Johannesburg — THE United Nations (UN) expects African countries to produce economic growth of 5,5% this year, following a year in which there was a 65% leap in the amount of foreign direct investment (FDI) into the continent.

These were key findings of the UN's World Economic Situation and Prospects report, which showed that as growth in Africa increased from 5,1% in 2004, foreign direct investment climbed to $30bn from $18bn.

However, even though the UN presented a relatively upbeat picture of Africa's improving economies, it warned that these growth rates may still not be fast enough to meet the Millennium Development Goal of halving poverty by 2015.

"The aggregate rate of growth has remained below 7%, which the Economic Commission for Africa and World Bank estimates as the minimum" needed to meet these goals, it said.

This is despite the fact that Africa's 5,1% growth exceeded the overall 3% global growth.

But the increased levels of FDI, which typically see overseas companies buying into local operations, are an important aid to increasing growth in Africa.

There is still some scope for FDI into Africa to expand because, despite last year's 65% gain, the continent still only gets about 11% of the $278bn in FDI going to developing countries.

The UN said that efforts like the African Peer Review Mechanism "will (hopefully) eventually confirm Africa as a desirable destination for FDI".

There were a number of reasons for Africa's improved economic performance last year, including progress in macroeconomic reforms and greater political stability.

The best performers were Angola and Chad, which saw their economies grow at close to 15%, while the Côte d'Ivoire, Seychelles and Zimbabwe saw their economies contract the most.

The UN said SA's economic growth remained stable, but raised concerns about its unemployment rate, which Statistics SA said this week had grown to 26,7% in the year to September.

"The high unemployment rate remains a major challenge and was further complicated in 2005 by an ... influx of illegal and unskilled workers from neighbouring countries and a large outflow of skilled workers, constituting a 'brain drain'," it said.

African countries reliant on textile and clothing exports also took a hit last year, due partly to competition from China and low-cost Asian suppliers. "The value of sub-Saharan textile and apparel exports dropped by 11% (last year)," it said.