The African Development Bank in North Africa Before and After the - PowerPoint PPT Presentation

The African Development Bank in North Africa Before and After the Arab Spring Jacob Kolster Director, North Africa Region African Development Bank April 24, 2012

Outline A Brief Introduction to North Africa I. AfDB in North Africa II. The Arab Spring: Challenges & Opportunities III. IV. The Arab Spring: New Strategies & Partners The Deauville Partnership V. VI. Concluding Remarks

1. Brief Introduction to North Africa Some Basic Facts Tunisia Political Economy is changing Morocco Algeria • Structure of Economy: Resource rich – Diversified Libya Egypt • Transition Process: Bottom – Up (East) Mauritania Top-Down (West) Wealthiest Region in Africa Largest consumer market in Africa • Homogenous & fast growing population • Libya: High GDP/capita (USD10,000 ) • Algeria: High Reserves USD 184 • 170 million people (Egypt: 80 million) billion (36 months for import) • Sustained growth (2000-2010) • • Trade agreements Relatively high GDP before Revolution – expected to rebound • Growing Middle Class • Meeting most MDGs 3

I. Brief Introduction to North Africa Key Strengths • Top gas & oil producers Natural • Top phosphate and iron ore producers Ressources • Solar ( Energy & T ourism ) • Proximity to MENA & EU, Trade/Markets • Trade Agreements with EU and G8 • Growing trade / partnership with B RICs • Adequate transport infrastructure (which need to be sustained) Infrastructure • Communication infrastructure building up • Egypt & Morocco among top reformers Business • Governance issues to be overcome ? Climate • Free Trade Zones Human • Youth Bulge Capital • Cheap and relatively well educated labor 4

II. AfDB in North Africa Lending and Technical Assistance Tunisia Egypt Morocco Ongoing Operations Ongoing Operations Ongoing Operations • • • Total: $1.86 bill Total: $2.5 bill Total: $3.02 bill • • • Private $409 mill Private: $226 mill Private: $263 mill • • • TA: $7.6 mil TA: $7.75 mill TA: $9 mill Total Lending Accum : Total Lending Accum : Total Lending Accum : • $7.75 billion • $5.73 billion • $9.29 billion Mauritania Algeria Ongoing: $226 mill, $120 mill in Private Ongoing: $1,4 mill in TA Total Accum: : $775 mil Total Accum: $ 2.94 bill Total for NORTH AFRICA Ongoing operations : $7.65 bill of which $1.1 bill for Private Sector Operations Total Accumulated (1967-2011): $ 26 billion 5

II. AfDB in North Africa Growing Dialogue & Knowledge Agenda • 15 Country-specific ESW & diagnostic in 2011 Knowledge • Intensified socio-political & economic surveillance • Advisory support to Governments Dialogue • Frank dialogue with civil society & private sector • Lead role in international fora 6 6

II. AfDB in North Africa And on the Ground Regional Dept II Regional Dept I HQ in Tunis • Director: N.Matondo 2000 staff • Director: J.Kolster • No. of staff: 8 • No. of staff: 14 • Location: Tunis • Location: Tunis Tunisia Algeria Morocco Libya Egypt Mauritania Algeria Country Office Egypt Country Office Morocco Country Office • • • Res Rep: A.Diarra-Thioune Res Rep: S.Tapsoba Res Rep: A.Abou Zeid • • • No. of staff: 15 No. of staff: 14 No. of staff: 7 • • • Location: Alger Location: Cairo Location: Rabat

III. The Arab Spring Immediate Impact: Rising Borrowing Cost and Fall in FDI CDS trends in 2011 700 Egypt Adverse Reactions of Financial Markets 600 Morocco France Since January 2011, downgrades of T unisia  500 Germany (once) & Egypt (four times) 400 Egypt & Tunisia stock markets major negative  300 corrections 200 CDS rates triple for Egypt  100 Portfolio outflows and FDIs decline 0  Access to finance a major issue  Stock markets in 2010 - 2012 Ratings as of March 2012 Maximum Number of S&P MOODY'S FITCH Downgrades In 2011 B B2 BB- 4 times EGYPT 4 notches negative negative negative BBB- Ba1 BBB- 0 Revolution in Tunisia MOROCCO stable stable stable 0 BBB- Baa3 BBB- 1 time 8 TUNISIA 1 notch negative negative negative

III. The Arab Spring Underlying Drivers & Challenges Exclusion & Growing Disparities • Voice & accountability • Transparency & financial management • Reversal in poverty & inequality • In-country regional disparities • Deteriorating public social services Lack of Jobs & Economic Transformation • Growth thru rise in capital & labor stock • Little TFP increase & income/capita growth < ½ % • Absorption of labor in public sector at its limit • Crisis of youth unemployment • A widening skills mismatch Production Sophistication Compared • Lack of econ sophistication & Egypt Tunisia Indonesia Malaysia transformation • No regional integration & myopic global integration 9 1975 2005

III. The Arab Spring Political Transition: Continuity and Change Continuity Macroeconomic stability Attract Investors Ensure a business-friendly agenda Agenda for greater competitiveness & diversification of exports T olerant to different cultures and religions Change Ensure social justice Set for inclusive growth Adhere to democracy Ensure voice, transparency & accountability Root out corruption and level the playing field 10

III. The Arab Spring From a private sector perspective Business-friendly policies • Policies – emphasis on attracting investment • Private-Sector led growth strategies • Job creation , SME & entrepreneurship Accountability - Governance aspects Transparency aspects • Competition & equal • Clearer procurement rules opportunities • Smarter regulation • Reduction in costs associated • Increased Information with doing business • Improved business • Main stakeholders’ environment participation in business-related • Repatriation of profits policies and regulations • Enforceability of contracts 11

IV. The Arab Spring & AfDB’s Response New ways of doing business  Guarantees and risk alleviation  Mobilise private funding New Instruments and Sources  Mobilise grants for analysis and capacity building  Souk at-Tanmiya  Civil society and media  Academic institutions and think tanks New Players &  Labor unions & organizations Partners  Strong partnerships – IFI coordination platform and beyond  Consultations outside government, focus on voice & accountability New Ways and  Stronger knowledge work Ideas  T echnical assistance for nation re- engineering & building

IV. The Arab Spring & AfDB’s Response New Strategies & New Approaches New Strategies for Egypt, Morocco and Tunisia Tunisia Morocco Egypt Interim Strategy Strategy launched Interim Strategy under approved 02/15/12 04/03/12 preparation Preparation of NA Regional Integration Strategy Paper (2013-2017) Being Strategic in times of Change: Key Elements Scarce resources Uncertainty calls Transparency, Dialogue call for selectivity for flexibility & Communication and leverage Based on constant dialogue & regular review Appropriate balance of strategic intervention Diagnostic analysis & TA between immediate and options and priorities. long term goals support critical 13

V. The Deauville Partnership IFI Coordination Platform, Deauville Partnership Deauville Partnership • Egypt, Jordan, Morocco, Tunisia full Strengthen governance G8  members countries Develop economic & • Libya participate partly US chair in  2012 social inclusion Partnership Create jobs  countries Support private sector  Associated led growth 9 IFIs support IFIs countries countries Kuwait, Qatar, Advance regional/global  under the Saudi Arabia, Platform economic integration UAE and Turkey pillar Secretariat : Platform objectives Information sharing Oucomes  EBRD coming to the region Dialogue with partner •  • Increased coordination via web-based info and countries activity platform joint projects, policy and  • Targeted analytical work around key levers: analytical work (job creation and SMEs) Coordinate monitoring  AfDB mobilizing grant resources for joint activities • and reporting 14

VI. Concluding Notes AfDB is a long-standing actor in the region • Support through financing, TA and capacity building since the 1960s • Strong presence on the ground We have a wide range of instruments • Sovereign Guaranteed Operations • Non sovereign Guaranteed Operations We have reacted swiftly to needs of the region • New strategies for Tunisia, Morocco and Egypt • More knowledge work and TA for national re-building We are working with new partners • EBRD & Deauville Partners • Civil Society, private sector, academia, independent pundits

Appendix I Tunisia Interim Country Strategy (2012-2013) Framework Flexibility Modalities Maintain Selectivity Creativity dialogue: Pillar I: Monthly meeting Growth and with the ministry economic transition Adaptability : Leverage Discussions Transparency throughout effect political calendar Pillar II: Inclusion and Following reduction of procedures: regional Advisory Mid-term review disparities Visibility services after one year 16