Regional economies to grow by 6.8 pc

A recent report released by the Sub-Region Office for Eastern Africa (SRO-EA) of Economic Commission for Africa (ECA) shows that the Eastern Africa region grew by 6.6 percent in 2011, and is expected to grow at 6.8 percent in 2012. The report entitled, ‘Tracking Progress on Macroeconomic and Social Developments in the Eastern Africa Region 2011” was presented at the end of last week during the SRO-EA 16th meeting of Intergovernmental Committee of Experts in Dar-es-Salaam. It shows that in terms of GDP growth, a number of regional economies have been among the best performing economies in the world over the last 4 years of global economic turmoil, with Rwanda, Ethiopia, Tanzania and Uganda at the head of the pack.Andrew Mold, Head of the Macroeconomic and Social cluster at SRO-EA, who presented the report, cautioned that policymakers needed to keep an eye on a number of macroeconomic imbalances which could undermine growth, particularly inflationary pressures.“During the second half of 2011, these pressures have been strong in a number of countries in the region, especially in Ethiopia, South Sudan, and Uganda,” he said, noting that Rwanda is the only country that managed to keep inflation in check.Mold noted that 2011 performance of regional economies was impressive but it’s even more important to note that the countries will even do better compared to their European counterparts who are currently experiencing an economic meltdown.On his part, Antonio Pedro, the SRO-EA Director said if countries like Rwanda and Ethiopia maintain the pace, they will be able to achieve their target to become middle income economies by 2030.“As long as this stronger growth performance is sustained, more than half the countries in the region will have reached middle-income status by 2030,”“Though there are many challenges still confronting the region, particularly food security and climate change, the region enjoys much more room for manoeuvre than it did in the 1980s and 1990s,” he reiterated. On social development, the report states that across the region there has been an impressive improvement over the last decade in a whole range of indicators, such as maternal health or infant mortality, Rwanda particularly standing out. However, fertility rates in countries such as Somalia, Uganda and DRC remain exceedingly high while a population boom in countries with limited land resources like Rwanda threatens the achievements, calling for urgent measures to check population growth.The report argues that unless more concerted efforts are made regarding family planning, there was little chance that the region could benefit from the kind of ‘demographic dividend’ that has propelled growth in China and, more recently, India.In China and India, the demographic dividend is the result of a declining fertility rate, leading to a decrease in the ratio of dependents to workers in an economy. The report tracks social spending in the region, and finds that half the governments are spending more than 20% of their budgets on the education sector. Countries reaching this target include Rwanda, Comoros, Djibouti, Ethiopia, Kenya, Tanzania, Madagascar and Uganda. However, in health, spending tends to lag behind, with only 4 countries; Rwanda, Djibouti and Tanzania, reaching the 15% target agreed at the AU Summit in Abuja in 2002. Regarding cash transfer programmes, the report notes that these have proliferated across the region in recent years. The largest, Ethiopia’s Productive Safety Net Programme (PSNP), started in 2005 with between 5 and 6 million Ethiopians, comprised public works programmes for the actively productive population, as well as conditional transfers for the very poor who cannot participate in other forms of productive work. “It is time to consider up-scaling some of these initiatives into a more comprehensive and ambitious social protection agenda,” argued Mold. In this regard, he highlighted minimum wage legislation as an instrument that deserves greater attention from policymakers. The instrument currently shows a great deal of variability within the region. “At a time of fast economic growth in the region,” argued Mold, “it is important that the fruits of economic growth are more evenly shared.”Rwanda was cited as one of the countries that increased food production, controlled inflation as well as food and fuel prices, which was key in maintaining steady growth, unlike its neighbour Uganda and Kenya which saw inflation spiral out of control.

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Regional economies to grow by 6.8 pc