Science, Technology and GROWTH AND Innovation Indicators Initiative. POVERTY REDUCTION Africa is the fastest growing mobile phone market in the world: four out of ten Africans had a mobile phone in

The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 11 17/02/12 10:50 NEW ACTORS OF private sector co-operation and pressure governments for improved CHANGE: A NEW business climate and accountability. The African Economic Outlook is GENERATION OF increasingly partnering with this new POLICY MAKERS AND generation of business leaders: its annual African Economic Forum ENTREPRENEURS provides a platform for discussion between Africans, international policy According to a survey among African makers and the private sector. business leaders, a new class of political leaders contributed to the continent’s progress over the past decade. In the words of Nigerian businessman Acha Leke, founder of the African Leadership Network: Present “Examples include Paul Kagame in Rwanda and Ellen Johnson-Sirleaf in Liberia. They are credited with leading challenges Africa’s recent turnaround by enhancing political stability, economic of Africa: reforms, and improved governance. […] Now the major issue that needs our proposals to be addressed in Africa is the chronic poverty that the majority of Africans still ﬁ nd themselves in. The most important legacy this new generation Despite these important changes, of leaders can leave is to make the turnaround is new and remains Africa prosperous.” In this spirit, a new fragile. African countries face daunting generation of young entrepreneurs is challenges: Overall progress towards emerging. Many of them have studied reaching the Millennium Development abroad and returned to the Goals (MDGs) remains slow. The continent with new visions and ideas. continent is still highly vulnerable to They are starting new businesses, climate and price volatility, as the such as venture capital funds to recent food crisis has proven. Evidence support small and medium enterprises’ shows that instead of promoting growth. By joining business networks, production diversiﬁ cation and they identify and connect with other capitalising on the commodity boom entrepreneurs and engage in windfall, since 2001 Africa has been partnerships. They use modern increasingly specialising in raw material technology to strengthen regional exports. Much progress is still needed

The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 12 17/02/12 10:50 to deepen democracy and strengthen and relevant tool to support the efforts the quality of institutions and their of the G20. governance. Inadequate infrastructure and inefﬁ cient health and education MOBILISE DOMESTIC systems are reducing the growth potential and causing further inequality. RESOURCES

How can African countries capitalise According to British economist Paul on the progress achieved in the past Collier, “Zambia is exporting some decade to achieve sustainable growth USD 3 billion of copper, yet tax and poverty reduction? What can revenues from these exports are a policy makers and the international mere USD 100 million. The global community do to help set Africa on a copper boom has benefi ted the fi rm footing for growth? Chinese who own the copper company far more than it has benefi ted These important questions came to ordinary Zambians”. One way to build the table of the Toronto 2010 Summit effective states and achieve poverty which marked the offi cial inclusion of reduction is to mobilise domestic development on the G20 agenda. In resources. The global crisis has given the wake of the most severe new impetus to dialogue on domestic economic shock in recent history, resource mobilisation in Africa. Indeed, the G20 leaders decided that “tackling the G20 has given a clear mandate development gaps was part and parcel to the OECD to help African countries of their efforts to promote stronger and fi nd solutions to tax collection issues. more balanced growth and to support As suggested by Ángel Gurría, the the emergence of new sources OECD Secretary General at the MDG of global demand”. This led to the summit in September 2010, “...African adoption in Seoul of a G20 Consensus countries’ focus should be on low, for Shared Growth and a Multi-Year simple taxes: they are easier to collect Action Plan to promote growth in and more effective in stimulating the developing countries, with deadlines development of the private sector. This being set for 2011 to 2014. The plan means fl atter rates, fewer exemptions includes actions on domestic resource and a broader tax base. The African mobilisation, fi nancial inclusion, Economic Outlook provides evidence private investment and job creation, that this approach works”. Indeed, the infrastructure, human resources and African Economic Outlook 2010 has development, food security, growth helped countries identify policy options, resilience, and knowledge sharing. All including removing tax preferences and of these topics have been thoroughly taxing extractive industries more fairly analysed by the African Economic and more transparently. The current Outlook, making it a particularly timely commodity boom should be harnessed

The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 13 17/02/12 10:50 to boost government revenues. The Development, which the OECD increased public resources from taxing launched. The OECD is also supporting extractive activities should be used to a number of countries and institutions diversify the economy and improve tax to set up an African Tax Administration administration rather than to reward Forum launched at the end of 2009, a other taxpayers for political reasons. platform for institutional capacity and The Extractive Industries Transparency peer learning to share good practices Initiative (EITI) is unique in its aim to on revenue governance. increase the transparency of transactions between companies and government entities as well as the FINANCE SMALL use of revenues by the governments concerned. In 2009, Liberia became AND MEDIUM the fi rst African country to comply with ENTERPRISES, THE the EITI. “MISSING MIDDLE” Increasing fi scal revenue in a At the Seoul G20 Summit, G20 leaders sustainable way is crucial to increase recognised “the critical role of the ownership and accountability of private sector to create jobs and government policies, paving the way wealth, and the need for a policy for Africa to move away from aid in the environment that supports sustainable long run. But in the short run, better private sector-led investment and domestic resource mobilisation is not growth”. This requires fi rst of all an alternative to aid; they must go understanding the private sector in together. “Making taxes work for Africa, its potential and the obstacles it development and the achievement of faces. The AEO surveys have revealed the MDGs is a shared responsibility”, that Africa’s private sector consists of Gurría said. The international mostly informal microenterprises, community has a key role to play in operating alongside large fi rms. Most channelling aid to strengthen companies are small because the administrative capacity, while African private sector is new and because of partners should provide peer-learning legal and fi nancial obstacles to opportunities. African countries also accumulate capital. Between these need a strong commitment by their large fi rms and microenterprises, partners to deal multilaterally with the small and medium enterprises (SMEs) issues of tax havens and abuses of are scarce and constitute a “missing transfer pricing techniques by middle”. Africa’s SMEs have little multinationals. Increasing the share access to fi nance, which hampers their of aid spent on improving tax emergence and eventual growth; they administrations is one of the aims are often too small to attract of the Task Force on Tax and commercial bank or investor interest,

The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 14 17/02/12 10:50 but too large to benefi t from microfi nance products. To date, DEVELOP few scalable solutions to support TRANSPORT this missing middle tier of businesses have been found. INFRASTRUCTURE Already in 2005, the African A point often missed in considering Economic Outlook called for a focus poverty reduction is that transport on this problem as a key means of infrastructure is crucial. Women expanding opportunities and creating – not trucks, not trains, not planes – jobs for the poor. A four-pronged carry two-thirds of all goods that are approach was proposed to permanently transported in rural Africa. Although increase SMEs’ access to fi nance. not a Millennium Development Goal This includes: in itself, transport is a key element to • improving business conditions better people’s lives since it improves through improved access to mobility; it allows food, medicines and information on SMEs, clear teachers to reach populations in need. accounting standards, and According to the AEO survey carried impartial legal and judicial systems out in 2006, the presence of paved to settle contract disputes; road more than doubled children’s • helping SMEs to meet the school attendance in Morocco. requirements of formal banks, e.g. warehouse-receipt fi nancing in Zambia for instance guarantees Despite being a key element for loans with agricultural stocks; poverty reduction and economic • getting money from outside the development, transport infrastructure fi nancial system - through has been dangerously neglected over remittances from abroad, the last 30 years. The weaknesses of subcontracting, clustering of fi rms - Africa’s transport compared to other and strengthening links between regions are striking. Sub-Saharan all fi nancial actors and developing Africa accounts for 7% of the gross innovative fi nancial mechanisms. domestic product (GDP) and 17% of the population of developing countries Ultimately, removing the obstacles but just 3% of rail and air travel. Only a for SME’s access to fi nance requires fi fth of Africa’s road network is paved, that commercial banks, microfi nance compared to over a quarter in Latin institutions, community groups and America. Geography, demography and NGOs providing business development lack of resources are all major services work closely together. With impediments to transport development this in mind, the G20 have created a in Africa. Fifteen of the continent’s half billion dollar fund to help support 53 countries are landlocked and SMEs and innovative fi nancing models. population densities in the interior are

The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 15 17/02/12 10:50 low, making infrastructure investments investment. Upfront planning by the and maintenance expensive. public sector is equally important. As The fi nancial challenges are huge. shown by the successful Master In Sub-Saharan Africa USD 93 billion Plan for Greater Cairo, transport per year (15% of GDP) are needed for infrastructure projects need to fi t infrastructure development over the national plans for economic and next decade, one-third of which is for pro-poor development and involve maintenance. However, infrastructure community participation. had been left out of donors’ debates until 2005 with the UN Millennium Plus Five Summit calling IMPROVE ACCESS for increased assistance. Meanwhile, non-traditional donors, notably China TO WATER AND and Arab countries, are increasingly SANITATION involved in infrastructure in Africa.1 Short of money and burdened with “The positive impact of improved ineffi cient state-owned monopolies, access to basic water and sanitation is African countries are seeking overwhelming. In Uganda, for instance, private-sector participation. improved sanitation would cut the risk Nevertheless, results have been mixed of infant mortality by 40%,” said so far; investors’ perceptions of high Louis Kasekende, then Chief political and economic risk in Africa Economist of the African Development have rendered privatisation diffi cult. It Bank. However, not only is Africa will be crucial to link all the initiatives to unlikely to reach the drinking water and ongoing regional processes such as sanitation Millennium the NEPAD Infrastructure Consortium Development Goals, but due to for Africa and the NEPAD Infrastructure high population growth, the number Project Preparation Facility. While these of unserved people is growing. efforts are important, the African As reported by the 2007 African Economic Outlook warns that money Economic Outlook, there are alone is not enough. Effi cient regulation 322 million people without access is needed to attract private sector to safe water and 463 million people involvement and avoid excessive prices without access to sanitation. These and inadequate service, while ensuring aggregate numbers mask wide optimal access, maintenance and disparities among countries. In North Africa about 91% of the population have access to drinking water and 1. The World Bank estimates that Chinese fi nancing commitments in infrastructure increased from less than sanitation; similarly, Mauritius and USD 1 billion per year in 2001-2003, to about USD South Africa are close to universal 6 billion per year in 2006-2007 and that Arab development funds have contributed around USD 500 million access, while in the Democratic per year to African infrastructure development. Republic of the Congo and

The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 16 17/02/12 10:50 Mozambique only about 45% of the Kasekende warned that “if Africa is to population have access to water and enhance progress towards the MDGs, 30% to improved sanitation. These the prioritisation and fi nancing of water disparities reveal that the limited and sanitation infrastructure must access to water and sanitation is not be scaled up […]. It will be crucial to an issue of water resources. Although rethink how to use aid to leverage pri- a third of countries experience some vate and other public resources more pressure on their internal water effi ciently”. The European resources, they are overall considered Commission has responded to the abundant. The problem is one of poor AEO call by raising its allocation to management, pollution and wastage, water in Africa. Other recent global as well as lack of facilities – except in efforts have been made to address Northern and South Africa. In most fundamental bottlenecks to improving African cities over 50% of the water access to sanitation and water under supply is wasted. “Sanitation and Water for All: A Global Framework for Action”. The partnership Building on the experience of good links with other important regional and performers, the African Economic global initiatives such as the G8, the Outlook suggested that only a African Ministers’ Council on Water, comprehensive and integrated the African Development Bank’s Rural approach involving all stakeholders, from Water Supply and Sanitation Initiative, communities to regional partners in the the EU Water Initiative and management of water resources, would UN-Water. What remains to be seen improve effi ciency and avoid confl ict is how these initiatives will successfully over water access. Lessons from co-ordinate and complement each successful experience can show the other, without leading to the creation way forward: the partnerships between of parallel implementation units that the South African Government Agency ignore existing country and regional and the water provider are a good processes. example of reinforcement of capacity on the ground. The Uganda Sector Wide Approach to water whereby CREATE NEW government and development partners support a single policy and SKILLS: INVESTING expenditure programme using a IN AFRICAN YOUTH common approach, has been successful. However, sanitation and The recent political unrest in Egypt water have received a relatively low and Tunisia, driven by a generation of priority in terms of aid and domestic young revolutionaries, has revealed budget allocations. In launching the the extent of the youth unemployment African Economic Outlook 2007, Louis problem in Africa. Many young people

The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 17 17/02/12 10:50 have few or no skills. It is estimated struggling to absorb youngsters from that some 133 million youth people, primary school. half of Africa’s young, are illiterate. These fi gures tell their own story: much This increasingly dire situation has more should be done to increase skills put training back on the national and at all levels of the spectrum (low, international agenda. Many African intermediate and high), with each countries are making progress in country emphasising the mix of skills reforming their training systems. In that best corresponds to their stage of Ethiopia, Mozambique and South economic development and the needs Africa, skills shortages are specifi cally of the local labour market. targeted, and training strategies are fully integrated into poverty-reduction plans The 2008 African Economic Outlook and focus on sectors with promising looked in particular at technical employment prospects. Successful and vocational skills development in cases in Mauritius and Morocco have Africa. Higher technical skills can open shown that partnerships with enterprises, doors to more economically and trade unions and non-governmental socially rewarding jobs, support the organisations can help to enhance transition from school to work for school the relevance of training for the labour leavers and graduates, and help small market. But much remains to be done businesses and women’s enterprises to strengthen skills development in the develop in the informal economy, which informal sector. Currently about 60% of represents the major employer in Africa. junior secondary school leavers who do not continue into higher education enter Surprisingly though, over the last into apprenticeships in the informal sec- 40 years, the importance attached to tor and fi nd a job there. Skills gained in technical and vocational skills in the the informal sector should be validated national and international development by certifi cation systems, as for instance agenda has waxed and waned. in the case of the Vocational Skill Technical and vocational training Certifi cate in Benin. systems in Africa suffer from both a lack of resources – with only 2% to 6% of The challenge for African governments education budgets – and a shift in is to make new training strategies international priorities. At the 1990 “bankable” – clearly stating their Education for All conference in Jomtien objectives and the resources needed – and the 2000 Millennium Summit, and therefore more attractive to primary education became the priority. fi nancial and technical partners, from As a result, now ill-equipped and the donor community, business long-neglected secondary and associations and industry. Much of the vocational schools in Mozambique employment potential of Africa's young and South Africa, for example, are people depends on it. In 2011, as youth

The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 18 17/02/12 10:50 frustrated with the lack of economic explore the issue further by dedicating opportunities took to the streets of Tunis the 2012 edition of the report to and Cairo, AEO partners decided to Promoting youth employment in Africa.

The African Economic Outlook and the G20 agenda: key recommendations

Mobilise domestic resources Focus on low, ﬂ atter rates, fewer exemptions and a broader tax base to build effective states

SME ﬁ nancing Facilitate SME-business friendly environments with integration among ﬁ nancial actors

Transport Infrastructure Reverse neglect through better regulation and strategic public-private partnership projects drawing on external funding

Water Adopt an integrated approach to water management, recognising that the inefﬁ ciencies are not in resources, but in management

Technical skills development Make training programmes responsive to labour market needs: engage in partnerships with the private sector, non-governmental organisations and trade unions, and target the informal sector

The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 19 17/02/12 10:50 The road ahead: building informed societies

The power of social media in bringing The road ahead is therefore to help hundreds of thousands people into the build a critical mass of informed streets in North Africa clearly shows citizens by stimulating dialogue on that modern communication what works in Africa, promoting peer technology has vastly lowered the learning and sharing knowledge on key costs of knowledge and enhanced the solutions for development challenges. ability of citizens, once informed, to The future of Africa’s development organise themselves collectively into rests on knowledge, entrepreneurship pressure groups. Spreading knowledge and governance. According to British is crucial to build informed citizenries economist Paul Collier, “What African and societies and to drive change. countries most need is not our money but our knowledge so that they can build up the skills, expertise and technical capacity to realise their own development goals”. As stated by AfDB President Donald Kaberuka, “As we in Africa continue to battle with the issue of poverty eradication, there are many lessons to draw upon, many best practices to inspire us, from Africa herself and many other parts of the world”. The African Economic Outlook’s goal is to distil and share these lessons and provide a platform for African and OECD entrepreneurs, policy makers and activists.

The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

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The OECD Development Centre - Spotlight on Africa The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 21 17/02/12 10:50 REFERENCES African Leadership Network, www.africanleadershipnetwork.com.

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Collier, P. (2010), The Plundered Planet: How to Reconcile Prosperity with Nature, Oxford University Press, Oxford and New York.

G20 (2010), “The G20 Seoul Summit Leaders’ Declaration”, G20 Seoul Summit, Seoul, 11-12 November, www.g20.org/Documents2010/11/seoulsummit_ declaration.pdf.

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Kasekende, L. (2007), statement made at the OECD/AfDB International Forum on African Perspectives, Paris, 5 June, www.oecd.org/dataoecd/27/59/38745789. pdf.

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OECD (2005), “Improving the Quality of Aid: Issues and Challenges Ahead”,

The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 22 17/02/12 10:50 Mutual Review on Development Effectiveness, OECD Publishing, Paris.

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World Bank (2009), Building Bridges, China’s Growing Role as Infrastructure Financier for Africa, World Bank Publications, Washington D.C.

The OECD Development Centre - Spotlight on Africa

OCD_ A5_AFRICA_1702012.indd 23 17/02/12 10:50 www.oecd.org/dev www.africaneconomicoutlook.org

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