The European Commission has stated that most African economies often relied on a narrow range of exports, making them highly vulnerable to long-term price decline and fluctuations in the world prices of such commodities.

This was contained in a report on the European Union (EU) strategy for Africa, which the commission communicated to the European Council, Parliament and its economic and social committees.

The report said from 1980 to 2000 the real price of sugar fell by 77%, cocoa by 71%, coffee by 64% and cotton by 47%. It said unlocking agricultural growth would involve both increasing output and addressing the overall vulnerability and volatility of the sector, adding that the improvement of the yields in cassava and rice production in West Africa would go a long way to enhance agricultural growth.

"In eastern African countries like Kenya, Uganda and Ethiopia, diversification of non-traditional agricultural exports is being pursued with some success, and in Kenya, horticulture has become the fastest sub-sector in agriculture.

Rapid expansion of fish and fish products exports in Senegal, Tanzania, Kenya and Uganda, when sustainably developed, contributed to a successful diversification of production."

It mentioned the scope of regional trade in Africa, in which even a landlocked country like Mali could become a major rice exporter in the West African sub-region, through enhanced trade and regional integration.

The report, which was released to the media by the Presidency of the European Union in Accra last week, disclosed that another important driver of growth is the existence of a reliable and attractive investment climate.

"Currently, the bulk of investments in Africa are domestic; around 80% against 20% foreign investment. Unsurprisingly, there is a correlation between the stability and governance performance of a country and the investment climate. Issues related to transparency and accountability are often considered particularly important by investors."

It revealed that in Uganda, which had undergone widespread economic reforms, GDP grew by around 7% per year during1993-2003, reducing the share of the population living below the poverty line from 56% in 1992 to 35% in 2005. It said in Tanzania, an improvement in investment climate is largely behind the country's fastest growth in 15 years.

"In these countries, cooperation and dialogue with the national and international business community has proven to be a crucial component in the development of a positive investment climate."

According to the report, another key component of the investment climate is regional integration; the building of larger harmonized markets, which are more attractive for investment in the productive sectors, adding that the building of regional interconnections, including the establishment of harmonized policies and enhanced trade facilitation, are crucial issues in this context.