From time in memorial a number of strategic programmes have been brought forward to help Africans lift themselves out of the biting poverty. Despite such efforts, African economies have instead been registering economic decline causing frustration to the stakeholders. The latest in the series however is that solid economic performance across Africa in the decade 1995-2005 contrasts sharply with the economic collapse of 1975-1985 and the stagnation experienced in 1985-95. This was revealed by the World Bank in its Africa Development Indicators (ADI) 2007 released on Wednesday in Johannesburg, South Africa. The ADI indicates though that spreading and sustaining growth going forward can be achieved by accelerating productivity and increasing private investment. Accomplishing this however will require improving the business climate and infrastructure in African countries, as well as spurring innovation and building institutional capacity. The World Bank vice president for the Africa Region Obiageli Ezekwesili, said that, over the past decade, Africa has recorded an average growth rate of 5.4 per cent which is at par with the rest of the world. He added that the ability to support, sustain and diversify the sources of these growth indicators would be critical not only to Africa’s capacity to meet the MDGs, but also to become an exciting investment destination for global capital. Ezekwesili added that, “Greater integration with the global economy especially through export trade, are characteristics common to all African countries that have recorded sustained growth.” He said that these according to the ADI largely explain the aggregate efficiency levels and investment volumes – comparable to India and Vietnam – recorded by these countries.” The overall investment in Africa increased from 16.8 per cent of GDP to 19.5 per cent of GDP between 2000 and 2006. The report indicates that in 2005, economic performance varied substantially across countries, from -2.2 per cent in Zimbabwe to 30.8 per cent in Equatorial Guinea, with nine countries posting growth rates of near or above the 7 per cent threshold needed for sustained poverty reduction. ADI groups African countries into three broad categories, the first group of seven countries comprises the region’s seven major oil exporting economies, to 27.7 per cent of the region’s population. The second grouping of 18 countries 35.6 per cent of the region’s population show diversified, sustained growth of at least 4 per cent. The third grouping of 17 countries, comprise 36.7per cent of the region’s population characterised by the nature of their poor resources, strong volatility and conflict-prone. These countries are just trapped in slow growth of less than 4 per cent. The report finds that, policies are getting better and commends the reforms of the last decade. Inflation, budget deficits, exchange rates and foreign debt repayments are more manageable and the economies are more open to trade while private enterprise governance is on the mend. “These better economic fundamentals have helped to spur growth, but equally important to avoid the growth collapses that took place between 1975 and 1995,” it reads. The ADI, 2007 however warns that growth in Africa is more volatile than in any other region and that this volatility has dampened expectations and investments. John. Page, the World Bank’s Chief Economist for the Africa Region explained that ADI 2007 finds that avoiding sharp declines in GDP growth was critical to Africa’s economic recovery. “Avoiding growth collapses is key to accelerating progress towards the MDGs in Africa,” he added. The report identifies stronger and more diverse export growth as a key factor needed to sustain growth and reduce volatility. It laments the higher indirect costs of exporting in Africa which accounts for 18 per cent to 35 per cent of total costs compared to indirect costs in China – a mere 8 per cent of total costs. “As a result, while efficient African enterprises can compete with Indian and Chinese firms in terms of factory floor costs, they become less competitive due to higher indirect business costs, including infrastructure which is an important emerging constraint to future growth,” the report reads. Sub-Saharan Africa lags at least 20 percentage points behind the average for poor developing countries also funded by the World Bank’s concession window (IDA) on almost all major infrastructure measures – pushing up production costs, a critical impediment for investors. Africa’s unmet infrastructure needs are estimated to total around $22 billion a year (5 per cent of GDP), plus another $17 billion for operations and maintenance. Despite the negative impact of poor infrastructure, 38 African countries increased their exports as the region as a whole saw its exports rise in value from $182 billion in 2004 to $230 billion in 2005. ADI shows that exports were fuelled by growing pockets of non-traditional exports such as clothing from Lesotho, Madagascar and Mauritius; the successful connection between farmers and buyers which is the initiative that boosted. Rwanda’s coffee exports to the USA by 166 percent in 2005; and the aggressive expansion of successful exports such as cut flowers whose exports from Kenya more than doubled between 2000 and 2005, making cut flowers the country’s second export earner, after tea. ADI contains the most comprehensive database on Africa, covering more than 1,000 indicators on economics, human development, private sector development, governance, environment, and aid, with time series of many indicators going back to 1965. Ends
