Geographies in Depth

Liveblog: African Economic Outlook

Ian Bremmer
President, Eurasia Group
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Africa

How are current developments informing the region’s economic outlook for the year to come?

Dimensions to be addressed:

– Increaseing productivity and employment
– Leveraging innovatin as agrowth engine
– Collaborating with other regions

Ian Bremmer Ian Bremmer May 10, 20134:39 pm

of course, this is such a rich and complex topic that many critical themes were sure to go unmentioned. it was an incredibly lively discussion and i learned a whole lot– hope you’ve all enjoyed! -ian

Ian Bremmer Ian Bremmer May 10, 20134:36 pm

and the unspoken bright spot that demands more attention than it received:

urbanization. it’s a natural elixir for a lot of the shortcomings that we’ve been unpacking throughout today’s summit:

-urbanization is bringing economies of scale to africa’s traditionally fragmented and inaccessible national markets
-it renders infrastructure gaps more manageable for trade and investment (although there is, of course, no substitute for the infrastructural prerequisites for economic transformation in most african countries).

Ian Bremmer Ian Bremmer May 10, 20134:34 pm

so back to our elephant in the room for today’s summit:

china.

here’s a good example of how, for any discussion of african economic growth, china is omnipresent. this wef summit is a celebration of the 50th anniversary of the african union.

beijing paid for—and built—the african union’s new $200 million headquarters in addis ababa.

Ian Bremmer Ian Bremmer May 10, 20134:32 pm

well said:

Ian Bremmer Ian Bremmer May 10, 20134:31 pm

since we’re talking power output, nigeria is sorely lacking as well. nigeria has almost as many people as brazil– but produces just 5% as much electricity.

h/t economist–
http://www.economist.com/node/21562246

Ian Bremmer Ian Bremmer May 10, 20134:30 pm

okonjo-iweala: “sometimes politics drives economics on the continent.”

word.

Ian Bremmer Ian Bremmer May 10, 20134:29 pm

governor of bank of tanzania talking about needs, use of revenues of oil and gas.
this cuts to the quick of what his country lacks:
only 14% of tanzanians have access to power.

Ian Bremmer Ian Bremmer May 10, 20134:26 pm

borg discussing importance of social cohesion for political stability. very true. health care, education, child care– “builds trust; lowers transaction costs in the economy.”

Ian Bremmer Ian Bremmer May 10, 20134:24 pm

Ian Bremmer Ian Bremmer May 10, 20134:21 pm

two topics that have gone under-discussed:

-china

-urbanization

Ian Bremmer Ian Bremmer May 10, 20134:21 pm

put the health care insufficiency another way:
there are twice as many angolan doctors working in portugal as there are working in angola.

Ian Bremmer Ian Bremmer May 10, 20134:18 pm

investment in health care is imperative. this statistic is shocking and saddening:

as of 2010, there were more than twice as many doctors serving france’s 62 million citizens as there were for sub-saharan africa’s 860million+.

Ian Bremmer Ian Bremmer May 10, 20134:16 pm

“nobody mentioned healthcare.” here’s another must when discussing economic growth potential.

Ian Bremmer Ian Bremmer May 10, 20134:15 pm

a question about tourism…. “an industry africa should think about.”

agreed: africa drew just 50 million of the world’s 980 million international tourists in 2011.

Ian Bremmer Ian Bremmer May 10, 20134:14 pm

“we can’t talk about the continent’s economic outlook without talking about the continent’s political landscape.” need i say i agree?

Ian Bremmer Ian Bremmer May 10, 20134:13 pm

perhaps choosing nyc as a foil for the health of botswana’s infrastructure was not the best move…

Ian Bremmer Ian Bremmer May 10, 20134:10 pm

for those of you who wanted a more orthodox financial discussion today, here are some charts and figures to snack on.

bond data:

and here’s a good resource for all things private equity in africa:
http://www.africa-assets.com/news/private-equity-sub-saharan-africa-state-play-20122013

Ian Bremmer Ian Bremmer May 10, 20134:08 pm

…but south africa has its hands full at home. don’t forget the official unemployment rate is 25.2%; youth unemployment (ages 15-24) is estimated around 50%.

Ian Bremmer Ian Bremmer May 10, 20134:07 pm

south african finance minister discussing a continent-wide approach. south africa has done its fair share on this front: in 2012, south africa invested in more projects in the rest of africa than any other country, mostly in service sectors like banking, telecom, and retail.

Ian Bremmer Ian Bremmer May 10, 20134:05 pm

there’s been a lot of talk about sustainable growth, and weaning off commodity reliance. here’s an interesting chart discerning which african countries are best situated to succeed on this front:

Ian Bremmer Ian Bremmer May 10, 20134:02 pm

okonjo-iweala could not be more spot on about housing. in a country with a fertility rate of 5.38, they’ll need houses for the booming population.

here are a few ways of looking at it:
lagos is expected to be among the world’s 3 or 4 most populated cities by 2030. all by itself, greater lagos is already a compelling lower-middle income market of nearly 20 million, with effective local governance.

or on a country-wide level….

in a quarter-century, at the rate nigeria is growing, 300 million people — a population about as big as that of the present-day united states — will live in a country the size of… arizona and new mexico.

Ian Bremmer Ian Bremmer May 10, 20133:59 pm

two less-mentioned sectors that excite okonjo-iweala:

1) “the creative industries.” huge film industry in nigeria– shouldn’t be ignored.
2) “housing.”

Ian Bremmer Ian Bremmer May 10, 20133:54 pm

i’d like to hear more on the economic potential that can be unlocked through technology.

while rising rapidly, african internet use was at just 7% in 2011.
that’s a hindrance for broader growth– but it spells monster opportunities as the continent rapidly catches up. a space that unsaturated is well worth watching.

Ian Bremmer Ian Bremmer May 10, 20133:50 pm

“as much as we’re optimistic we should also recognize our vulnerabilities.: – okonjo-iweala.

all heads nod vigorously in agreement.

in nigeria, let’s count the ways:
44% of the population is under 15 years old. that is both a huge potential economic boon and vulnerability.

and boko haram undoubtedly deserves a mention when we’re talking nigerian vulnerabilities for growth. the cost of the insurgency in the north is hitting home, firstly with $5bn apportioned for security in the 2012 budget– and $6 billion in 2013. that expenditure came in lieu of further investment in agriculture, health and education. and secondly, boko haram is facilitating a destruction of the northern economy and a growing north-south migration which is distorting national development plans.

Ian Bremmer Ian Bremmer May 10, 20133:47 pm

fdi shouldn’t be ignored in tanzania. carlyle group’s first sub-saharan africa fund made its inaugural investment in tanzania– $210m in an agriculture export company.

Ian Bremmer Ian Bremmer May 10, 20133:44 pm

china not getting its due in this session thus far…

Ian Bremmer Ian Bremmer May 10, 20133:44 pm

interesting point from tanzanian bank governor– biggest investor in tanzania from ’07-’09 was… kenya.

Ian Bremmer Ian Bremmer May 10, 20133:43 pm

Ian Bremmer Ian Bremmer May 10, 20133:42 pm

we’re talking botswana. here’s some trivia: president ian khama has not held a domestic press conference since coming to power in april 2008.

Ian Bremmer Ian Bremmer May 10, 20133:41 pm

our host has claimed, “africa must put its money where its mouth is.”

as i mentioned in this morning’s summit, we’re not seeing that happen on gov expenditure:

african state expenditure is rarely above 10-15% of gdp (compared with 36% average in oecd countries).

Ian Bremmer Ian Bremmer May 10, 20133:39 pm

south african revenue service (SARS). an unfortunate acronym, that.

Ian Bremmer Ian Bremmer May 10, 20133:39 pm

south african finance minister gordhan speaking now.

his background: he was the former commissioner of the south african revenue service.

Ian Bremmer Ian Bremmer May 10, 20133:36 pm

a telling nigeria statistic:

in nigeria, africa’s largest oil producer, services account for a larger share of gdp than oil exports.

Ian Bremmer Ian Bremmer May 10, 20133:35 pm

and okonjo-iweala now discussing value of african investment in africa.

Ian Bremmer Ian Bremmer May 10, 20133:35 pm

okonjo-iweala discussing merit of foreign direct investment. here’s a handy chart:

Ian Bremmer Ian Bremmer May 10, 20133:34 pm

anders borg: “chinese miracle: 2/3 is based on foreign direct investment….brings technology, production. manufacturing is key part of asian strategy.” borg arguing they should bring that here.

Ian Bremmer Ian Bremmer May 10, 20133:31 pm

savvy observation:

Ian Bremmer Ian Bremmer May 10, 20133:30 pm

for today’s buzzword, ‘inclusive growth’ is making a run for its money.

Ian Bremmer Ian Bremmer May 10, 20133:28 pm

“very rich country, botswana.”

yes, but despite economic success, life expectancy in botswana has dropped from 60.6 in 1980 to 53.0 in 2012, mostly due to the effects of hiv/aids (infection rate: 25% of population aged 15-49).

Ian Bremmer Ian Bremmer May 10, 20133:27 pm

turning to east africa now–

ndulu, gov of the bank of tanzania:
‘africa has key opportunities: natural resource wealth, low labor costs, population growth’

Ian Bremmer Ian Bremmer May 10, 20133:24 pm

Ian Bremmer Ian Bremmer May 10, 20133:24 pm

‘sustainability’ is the buzzword du jour thus far

Ian Bremmer Ian Bremmer May 10, 20133:23 pm

africa’s growth story over the first decade of 21st century certainly not an illusion. during that span, six of the world’s ten fastest-growing economies were found in sub-saharan africa. (h/t economist)

Ian Bremmer Ian Bremmer May 10, 20133:21 pm

okonjo-iweala opening by reminding how far africa has come since 1980s/1990s.

okonjo-iweala: africa’s growth over the last decade not just “a flash in the pan”

Ian Bremmer Ian Bremmer May 10, 20133:20 pm

the first question: ‘is africa ready for a changed, improved and enhanced economic outlook?’

Ian Bremmer Ian Bremmer May 10, 20133:18 pm

and the session has kicked off. host julie gichuru is introducing the panelists.

Ian Bremmer Ian Bremmer May 10, 20133:14 pm

Ian Bremmer Ian Bremmer May 10, 20133:11 pm

in this morning’s summit on africa’s 50-year outlook, china was little mentioned.

in the next summit on partnerships, china was in the spotlight:

we’ll see which way it goes for #wefafricaoutlook, starting in 5 minutes. any comprehensive conversation on africa’s economic outlook demands a healthy dose of china talk.

Ian Bremmer Ian Bremmer May 10, 20133:08 pm

we should be underway shortly for the african economic outlook summit. we have a fantastic group of panelists, spanning south/east/west africa; conversation will likely touch on everything in between.

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