Accounting for natural capital?The case of the African Economic Outlook
HB Solignac-LecomteOECD Development CentreDAC Environet, 20 Feb. 2014
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Chapter 1: Macroeconomic ProspectsAfrica’s Growth: resilience in the face of
headwinds from the global economy
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012(e)
2013(p)
2014(p)
0
1
2
3
4
5
6
7
Africa Africa excluding Libya
Gro
wth
Rat
e (%
)
Chapter 2: External Financial Flows and DRMFDI is picking up
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012(e)
2013 (p)
-30
-10
10
30
50
70
90
110
130
150
170
190
210
TOTAL
Remittances
ODA
FDI
Portfolio invest-ments
USD
bill
ion
Chapter 3: Trade and Regional IntegrationTrade: China in the lead
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
0
50
100
150
200
250
Africa's exports to selected partners (2000-2011)
EU-27
China
USA
India, Brazil, Korea, Turkey, Russia
Intra-African
Billion USD
6
Chapter 4: Human DevelopmentSlow progress
Average change in income and non-income human development indices, 2005-12
7
Chapter 5: Political and Economic GovernancePublic protest up, civil violence down but > 2011
19961997
19981999
20002001
20022003
20042005
20062007
20082009
20102011
20122013
0
100
200
300
400
500
600
Public protest (base 100 = 2000)
Civil Violence (base100 = 2000)
2002 (no theme)2003 Privatisation2004 Energy2005 SME Financing2006 Transport2007 Water and sanitation2008 Technical & Vocational Skills2009 Innovation and ICT 2010 Public Resource Mobilisation and Aid2011 Africa’s Emerging Partners
2012 Promoting Youth Employment2013 Structural Transformation and Natural Resources2014 Global Value Chains and Africa’s Industrialisation
Chapter 6: Special Theme
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Chapter 6: Special Theme 2014 “Global Value Chains and Africa’s Industrialisation”
Potential for integrating GVCs :
1. Extractive industries: backward linkages from oil, copper, diamonds, gold. e.g. MOZAL cluster.
2. Agriculture /agroindustry : Cotton, coffee, tobacco, flowers, horticulture, cashews, cut flowers … But so far mainly isolated success stories, no massive upscaling.
3. Light manufacturing: few success stories (Mauritius, Tunisia, Morocco, Lesotho) despite preferential access to EU, US markets
4. Tradable services: Some successful companies across the region, e.g. Kenya: Business Process Outsourcing (BPO), Call Centers.
GVC do have potential in certain areas – but unlikely to become strong drivers of the desired structural change.
Greatest potential for inclusive growth in high-value agriculture.
Source: Tilman Altenburg (German Development Institute)
Farmer Processor RetailerLogistics
Blue Skies’ ‘fresh from harvest’ value chain
• Employment• Income distribution• Technology and skills transfer
Chapter 6: GVCs (cont.)Cut fruit from Ghana
Source: Blue Skies
Chapter 6: GVCs (cont.)Textile/clothing in Ethiopia, Tanzania
• over 28000 employees in China and Cambodia, export to the US and EU markets
• hired over 1000 local workers in Dar es Salam, Tanzania in 2013• Incentives: stable political environment, good relations with China, SEZ
• Sourcing knitwear from MAA Garment & textile, in Mek’ele• Lower wage cost, delivery time to EU shorter by 1/3 vs. China• Ethiopia’s textile & apparel exports grew by 28% / 12 months to June
2012 = US$84.6m (compared to total German imports alone $17.4bn)• Next: Tesco (UK), Primark (IRE)
Source: Tang Xiaoyang, Tsinghua University
Chapter 6: GVCs (cont.)Regional Value Chains: The rise of supermarkets
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Who will benefit?• Supermarkets aim for preferred suppliers• Small holders ill-prepared to meet
demands (quality, packaging etc.)• But experience of Kiambu’s small holders
in Kenya shows that it can be done • Though experience of Nicaragua farmers
with Walmart warrants caution• South African supermarkets in
the lead• Kenyan supermarkets focused in
East Africa (Nakumatt eyeing Nigeria)
• International players entering (Spar, Walmart )
Can supermarket increase global reach of African manufacturers?
Source: Julius Gatune (African Centre for Economic Transformation)
13
54 Country NotesStrictly comparable, 15 pages, 7000 words
2-year Forecasts • Growth• Inflation• Current account, • Budget balance
Analysis• Macroeconomic Policy• Economic and Political Governance
• Incl. Natural Resource Management & Environment (300 words)
• Social Context and Human Development• Thematic Analysis: GVCs
African Economic Outlook
14
Macro Trade Human GovernanceFinance
Algeria Angola Benin
Ethiopia
Zambia Zimbabwe
Statistical Annex
Special Theme: Youth Employment, Natural Resources, GVCs …
FORECASTS
15
Drivers of growth = “Shifting wealth” (including the commodity price boom), demography and better macroeconomic policies
But 5% growth is not enough to take-off
Tackling the job challenge: structural transformation, private sector development
Two drivers: natural resources, rising consumer demand => Territorial strategies, product-specific
The Big Picture: Is Africa Rising?
16
The “environmental risks faced by developing countries today call for a radical shift in how we view growth and development”
OECD (2013) Putting Green Growth at the Heart of Development.
Are we missing something?
17
1. Integrate the environment in country growth forecasts (upgrade model) → data?
2. Add section in country notes → tokenistic?3. Add selection of environmental indicators to
statistical annex→ visibility, impact?4. Chapter on environment → add?5. Other?
Options for “Greening” the AEO?
Additional issues:• Green Economy, Green
Growth, Sustainable development?
• Political economy
Source: Stoever, J. Options for Greening the AEO.
18
Option 1 - Integrate the environment in country growth forecasts (upgrade model)
+ truly integrates environmental factors
into the (traditional) economic growth model
Results are in a language that is familiar to policymakers/the audience of the AEO
Analytically strong and theory-based approach
- Theoretically and empirically
challenging Large workload and data
requirements Uncertain outcome Dependent variable is still GDP
growth (close to GG concept, not necessarily a weakness)
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Option 2 – Add Section in country notes
+• Textual closeness the of environment
and economic growth emphasizes their close connection
• Brings the environment to the attention of the readers of the country notes
• Individually tailored paragraphs for each country, specific contexts can be incorporated and/or highlighted
• Can be combined with options 3&4
-• Add-on solution, no full integration• It does not seem logically
consistent with the current structure of country notes to include a separate fairly standardized paragraph on the environment in all country notes
• Workability (all authors of country notes have to be involved)
• Natural resources are already included in the country notes when they are an important component of GDP growth
20
Option 3 - Add a section on the environment in the statistical annex
+• Relatively little effort required• Has been done in other reports (e.g.
ADB, 2013; World Bank, 2013b)• Easy and quick to implement• Can be combined with options 2&4• Only one point for discussion:
selection of indicators (and ways of presentation)
-• Will not generate much attention
compared to other options• Added, but not really integrated in
AEO (as stand-alone option)• Without explanations: limited
interpretation• Does not “change how we think
about growth” if numbers are not put into context
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Option 4 - Add an extra chapter on the environment to the AEO
+• A special theme would generate
public interest• An additional chapter 6 would give
the environment the space and visibility it deserves in the logic of comprehensive wealth
• Can be combined with options 2&3
-• Add-on solution• Chapter 6 (Special theme): partly
very close to 2013 special theme on natural resources
• Environment & poverty overlaps with other chapters
• (Minor) re-organization of other chapter(s) necessary
• “far away”, separates the environment from economic growth part
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