Strategy for Development of Korea-Africa Economic Cooperation. Contents

Transcription

1 Strategy for Development of Korea-Africa Economic Cooperation (Presentation synopsis) Contents I. Overview of Africa and Korea-Africa Economic Cooperation 1. Africa is 2. Overview of Korea-Africa Economic Cooperation II. Changing Africa III. Development Strategy for Korea-Africa Economic Cooperation 1. Basic Directions for Economic Cooperation 2. Korean Initiative for the Development of Africa 3. Economic Cooperation Strategy by Sector

2 Ⅰ. Overview of Africa and Korea-Africa Economic Cooperation 1-1 Africa is The African continent, consisting of 53 countries, can be largely divided into two regions. The northernmost part of the African Continent, which we usually referred to as MENA along with the Middle Eastern countries, and the southern part, the sub-saharan region, also known as the Black Africa. Africa is the world' second-largest and second-most populous continent. - However, Africa's total GDP is only 954bn$, which is merely 2.1% of World GDP(44,388bn$) and just slightly higher than Korea's GDP(788bn$). (Up until year 2004, Africa's total GDP was lower than Korea's GDP) <Africa's Main Economic Indicators> Classification Population Africa Total 904m GDP(bn$) GDP per Capita ($) 2,724 GDP Growth('06e) 5.8% 1st Ranking2nd Ranking 3rd Ranking 4th Ranking5th Ranking Nigeria (131m) South Africa E. G. 14,600 Angola (20.6%) Ethiopia (77m) Algeria Libya 5,530 Egypt (74m) Nigeria 98.9 Mauritius 5,260 Mozambique Burkina Faso (7.9%) (7.6%) DRC (58m) Egypt 89.3 Botswana 5,180 Tanzania (7.0%) South Africa (47m) Moroco 51.7 South Africa 4,960 DRC (6.7%) Source : World Economic Outlook, World Bank / African Economic Outlook, OECD - 2 -

3 1-2 Korea-Africa Economic Cooperation 1) Trade(Export ㆍ Import) Trade volume between Korea and Africa is quite low, but we are witnessing rapid growth recently. There has been steady growth in 2005, with exports amounting to 6.2 billion US dollars and imports amounting to 2.9 billion US dollars. However, if we look at it from the point of total trade volume, this only accounts for 1.6% and 1.1% respectively. <Korean Trades to Africa> (US$ m) Export 2,250 2,996 2,867 3,118 5,633 6,203 Import 2,521 1,679 1,686 2,006 2,847 2,946 Trade Balance ,286 1,181 1,113 2,786 3,257 Source : KOTIS Trade Partners in Africa Liberia(90% of exports to Liberia is ships), South Africa, and Nigeria account for 70% of total exports to Africa. Recently, South Africa, Angola, Nigeria, Egypt, and Algeria have become important trading partners with Korea as we are increasingly importing oil from Africa due to the crude oil trade diversification policy

4 <Regional Imports and Exports of Korea to Africa> (US$ m, %) Export Import Export Import Export Import South Africa 530(17) 782(39) 959(17) 999(35) 1,320(22) 1,094(37) Nigeria 599(19) 108(6) 680(12) 551(19) 831(13) 366(12) Angola 25(1) 268(13) 1,814(32) 137(5) 1,517(32) 1(1) DRC 11(1) 369(18) 14(1) 284(10) 17(0.27) 419(14) Liberia 1,526(49) 5(2) 1,708(30) 26(1) 1,987(32) 8(1) Ghana 71(2) 11(1) 75(2) 7(1) 89(2) 7(1) Source : KOTIS Main Trade Items Main export items include automobiles, ships and related parts, electronic or electrical equipment, various textile and petrochemicals. Recently, exports of used automobiles are on the rise as well. Among the imported items, crude oil is showing significant growth as primary commodities including mineral resources and raw materials are taking up a major part of all imported items. <Main import item from Africa> (US$ m, %) 2005 October 2006 Amount share Growth Amount share Growth Crude Oil 1, , Copper Gold & Silver Iron Ore Food Items Source : KOTIS - 4 -

5 2) Foreign Direct Investment Korea's investment in Africa is not very active at the moment. There has been 240 foreign direct investments in Africa from Korea as of June This is worth US$1,830 and accounts for only 1.9% of total Korean FDI. Korean FDI is mostly concentrated in Algeria, Nigeria, Libya and Egypt and the amount in that order. <Korean FDI by Country in Africa(2006.9))> (US$ thousand) Classification ~ Classification ~ Algeria Nigeria Libya Egypt Cases 5 Cases 8 Sudan Amount 342,335 Amount 157,170 Cases 20 South Cases 45 Amount 333,961 Africa Amount 147,414 Cases 5 Cases 26 Morocco Amount 288,751 Amount 118,027 Cases 17 Cases 6 Côte d'ivoire Amount 188,114 Amount 73,040 Source: Korea Eximbank FDI is mostly concentrated in the manufacturing industry, and the trade and services industry

6 3) Official Development Assistance(ODA) Grant Aid From 1991 to 2005, Korea has provided grant aid of around one hundred and fourteen million US Dollars(114m) to Africa. Because Korea's grant aid was mostly directed toward Asian countries, the aid to Africa was only around % of the total grant aid budget. But thanks to our Government's policy to join global efforts toward Africa's development, the grant aid amount has increased by 11% to 15.7 million US Dollars in year Main Areas of Grant Aid Assistance For Africa's sustainable economic and public development, grant aid is mainly concentrated in assisting primary commodities and providing training programs as well as (specialized) expertise programs. We especially focus on the area of human resources development so that ultimately, countries will be able to nurture and strengthen their capacity to sustain economic development on their own. <Korea's Grant Aid to Africa(Year 2005)> New Project Active Project Amount (US$ thousand) Training Program ,522 Expertise Sharing Program ,345 Volunteer Dispatch ,958 Feasiblity Study Commodity Assistance ,470 Project 0 8 3,117 NGOs Immediate Assistance Total ,719 Source: KOICA(Korea International Cooperation Agency) - 6 -

7 ODA Soft Loan To help developing countries spur economic growth and improve economic stability, on June 1, 1987, the Korean Government established EDCF, the Economic Development Cooperation Fund, which is a bilateral ODA Loan Program. Since the establishment of EDCF, Korea has provided concessional loan of around 175 million Us Dollars to Africa up until This accounts for 10.6% of total EDCF. About ten million US dollars to thirty million US Dollars was provided per project. Main areas of assistance were vocational education, agriculture, telecommunications and infrastructure construction. As stated in Korea Initiative for Africa's Development, which was announced last March during President Roh's visist to Afrcia, ODA volume is expected to triple in next three years. <Korea's Bilateral ODA to Africa(Sept. 2006)> Year Country Project Amount (US$ m) 1987 Nigeria Passenger Coach Purchase Ghana Petroleum Products Storage Depots Nigeria Locomotive Modernization Uganda Regional Telephone Network Expansion Kenya Technology Development Center Ghana LPG Cylinder Manufacturing Plant Tunisia Olympic Stadium Construction Angola The Fisher Boat Building Ghana The Buipe-Bolgatanga Petroleum Products Pipeline Kenya Road Maintenance Equipment Renewal

8 2004 Tanzania Vocational Education Construction Angola Agriculture Modernization Equatorial Guinea Water Supply Source: Korea Eximbank - 8 -

9 Ⅱ. Changing Africa (from a continent of crisis to a market of opportunity) Until year 1990, Africa was known as a continent suffering from diseases, famine, continuous political instability, absence of infrastructure, and weak government management system. However, we are seeing gradual progress in the region, triggered by both external and internal factors. Externally, thanks to the continuous oil price increase, Africa, which is abundant with natural resources, is enjoying a large inflow of oil money, which helps to build the framework for economic development. Plus, as internal efforts to achieve political stability and economic reform are beginning to reap fruit, Africa is becoming a market of opportunity, taking the place of BRICs. - First of all, the rapid inflow of oil money drives high economic growth, especially for oil producing countries, and this will be an important source in building the economic infrastructure in Africa in the near future. <Inflow of Oli Money in Africa> C l a s s i f i c a t i o n Oil Export Volume (Thousand b/d) 5,906 5,754 6,327 6,965 7,429 Average Annual Price* (USD) Amount of Export (Hundred Mill. USD) ,510.0 * Based on Nigerian Forcados Oil Price Source : Estimate based on OECD African Economic Outlook 2005/2006, BP Statistical Review of World Energy June

10 <Africa's diverse growth experience> Source : World Bank What is more important though, is that there are fundamental and gradual changes taking place in each African country to make economic reform and establish political stability. According to IFC's 2006 Doing Business Index which indicates countries' efforts to enhance their business environment and realize economic reform, for the first time, Africa surpassed South Asia, East Asia and Latin Africa, ranking third. <IFC Doing Business Index>

11 Especially, Tanzania and Ghana ranked as one of the top ten countries that successfully achieved economic reform last year, out of the 179 countries that underwent reform. In addition, we are seeing improvements in resolving internal conflicts, which was one of the main obstacles in Africa's economic development. At some point in the past, there were 25 countries suffering from conflicts, but now the number has decreased significantly to five. <Political Troubles in Africa, > Source: AfDB * 25Countries: Algeria, Botswana, Burkina-Faso, Cameroon, Chad, CÔte d'ivoire, Egypt, Equatorial Guinea, Ethiopia, Gabon, Ghana, Kenya, Mali, Mauritius, Morocco, Mozambique, Namibia, Nigeria, Senegal, South Africa, Tanzania, Uganda and Zimbabwe

12 These are signs of hope that we may be able to finally see changes in Afro-Pessimism, which we once thought would be invincible even with Africa's high economic growth

13 Ⅲ. Strategy for Korea-Africa Economic Cooperation Development 3-1 Basic Directions for Economic Cooperation Assistance in Public Sector, Expand Exchange Korea : Fulfill Responsibility in the International Society Africa : Eradicate Famine and Disease Infrastructure Construction, Energy Development Market Trade Korea : Energy Security Korea : Early entry into the Africa : Secure Development Next Opportunity Technology and Market Electricity Africa: Build Economic Infrastructure Base Basic Directions for Korea-Africa Economic Cooperation need to be developed and coordinated in three main areas: First, Korea will join the world's effort to eradicate diseases and hunger problems in Africa, and carry out its share of responsibility in the global community by tripling the overall amount of development assistance to Africa. Moreover, Korea will share with the African Countries its own economic development experience and provide support in e-government projects to help establish efficient governance system. Secondly, cooperation in energy development is needed. By doing so, Korea will be able to safely secure major energy resources, and Africa will be able to obtain development technology, expand its infrastructure and gain access to th necessary electricity facilities. Finally, there should be cooperation for establishing economic infrastructure and expanding trade. Korea will enter Africa's market in building economic infrastructure. At the same time, Korea will also

14 increase preferential duty for the Least Developed Countries in the context of South-South Cooperation and gradually expand trade volume. Overall, these three aspects should work together in coordination to form the basic pillars in expanding Korea-Africa Economic Cooperation

15 3-2 Implementing 'Korean Initiative for African Development' President Roh published the 'Korean Initiative for African Development' during his visit to Africa this March This initiative states specific plans to implement what I mentioned above, such as tripling the ODA Loan and inviting 1000 people from Africa in the next three years to share Korea's economic development experience, giving medical support, helping to bridge digital divide and expand trade volume. We believe the initiative will be a guidance for south-south cooperation between Africa and Korea

16 <Main Contents of the Korean Initiative for African Development> ❶ Items Three-fold increase of ODA in 3 years ❷ Sharing Korea's Development Experience ❸ Medical Support ❹ HRD Support ❺ ❻ Relieve Africa's Food Shortage and Promote the Primary Industry Bridging the Digital Divide and Sharing ICT Establishment of Consultative Economic ❼ Cooperation Bodies in Various Sectors ❽ ❾ ❿ Cooperation with Multinational Agencies Improve trade capacity of Africa and promote trade and investment Pursue the initiative strengthening Africa's ownership over its development Main Contents - Increase ODA to $10 Million - Substantial budget increase for grant aid - Focus on countries with good governance - Invite 1000 students from Africa in 3 years - Send more volunteers and experts to Africa for regional development - Send medical staff - Hospital construction, assistance in medical equipment and vaccine development - Construct information and communication technology(ict) infrastructure for schools - Build Vocational Training Centers and provide training programs for African instructors - Share agriculture technology and assist the construction of rural infrastructure - Assist in agriculture and fishery fields - Expand the invitation of trainees and the dispatch of Korean Volunteers in the ICT sector - Constructe information technology training centers and support e-government projects - Facilitate activities of the consultative body consisting government officials, academic scholars and civilians (e.g., 'Korea-Africa Forum' and 'Korea-Africa Economic Cooperation Forum') - Joint projects with iwfp, UNIDO and UNWTO - Expand imported items subject to duty-free and quota-free benefits from the least developed countries (LDCs). - Dispatch delegations to promote trade and investment. - Conduct joint projects with AU and NEPAD with a view to assist Africa's self-help efforts for development

17 3-3 Economic Cooperation Strategy by Sector Expansion of Assistance and Exchange in the Public Sector Expansion of ODA Sharing Korea's Development Experience Medical Support Human Resource Development Bridging Digital Divide (E government) Consortium on Economic Cooperation Energy Development Joint Energy Development - Conclusion of Natural Resources Development Cooperation Agreement Electricity Infrastructure Construction Assistance Assistance in the Public Sector Leading Economic Cooperation in the Private Sector Energy Security Infrastructure Construction Africa is blessed with having 10% of the total crude oil reserve in the world and also is the continent with the highest potential for new crude oil development One third of total new oil development in the world was in Africa between year 2000~

18 <Oil Resources in Africa> (Billion Barrels) Year 1984 Year 1994 Year 년 Reserve Market Share R/P ration Libya % 63.0 Nigeria % 38.1 Algeria % 16.6 Angola % 19.9 Sudan % 46.3 Egypt % 14.8 Gabon % 25.8 Congo % 19.3 Equatorial Guinea % 13.6 Chad % 14.3 Tunisia % 25.2 Other Countries Total % 31.8 Source: BP Statistical Review Report Especially Africa is blessed with natural mineral resources such as platinum, uranium, manganese. Mineral Resources <Natural Mineral Resources' in Africa> Of Total World Reserve(%) Production(%) Cobalt Diamond Countries Congo(DRC), South Africa, Zambia South Africa, Botswana, Congo(DRC). Platinum South Africa, Zimbabwe Chrome South Africa, Zimbabwe Uranium Niger, South Africa, Liberia Gold South Africa, Ghana, Zimbabwe, Tanzania Manganese South Africa, Gabon, Ghana Phosphate Morocco(1/4 of World Total Reserve) Bauxite Guinea, Cameroon, Ghana Cooper 12 7 Zambia, Congo(DRC.) Coal 6 6 South Africa, Mozambique, Zimbabwe Source: Korea Resource Corporation

19 Today, Africa depends mostly on hydraulic power for its electricity and seriously lacks access to electricity. <World Access to Electricity> Source : World bank Economic Infrastructure Construction, Trade Expansion Overseas Assistance in constructing economic Construction, infrastructure such as roads, harbors, Enter the airports, telecommunications Market for Preferential duty for the Least Developed Industrial Plants Countries Signing FTAs with main trading partners Market Expansion Africa's infrastructure construction market is expected to be huge. There's a need to increase import volume to certain level by increasing preferential duty for Least Developed Countries. The complicated network of economic consortiums Africa is actually an impediment to Africa's economic unification. There is the need to pursue FTAs by using South Africa as economic strategic point and utilizing the existing consortiums that are effectively being operated

20 <Regional Integration Areas in Africa>