Transcript Spotlight on Africa

Spotlight on Africa
L I SA D. COOK , P H. D.
AS S OCIATE P ROF ESSOR, ECON OMI CS AN D I N T ERNATIONAL R E LATIONS, MS U
I N T ERNATI ONAL BU S I N ESS I N STI TUTE, BROA D S CHOOL OF BU S I N ESS
JU N E 2 , 2 0 1 5
Roadmap of Spotlight on Africa
1. The Real Map and the News
2. The Macroeconomic Environment
3. The Business Environment
◦ A. Foreign direct investment
◦ B. Competitiveness
◦ C. Doing Business
◦ D. Country and Industry Focus
4. Concluding Remarks
5. Resources for Learning and Teaching about Business in Africa
The Real Map and the News
•
What do we mean by Africa?
• Not a country but a continent!
• Lots of heterogeneity across the continent
• Africa is poorly covered in the news
• Little coverage in the U.S. financial and popular press
• When covered, news is largely negative
• Basis of today’s presentation: data and research, not the news
Macroeconomic Environment
BEFORE AND AFTER THE GLOBAL CRISES
Macroeconomic Environment
BEFORE THE GLOBAL CRISES
Best growth performance since independence
No real growth from 1960’s/1970’s through much of 1990’s
High inflation rates; unstable or ineffective fiscal, monetary policy; civil wars
Turnaround in the 2000’s with highest predicted growth rates of
any region; Beny and Cook (2009)
Average real GDP growth:
2004-2007 – 6.3%
Macroeconomic Environment
AFTER THE GLOBAL CRISES
Slower growth but still better than most regions and historical
average
Distinct from the past due to better macroeconomic management
Average real GDP growth:
2008-2010 – 4.5%
2011-2013 – 5.0%
Compare to 5.0% in South Asia and 2.6% in Latin America (World
Bank, 2012-2013 averages)
Macroeconomic Environment
Lots of heterogeneity, as in the map
In 2013,
2-3.5%: Algeria, Comoros, Egypt, Madagascar, Seychelles, South
Africa, Swaziland, Tunisia
3.6-7.5%: Benin, Botswana, Burundi, Djibouti, Liberia, Mauritius,
Morocco, Namibia, Nigeria, Rwanda
7.6%+: Angola, Cote d’Ivoire, DRC, Ghana, Liberia, Libya,
Mozambique
The Business Environment in Africa
FOREIGN DIRECT INVESTMENT
The Business Environment in Africa
FOREIGN DIRECT INVESTMENT
 Africa’s
share in global FDI increased to an all-time high in 2013 –
5.7%
 Surveys reveal its recent climb in comparison to other regions
topping Asia in 2014
 Where has FDI gone in Africa recently? It varies by source.
 Which sectors have been targets of FDI? It varies by country.
The Business Environment in Africa
COMPETITIVENESS
The Business Environment in Africa
COMPETITIVENESS
FDI data give us hints about competitiveness (potential for long-run
growth), but let’s take a closer look

 World Economic Forum’s Africa Competitiveness Report, 2013
 Global Competitiveness Index
Framework: Figure 3, p. 5
Global Rankings: Figure 4., p. 7
Within Africa: Table 2, p. 11
The Business Environment in Africa
COMPETITIVENESS
Greatest problems doing business
By region, Figure 11, p. 20
The Business Environment in Africa
COMPETITIVENESS: CORRUPTION PERCEPTIONS AND THE NEWS
 #2
problem in Africa Competitiveness Report 2013
 Large problem of perceptions and reality, including poverty and
underdeveloped institutions
Transparency International’s Corruption Perceptions Index 2014
The Business Environment in Africa
DOING BUSINESS: GETTING DATA AND SUPPORT
World Bank, Doing Business Report
Ranks 189 countries
Ease of Doing Business Rankings 2015
Table 1.1, p. 4
Africa as 2nd most improved region: Figure 1.4, p. 5

The Business Environment in Africa
DOING BUSINESS: THE INNOVATION ECONOMY AND INTELLECTUAL PROPERTY
 Long-term
economic growth is largely dependent on innovation
and international trade
 Much of that innovation needs protection internationally
 The information economy is desirable in Africa as it is in the U.S.
(higher growth, higher incomes), e.g., in Ghana, Tunisia, South Africa
(not just FDI)
Indicator of innovative capacity: Patents per resident
The Business Environment in Africa
COUNTRY AND INDUSTRY FOCUS
 Mobile
Banking: M-PESA in Kenya
Kenya is the leader in use of mobile money
Mystery why sending cash through mobile phone has not taken
hold in the West and elsewhere to this extent
2/3 of adult population uses it
25% of GDP flows through mobile money channels
Lowers risk of theft, corruption
Addresses inadequacies in traditional banking in Africa
CONCLUDING REMARKS
AFRICA IS RISING
Be skeptical of the news!
Best coverage by major publications is Financial Times, the
Economist, and AllAfrica.com
 There are both opportunities and challenges
 Both are changing, some rapidly
RESOURCES
WHERE TO FIND MORE
Macroeconomic environment
African Development Bank -- http://www.africaneconomicoutlook.org/en/statistics/table-2-real-gdp-growthrates-2003-2013/
Broad economic and social conditions
UN Human Development Report -- http://hdr.undp.org/en/content/table-1-human-development-index-andits-components
Business environment
FDI, exports: UNCTAD country profiles -- http://unctadstat.unctad.org/CountryProfile/home/Indexen.html
Competitiveness: World Economic Forum – http://www.weforum.org/reports/africa-competitiveness-report2013
World Bank Doing Business Series -https://openknowledge.worldbank.org/bitstream/handle/10986/20483/DB15-Full-Report.pdf?sequence=1
Corruption Perceptions -- https://www.transparency.org/cpi2014/results