Doing Business in Africa

African Development Bank Group

AfDBInternational Economic Forum of the

Americas (June 7-10, 2010)

Nkosana Moyo, Vice President & COO

1. The Context: Africa’s Economic Performance

2. Doing Business in Africa

3. Challenges to Doing Business in Africa

4. Africa’s Infrastructure and Energy Opportunities

5. Inga 1: Status Update

1. The Context: Africa’s Economic Performance

2. Doing Business in Africa

3. Challenges to Doing Business in Africa

4. Africa’s Infrastructure and Energy Opportunities

5. Inga 1: Status Update

Outline

1

2001-2008: Buoyant growth (5.6% a year).

End 2008-Early 2009: Sharp decline (2.9% a year).

End 2009-2010: Resumed growth (4.5% a year).

Anticipated increase in aid by 11% (between 2008 and 2010).

1. Africa’s Economic Performance

2

2.1 Doing Business in Africa

Political Governance: 33 countries with at least 2 successive elections.

Telecommunications: mobile subscriber base at 280.7 million people in 2008-to reach 561 million by 2012 .

Diaspora: Approximately $12 billion remittances to Sub-Sahara Africa alone in 2007.

Solid progress in Business environment reforms.

Mineral Reserves: 30% of the world’s share: Gold (40%), Cobalt (60%) and PGM(90%).

2.2 Lessons from Africa’s Mobile Phone Usage

• Low income earners prepared to incur high costs to access mobile phone facilities.

• A huge medium for extending scarce financial services to rural areas (e.g. Kenya’s M-PESA).

• Government’s play a critical role in dismantling artificial barriers (e.g. Tanzania).

• A potential avenue for knowledge management: ‘m-learning’.

2.3 Country Examples of Reforms

• 67 regulatory reforms registered in 29 of the 49 sub-Saharan African countries.

• Rwanda ranked as the world’s top reformer.

• Liberia, Ethiopia, Ghana and Togo: streamlining of inspection processes.

• Uganda, Sudan: improved customs processes. • Cape Verde: improved access to credit information.

• Cameroon: eliminated licence tax for new businesses.

3. Challenges to Doing Business in Africa

• Progress in ‘overall’ ease of Doing Business Rankings remains slow.

• Power outages among the highest in the World.

• Inland transportation costs higher than other regions.

• Attracting FDI into diversified and higher value-added sectors still a challenge.

• African firms are some of the most highly taxed in the world.

4. Infrastructure and Energy Opportunities

• Bridging of Africa’s infrastructure gap estimated at $93 billion a year: with high returns.

• Oil reserves of 117.481 billion barrels in 2007: (9.49 % of the world's total).

• Natural gas reserves of 14.58 trillion cubic metres, (8.22% of the world total).

• 17 countries in Africa have the largest potential for solar, wind, hydro, and geothermal energy.

5. Status Update on Inga 1 Project

• Hydropower project co-financed with the World Bank: situated in the DRC.

• Components: a) Generation; b) Transmission; c) Distribution; d) Capacity Building and Governance.

• AfDB Grant support totals UA 35.7 Million.

• Rehabilitation of project delayed due to efforts to link components of Inga 1 and 2.

• Procurement processes currently underway to finalize selection of companies.

Thank you/Merci