African countries that have made the most progress in putting in place the right policies to reduce poverty top the rankings in the latest Economic Report on Africa (ERA 2003), the annual Economic Commission for Africa (ECA) flagship publication launched today.
The report, titled 'Accelerating the Pace of Development', examines how Africa can achieve growth rates necessary to attain the Millennium Development Goals. It ranks African countries based on the performance of macroeconomic, poverty reduction, and institution building policies, using an ECA-designed Expanded Policy Stance Index.
Botswana, South Africa, Mauritius, Namibia, and Tunisia rank highest, in that order, while the Republic of Congo is at the bottom followed by Zimbabwe, Chad, Guinea and Nigeria. The top performers have lower foreign debt, lower budget deficits, and lower interest rates. Market liberalization is more advanced in these countries, with few policy reversals; legal systems are more effective; infrastructure is of higher and more reliable quality and access is better; and pro-poor policies are more effective. The bottom five fare poorly on all these indicators.
The Report reveals that Africa's real GDP growth rate fell to 3.2% in 2002 from 4.3% in 2001, implying that only 5 of Africa's 53 countries achieved the 7% growth rate required to meet the Millennium Development Goals, 43 registered positive but below 7% growth rates, and 5 registered negative growth rates.
Seven countries -- Mauritius, Rwanda, Ghana, Gabon, Egypt, Mozambique and Uganda -- are subjected to in-depth study. The findings show that African governments are faced with four key challenges in accelerating the pace of development: escaping poverty; achieving fiscal sustainability to exit aid dependence; energizing African bureaucracies and moving to mutual accountability and coherence.
According to the Report, the outlook for Africa in 2003 is mixed, with growth expected to rebound modestly to 4.2%. Downside risks stem from the deteriorating political and economic situation in Zimbabwe and Liberia, with possible contagious effects in the western and southern sub regions. Renewed flooding and drought in various parts of the continent, especially in the Horn of Africa and the southern region, may affect agricultural production in 2003.
The failure of the Doha Development Round of multilateral trade negotiations to provide immediate duty-free and quota-free market access to the poorest countries hampers Africa's exports. At the same time, the US decision to introduce a six-year $51.7 billion farm bill boosting crop and dairy subsidies will reduce agricultural prices, making it difficult for small African countries to compete.
Yet despite the weak performance, African countries continued to strengthen their macroeconomic fundamentals and intensify their focus on reducing poverty and attracting domestic and foreign investment.
