African Economic Outlook 2007

Water and sanitation: How can Africa fill the gaps?

Lucia Wegner

Céline Kauffmann

2

• OECD members and partnersGoverning Board open to non-OECD: South Africa, Brazil, Chile, India, Romania, Thailand are members

• Research and policyIntellectual autonomy, no obligation of consensus

• Policy communitiesAll development policies, not just aid

• Different actors: private, public, etc.Informal dialogue

A bridge between …

OECD’s Knowledge Centre on Development

3

Part of the OECD’s “Development Cluster”

Sahel & West Africa Club(SAH - 1975)

DevelopmentCentre

(DEV - 1962)

Africa Partnership

Forum(APF - 2006)

DevelopmentAssistance Committee(DAC - 1961)

• Club of bilateral donors

• Best practice• Peer reviews

Informal discussion

Forum OECD / ECOWAS + Mauritania & Cameroon

• Bridge OECD members and

partners• Research / policy

• Intellectual autonomy

• Informal dialogue

Monitoring commitmentsG8/OECD – AU/NEPAD

4

What is the African Economic Outlook Project?11

Africa Performance: A diverging path?Africa Performance: A diverging path?22

Access to Drinking Water and Sanitation: how can Africa fill Access to Drinking Water and Sanitation: how can Africa fill the gaps?the gaps?

33

5

African Economic Outlook

• Joint publication of the AfDB and the OECD Development Centre, supported by the EC – 6th edition.

• Mobilising a network of in-country African experts + collaboration with WB, IMF, AFD, …

• A resource for policy makers, aid practitioners, investors, researchers, students, …

• A tool for policy dialogue amongst African policy makers (nationally, APRM, …) and with their partners (EC, G8, OECD)

Measuring the Pulse of Africa

6

African Economic Outlook

• Comprehensive, comparative and independent analysis of 31 countries and short-term macroeconomic forecasts.

• Annual focus

• 2003: Privatisation

• 2004: Access to energy

• 2005: SME development

• 2006: transport infrastructure

• 2007: access to drinking water and sanitation

• Statistical annex, including innovative indicators

An innovative product, an evolving process

7

Coverage 2007: 31 African countries

Algeria

Libya Egypt

Mauritania

Mali

Niger

Chad

Dem.Rep. Congo

Sudan

Central AfricanRepublic

Equatorial Guinea

GabonCongo

Cameroon

Angola

Guinea-BissauGuinea

Sierra Leone

Liberia

Côted'Ivoire

Tunisia

BurkinaFaso

Ghana

NigeriaTogo Ethiopia

Somalia

Djibouti

Eritrea

Kenya

Tanzania

Mozambique

SouthAfrica

Botswana

Zimbabwe

Namibia

Zambia

Swaziland

Lesotho

Malawi

Uganda

BurundiRwanda

Madagascar

SenegalGambia

Morocco

91% of GDP91% of GDP

86% of population86% of population

AEO 2007AEO 2007

Sao Tome et principe

Mauritius

Comores

Cape verde

8

What is the African Economic Outlook What is the African Economic Outlook Project?Project?

11

Africa Economic Performance: A diverging Path?

22

Access to Drinking Water and Sanitation: how can Africa fill the gaps?

33

9

Africa continues to grow strongly

0

1

2

3

4

5

6

7

1998 1999 2000 2001 2002 2003 2004 2005 2006(e) 2007(p) 2008(p)

gro

wth

rate AfricaAfrica

Total OECD

Sources: African Economic Outlook 2007, OECD

10

The recent commodity boom has an important role to play

50

90

130

170

210

250

290

330

370

410

450

490

janv-0

1

juil-0

1

janv-0

2

juil-0

2

janv-0

3

juil-0

3

janv-0

4

juil-0

4

janv-0

5

juil-0

5

janv-0

6

juil-0

6

janv-0

7

Petroleum Copper Aluminium Gold

Source: the Worldbank 2007Source: the Worldbank 2007

11

Stable growth in oil producers in 2006

3

4

5

6

7

8

2001

2002

2003

2004

2005

2006 (e

)

2007 (p

)

2008 (p

)

Rea

l GD

P G

row

th

Net Oil Exporters Africa

0 5 10 15 20

Equatorial GuineaChad

GabonAlgeria

CameroonLibya

NigeriaDRC

EgyptCongoSudanAngola

Real GDP Growth 2006

Source: African Economic Outlook 2007Source: African Economic Outlook 2007

Best performing performing net oil exporters in 2006exporters in 2006

(%)

(%)

12

And improving growth in oil importers: thanks to good harvest and booming

metal prices

3

4

5

6

7

8

2001

2002

2003

2004

2005

2006(e

)

2007(p

)

2008(p

)

Oil Importing Countries Africa

0 5 10

MozambiqueTanzania

Burkina FasoMali

BotswanaUganda

Net Oil ExportersMorocco

GhanaZambia

AfricaTunisia

NamibiaNet Oil

South AfricaKenya

Average Real GDP Growth 2001/2006

Sources: African Economic Outlook 2007Sources: African Economic Outlook 2007

Best Performing net oil importers in 2001-2006 (%)

(%)

13

… fewer bullets, more ballots

Sources: African Economic Outlook 2007, Political IndicatorsSources: African Economic Outlook 2007, Political Indicators

Political Troubles and Hardening of the Regime in 2006

0

50

100

150

200

250

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Ha

rde

nin

go

f th

e r

eg

ime

: w

eig

hte

d s

um

of

ev

en

ts

0

100

200

300

400

500

600

Po

liti

ca

l tr

ou

ble

s:

we

igh

ted

su

m o

f e

ve

nts

Hardening of the regime indicator Political troubles indicator trend

Presidential elections Presidential elections in 2006in 2006

BeninBenin

Cape Verde*Cape Verde*

ChadChad

Congo, Dem Rep.*Congo, Dem Rep.*

GambiaGambia

MadagascarMadagascar

Sao Tome et Principe*Sao Tome et Principe*

SeychellesSeychelles

Zambia*Zambia*

UgandaUganda

*Parliamentary elections as *Parliamentary elections as wellwell

14

Challenges ahead differ: Oil exporters and importers on a

diverging path?• Oil and Mineral

exporters:– Capitalising on

windfall gains– Create spillover

to rest of the economy

– Avoid Dutch Desease

• The rest of Africa (net oil importers): – Containing

inflationary pressure

– Finance widening trade deficit

– Streamline spending to prioritise poverty reduction

CPI Inflation

Total Africa 10.0 8.8 9.1 9.2 9.5

Net Oil exporters

11.6 9.4 5.7 5.3 5.5

Net Oil importers

8.8 8.4 12.0 12.7 13.0

Fiscal Balance

Total Africa -2.0 2.4 3.2 2.7 2.0

Net Oil exporters

-0.8 7.0 8.2 7.3 6.1

Net Oil importers

-3.1 -1.9 -2.3 -2.2 -2.4

Trade Balance

Total Africa 1.8 6.7 7.8 7.6 6.6

Net Oil exporters

7.5 20.3 21.3 20.6 19.4

Net Oil importers

-3.4 -6.2 -6.5 -6.2 -6.8

15

Despite strong growth rate, progress towards the MDGs remains

slow

Sources: African Economic Outlook 2007Sources: African Economic Outlook 2007

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Halve the % ofpeople suffering

from hunger

Ensure that allchildren can

Completeprimary school

EliminateGender

disparity in alllevels of

education

Reduce by 2/3under 5

mortality rates

Reducematernal

mortality by 3/4

Halt andreverse spreadof Tuberculosis

Halve the % ofpeople withoutaccess to safe

water

Satisfactory Non Satisfactory

16

Africa remains vulnerable… Due to its limited integration into international trade

• Africa’s share in world trade remains minimal (1.5 per cent)• New actors : China’s trade with Africa has increased five-fold since 2001 • There are opportunities but also a risk of further specialisation and of

raising the bar for competing in labour intensive industries

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

2001 2002 2003 2004 2005

A fric a % of world X F uel X % of A fric a X

Source: COMTRADESource: COMTRADE

Note: X indicates exportsNote: X indicates exports

17

……and poorly diversifiedand poorly diversified

The higher the index, the more diversified the economyThe higher the index, the more diversified the economy

Source: African Diversification Index, African Economic Outlook 2007Source: African Diversification Index, African Economic Outlook 2007

0 5 10 15 20

Chad

Mozambique

Algeria

Cameroon

Africa

Ghana

Sénégal

2005

19960 10 20 30 40

Ethiopia

Uganda

Kenya

Tanzania

Tunisia

Morocco

2005

1996

18

Better Governance and Business Environment are fostering FDI

growth…but • Africa’s share in world FDI inflow remains small at 4 per cent• It is mainly concentrated in natural resources rich countries

0

0.5

1

1.5

2

2.5

3

3.5

4

2000 2001 2002 2003 2004 2005

0

10

20

30

40

50

60

70

80

90 Total FDIs to Northern Africa

Total FDIs to Sub-SaharanAfrica

FDIs to Sub-Saharan Main OilProducers* & South Africa asa % of total FDIs to Africa(right axis)

19

How can Africa become an active player in Globalisation?

Increasing absorptive capacity of Trade and FDI: Continuing to maintain macroeconomic stability, improving business environment, and devise policies to promote diversification

Using external resources more effectively:• Capitalising on oil and minerals windfall gains to

invest in health education and access to basic services

• Using ODA as a catalyst: aid for trade is an instrument for enhancing Africa’s integration in the global economy.

20

ODA as a catalyst

0.33

0.36

0.26

0.22

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

% o

f G

NI

0

20

40

60

80

100

120

140

OD

A (

$ b

illi

on

20

04

)

ODA as a % of GNI (left scale)

Total ODA(right scale)

Total ODA to Africa(right scale)

0.33

21

Aid for trade is on the rise … and Africa is the 2nd largest

recipient

22

What is the African Economic Outlook Project?11

Africa Performance: A diverging path?22

Access to Drinking Water and Sanitation: how can Africa fill Access to Drinking Water and Sanitation: how can Africa fill the gaps?the gaps?

33

23

Access to water and sanitation: the facts

• 10 million people / year have gained access to improved drinking water over 1990-2004 in sub-Saharan Africa

• With population growth, the number of unserved has increased by about 60 million and SSA is unlikely to reach the MDGs by 2015.

• The situation is worse for sanitation: 35 million more people annually need access to improved sanitation (current trend: 7 million)

• If the MDGs were reached by 2015, 234 million people would still lack access to safe drinking water and 317 million to improved sanitation

24

People w/o access to drinking water (ml)

Sub-Saharan Africa, 322

Sub-Saharan Africa, 369

Rest of the World, 747

Rest of the World, 550

0

200

400

600

800

1000

1200

2004 2015 (p)

The world is progressing. Africa’s share of unserved is growing.

Source: WHO/UNICEF Joint Monitoring Programme

25

People w/o access to sanitation (ml)

Sub-Saharan Africa, 463

Sub-Saharan Africa, 554

Rest of the World, 2149

Rest of the World, 1836

0

500

1000

1500

2000

2500

3000

2004 2015 (p)

Idem for sanitation but proportions are 3 times bigger.

Source: WHO/UNICEF Joint Monitoring Programme

26

Access: the outstanding experiences

• North Africa:

– 91% have access to drinking water (highest level in developing world with Latin America).

– Sanitation coverage up by 12% points between 1990 and 2004 (at 75%), on track to reach the 83% target by 2015.

• Universal access to water in Mauritius and South Africa.

• Uganda: coverage for drinking water × 3 between 1990 and 2006 (from 21 to 61 per cent).

• Tanzania: 90% of population have access to some form of sanitation.

27

A resource issue?Renewable water per capita

(m3/inhab/yr)

0 10000 20000 30000 40000 50000 60000

Africa

Central Africa

West Africa

Southern Africa

East Africa

North Africa

Source: FAO, Aquastat.

28

Mainly a management issue

• Weak extraction capacities - except in North and South Africa

• Inefficient use: agricultural (68%), domestic (24%), industrial (8%).

• Industrial pollution, poor sanitation and sewage practices. In Congo, only 68% of SNE water samples comply with quality standard.

• Wastage: unaccounted for water reaches 50% in most cities. Botswana: 46%, Mauritius: 47%, Cairo & Alexandria: 50%

29

Introducing water demand management

the municipality of Windhoek Programme components:• Increasing public awareness • Implementation of block tariff system • Legislation to address water conservation • Improved maintenance and technical measures to

reduce leaks • Re-use of water: one of the first cities to introduce

recycling of effluent for drinking purposes

In 2006: unaccounted-for water fell to 10.3% (good practice: 15-20%)

30

The remaining Challenges

• Implementing integrated water resource management (IWRM)

• Strengthening local management

• Advancing sanitation and wastewater treatment to the top of the agenda

31

Status of National IWRMLevel 1 Level 2 Level 3

North Africa EgyptMoroccoTunisiaMauritaniaSudan

AlgeriaLibya

Central Africa Cameroon BurundiCentral African Rep.ChadCongoDRCRwanda

Eastern Africa Uganda EritreaEthiopiaKenyaMauritiusTanzania

Western Africa

Burkina BeninGhanaMaliNigeriaSenegal

Southern Africa

NamibiaSouth AfricaZimbabwe

BotswanaMalawiMozambiqueSwazilandZambia

Source: Global Water Partnership, 2006

32

Key management issues• Strong national water policies and legislation.

• Sound and autonomous regulation: monitor progress, set guidelines, design incentives to extend service provision and protect consumers (NWASCO in Zambia).

• Strengthening capacity on the ground (partnership in South Africa between TCTA and Umgeni Water).

• Harmonisation of different stakeholders’ interventions (SWAP in Uganda).

• Participation of all stakeholders: improve efficiency, maintenance, avoid conflict (Ghana community approach).

• Regional cooperation

33

Reducing the sanitation gap• Increasing access to drinking water can only be safely

achieved if sanitation is tackled simultaneously. Awareness rising: Senegal

• Investments are small compared to the health and environmental costs of inaction and returns (WHO: economic benefits of meeting MDGs in Africa = $23 bl/yr).

• Overcome the segmentation of the sector: between administrations, among providers (Durban).

• Develop technologies adapted to communities’ needs.

• Invest in prevention campaigns (Community health clubs in Zimbabwe).

34

Financing A key issue for all stakeholders

• Investment needs: $20bl/yr until 2025, 1/3 for sanitation, ¼ for drinking water supply (Africa Water Vision 2025).

• Insufficient public money (national budgets and ODA).

• National water providers have failed to achieve financial viability.

• Least attractive sector to private investors – but active in some countries.

35

Financing gaps in water and sanitation (rural/urban)

-80

-60

-40

-20

0

20

40

Benin

BurkinaDR

C

Kenya

Madagascar

Mauritania

Mozambique Seneg

al

UgandaIn

millio

n $

per ye

ar

Source: AMCOW, AfDB, EUWI, WSP & UNDP, 2006.

36

Strengthening utilities

• Financial independence: – cost-recovery: affordability and cross-subsidisation– sustainable & predictable public funding

• Capacity building through benchmarking and partnerships (ex: UNSGAB Water Operators Partnership).

• The role of small-scale local providers– Flexible, better knowledge of remote areas– But they need to be better regulated and their action

facilitated by institutional framework (Uganda Association of Private Water Operators)

37

What role for the donor community?

Source: OECD/DAC

0.3

0.6

0.9

1.2

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Bilateral ODA

Multilateral ODA

Total Water ODA to Africa, $ billion, 2004 prices

38

What role for the donor community?

• Using ODA to leverage further financing (Zambian Devolution Trust Fund).

• Using subsidies targeted on performance, such as Output-Based Aid (GPOBA in Mozambique).

• Develop innovative financial tools: sub-sovereign financing facility in local currency, risk mitigation through resource pooling.

• The role of the African development Bank: African Water Facility and the Rural Water and Sanitation Initiative.

39

Thank you