Purchasing Power Parities PPPs and International Comparisons Powering

Purchasing Power Parities (PPPs) and International Comparisons: Powering the Africa Free Trade Area Pali Lehohla Af. DB Report

Spurring the Giant into Africa Free Trade Outline • Preamble • Discuss Africa development Agenda • Problem statement • Articulate the mischief to be resolved • Africa Continental Free Trade Agreement • How does it address Agenda 2063 • ICP information – the lever and propellant of change • SWOT Analysis • Establishing pathways • Institutional arrangements for implementation • Programme and Project, Balance score card, RACI • Implementation frame • Dialogue matrix, Embedding ICP in CPI and GDP

Preamble: Discuss Africa development Agenda Africa Development Agenda • 1945 -1960 Decolonisation movement • 1963 -2000 the OAU • Lagos Plan of Action 1980 -2000 • Younde declaration 1996 Human Rights • 2000 - present AU Constitutive Act • NEPAD • Agenda 2063 UN Development Decennial System • 1960 -1970 target of 5% growth in aggregate GNI through export led development • 1971 -1980 target 0. 7% of GDP as ODA to developing nations • 1981 -1990 Human Rights approach to development • MDGs – Poverty reduction through 8 goals and 48 targets • SDGs – Poverty reduction and preservation of environment 17 Goals and 162 targets

Problem Statement: the mischief to be resolved • Africa’s development obstacles are complicated by reemergence of polarization in global politics and economics • Therefore more than ever Africa has to get its act together inspired and led by Africans • Agenda 2063 has advanced the signal that built on previous efforts to realize inter alia NEPAD • The signing of the Africa Continental Free Trade Agreement (ACFTA) is a practical step responding to the signal 1. African Continental Free Trade Agreement provide business opportunities that will enhance industrialisation in Africa in line with Agenda 2063 2. Intra-Africa trade drive sustainable growth and jobs 3. African Continental Free Trade Agreement benefit small and medium-sized entreprises 4. African Continental Free Trade Agreement for Africa’s women • These four areas stand to benefit from the largest consumption market research • Why is ICP information the only comprehensive source of Data for ACFTA

ICP the lever and propellant of change • Real GDP and Cost of Living Comparisons sanitized of currency and exchange rates • • Global poverty measurements PPPs is a common measure in income inequality Public services are in-country contextual but also relative to the rest of the world Geography based indices and indicators of Productivity, Competitiveness, Trade and Investment • Relationship between levels of development and the price of services relative to tradable goods • cross-country investment costs, such as labor and material costs • Monitor global agreements the environment, climate change and clean energy • The International Comparison Programme addresses Energy Efficiency

Some illustrations: Health prices 2005 to 2011

Some illustrations: Education prices 2005 to 2011

Some illustrations: Housing & utilities prices 2005 to 2011

Some illustrations: Transport prices 2005 to 2011

Some illustrations: Housing , personal transport & water

Some illustrations: Energy, personal transport & water

Some illustrations: Communications prices 2005 to 2011

Price differentials the basis for manufacturing and trade Most expensive countries The cost of living across Africa Least expensive countries Africa average = 100 Less expensive Average More expensive

Product class level price differentials the basis for manufacturing and trade Most expensive Least expensive The price of food across Africa average = 1 Less expensive Average More expensive

Item level price differentials the basis for manufacturing and trade Most expensive Least expensive The price of bread & cereals across Africa average = 1 Less expensive Average More expensive Bread & cereals includes rice, other cereals & flour, bread, other bakery products, and pasta products

Household welfare 2011 Per capita Actual Individual Consumption (Africa = 100) 10 highest countries Below 16 Average Above

Some illustrations: SADC Food & non-alcoholic beverages prices 2005 to 2011

SWOT Analysis: Establishing pathways STRENGTH 1. Global Market research data on - consumption -investment Real GDPs 1. Institutional infrastructure Methodology Expertise in people Agreed upon annual frequency Existing data 1. Platform for routine statistical activities in particular CPI and GDP 2. KNOWLEDGE HOLDINGS OPPORTUNITIES 1. POLICY -Africa Continental Free Trade Agreemen, - AGENDA 206, NEPAD 2. DATA RELATED, - Data revolution, - SHASA, - charter of statistics, - Evidence based design 3. UNSC Resolution For ICP to be an Annual compilation WEAKNESS 1. KNOWLEDGE DEFICITS Limited skill level Limited visibility Under utilisation Lack of ownership 1. POOR INFRASTRUCTURE Lack of statistical integration in offices Under funding of statistical agencies 1. POOR LINK BETWEEN ICP AND POLICY MAKING THREATS 1. 2. 3. AFRICA LEFT BEHIND ON ICP WEAK MAINTANANCE OF ICP ELITIST CHARACTER OF THOSE WITH KNOWLEDGE ATTITUDES & BEHAVIOURS OF EXPERTS

GAP Consumption, investment and real GDPs GAP Product and service classification Trade Production

CAUSE OF ACTION 1. 1. Address the weak link between ICP and policy making Create appropriate funding of statistical infrastructure Implement a knowledge base for Africa free trade agreement RESPONSIBILITY Strategically position ICP in the policy environment appropriate primarily for Africa Continental Free Trade Agreement RACI MATRIX(Responsible, Accountable, Consult, Inform) R A Heads of NSO Researchers think tanks Policy makers AFDB African Ministers responsible AFRICAN UNION for planning UNECA Place ICP as a knowledge base interlocutor of intracontinental programmes Heads of NSO Researchers/think tanks/ Policy makers AFDB AFRICAN UNION UNECA Heads of NSO Policy makers African Ministers responsible for planning Elevate the usefulness of ICP to the statistics community Af. DB UNECA AU NSOs Executive secretaries , chair of Policy makers commission and president Stats General Policy makers Illustrate the applications of ICP to policy makers Heads of NSO Researchers Heads of NSO Policy makers Integrate ICP as a regular and necessary programme of national accounts and prices Planning and Finance Ministry of National government Heads of NSO Research Think tanks Business Public Mobilise supra national resources appropriate for the ICP UNECA and AU Ministers of planning and Finance Af. DB, UNECA, AU Heads of NSO, Ministry of Foreign Affairs Research Think tanks Business Public Produce Digital Consumption, Investment, Real GDP Data bases Market Data Bases UNECA Investors Public C Consult policy instruments AGENDA 2063 ACFTA UNIVERSITIES THINK TANKS, NGO I PUBLIC PUBLIC

Institutional arrangements for Dialogue implementation INPUT(DATA COLLECTION ON INDUSTRIAL TRADE & DEVELOPMENT) Source and develop a high quality large scale market research statistics and data hub on consumption as or for inputs on trade (exports imports), investment and other statistics sources relevant for conducting fair and sustainable trade in Africa PROCESS DESIGN and DEVELOPMENT OF INDUSTRIAL DEVELOPMENT OF TRADE POLICY ACCOMPANIED & INCENTIVES BY ACCOMPANIED BY PROJECT & MONITORING & EVALUATION TOOLS) PROJECT & MONITORING & BENEFITS REALISATION Based on the industrial and trade development process develop and implement a The data input and hub device can inform policies and benefits realisation tool analysing the economics of social cost benefit analysis EVALUATION TOOLS) incentive programmes for industrial and trade realised post industrial and trade development policy and incentivation of development facilitation in the continent. Develop a industrialists through various programmes. This data could comprise of : project. The monitoring and evaluation tool with strategic data input and hub device can Impacted change on balance of payments, export promotion, imports, global objectives, targets, indicators, activities, baselines, competitiveness, manufacturing production index, employment creation, outcomes, outputs and impacts for trade andand industrial inform policies incentive contribution of GDP per sector, industry, human development index, skills development programmes for industrial and development, empowerment of marginalised groups, foreign direct investment trade development facilitation in the continent. Develop a project monitoring and evaluation tool with strategic objectives, targets, indicators, activities, baselines, outcomes, outputs and impacts for trade and industrial development

Advocacy Embed ICP in national planning data requirements Create policy briefs in country Create policy briefs continentally Create animations Write op-eds Message National development plan is supplanted by trade as it contributes x percent in the unit of spending – so much is in exports ICP is relevant for country’s investment and employment futures ICP will enable regional integration in Africa and goods, services and people’s mobility will be eased Who delivers the message RACI MATRIX(Responsible, Accountable, Consult, Inform) R A POLICY National Planning Ministers Sectoral Ministers budget Heads of Department speeches and plans NSO heads Heads of NSOs DGs planning and sector departments Researchers think tanks Policy makers Heads of NSO Industry conferences Policy makers Ministers responsible for planning AFDB AFRICAN UNION UNECA/AU Ministers Heads of NSO Product equivalents in visuals across countries Researchers/think tanks/ Knowledge Creation and within countries Policy makers Heads of NSO, Academia, data communities, researchers AFDB policy makers Create knowledge products AFRICAN UNION African Ministers responsible for planning UNECA Heads of NSOs Economic Agents Media Universities Producers, traders, consumers, regulatory Af. DB UNECA AU bodies, insurance and financial bodies Elevate the usefulness of ICP to the statistics Af. DB Executive secretaries , chair of commission and president community UNECA Stats General AU NSOs Illustrate the applications of ICP to policy makers Heads of NSO Researchers regulatory bodies in countires, regional , bi and multilateral bodies C Industry National development plans policy instruments AGENDA 2063 ACFTA UNIVERSITIES Industry THINK TANKS, NGO Continental plans ACFTA and Agenda 2063 I PUBLIC Public Consult policy instruments AGENDA 2063 ACFTA UNIVERSITIES THINK TANKS, NGO PUBLIC Policy makers Dialogue through Product and service classification

BENEFITS REALISATION COLLECTION SCHEDULE Post investment Pre investment ACFTA should • Provide business opportunities for Agenda 2063 • Use innovation and start-up hubs for experimenting with ICP • Create sustainable jobs • Improve smme performance • Support women Outcome/ Comment at Outcomes 6 months initial Outcome/ Comment after final after initial inspection disbursement at final inspection disbursement

INTEGRATED BALANCED SCORE CARD FOR INDUSTRIAL DEVELOPMENT STRATEGY BALANCED SCORECARD (BS) CORPORATE STRATEGY MAJOR BENEFITS: ORGANISATIONAL & PROJECT EFFECTIVENESS MAJOR BENEFITS: ORGANISATIONAL EFFECTIVENESS (INNOVATION) PORTFOLIO: CONTINUOUS IMPROVEMENT PROJECTS MAJOR BENEFITS: ORGANISATIONAL EFFECTIVENESS & EFFICIENCY FINANCE CSFs CUSTOMER CSFs INTERNAL CSFs LEARNING & GROWTH CSFs MAJOR BENEFITS: ORGANISATIONAL EFFICIENCY & MEASUREMENT IND PROG FREE TRADE IND PROG LOG HR IT PROJECTS DONE FOR EXTERNAL CUSTOMERS CUSTOMER RELATIONSHIP MANAGEMENT SERVING EXTERNAL CUSTOMERS CUSTOMER SERVICE MANAGEMENT SERVING EXTERNAL CUSTOMERS ORDER FULFILMENT MANAGEMENT SERVING EXTERNAL CUSTOMERS PRODUCT DEVELOPMENT & COMMERCIALISATION PROJECTS FOR THE MARKET DEMAND MANAGEMENT & CAPACITY PLANNING SERVING INTERNAL CUSTOMERS SUPPLIER RELATIONSHIP MANAGEMENT (PROCUREMENT) SERVING INTERNAL CUSTOMERS MANUFACTURING FLOW MANAGEMENT SERVING INTERNAL CUSTOMERS HUMAN TALENT INFORMATION ARCHITECTURE INFORMATION VISIBILITY CUSTOMERS FEEDBACK FREE TRADE PROJECT DRIVEN & NON-PROJECT DRIVEN (HYBRID) BUSINESS MODEL SUPPLY CHAIN AFDB PROGRAMME OFFICE MAJOR BENEFITS: OPERATIONAL: USAGE OF DATA EFFECTIVENESS & EFFICIENCY PORTFOLIO: BENEFITS REALISATION PORTFOLIO: ECONOMICS OF SOCIAL COST BENEFIT ANALYSIS MEASUREMENT OF OUTPUT KPIs PORFOLIO : INTERNATIONAL COMPARISON PROGRAMME INTEGRATION OF PROJECT, PROGRAMME AFRICA INDUSTRIAL DEVELOPMENT ©P G Steyn 2015

ICP Strategy: BALANCE SCORE CARD in ACTION

1 5 Dissemination Integration Agenda • • 2 Understanding Governance 4 Production 3 Classifications Product Specifications

1 5 Dissemination Integration Agenda 2 Understanding Governance 4 Production 3 Institutional Fabric

CUSTOMER PERSPECTIVE Classification Working Groups The Academia/Think Tanks Institutional fabric International Organizations Scientific Committees Governance NSOs

INTERNAL BUSINESS PROCESS Prices CPI Housing M. & Equip. Construction National Accounts Detailed GDP Expenditures ICP

Process Re-engineering for operational Operational Efficiencyand Effectiveness Prices CPI Housing M. & Equip. Construction National Accounts Detailed GDP Expenditures ICP