BuaNews (Tshwane)
16 November 2007
Addis Ababa — The 2nd African Economic Conference will provide a platform for African academics and policymakers to exchange views on economic development problems and challenges facing Africa.
The conference opened on Thursday under the theme: "Opportunities and Challenges of Development for Africa in the Global Arena."
Ethiopian Minister of State for Finance and Economic Development Mekonen Manyazewal said according to the Economic Commission for Africa's (ECA) 2007 Africa Economic Report the continent's growth in real GDP in recent years had averaged about five percent.
This is a strong performance compared to the past, he said, but the sustainability of growth in Africa is still an unfinished business, particularly due to the continually changing external environment testing African countries' capacity to accelerate and sustain growth.
ECA Executive Secretary Abdoulie Janneh said Africa's economy had shown an encouraging improvement over the past few years.
This kind of conference, which creates an opportunity for economists and policy makers to discuss on the issue, is essential to sustain the growth, he added.
The conference is aimed at promoting knowledge management as an important component of good policy design and implementation, to foster dialogue and the exchange of ideas among economists and African policymakers as well as encouraging and enhancing research on economic issues related to the development of African countries.
Some 65 papers on various issues will be presented at the conference co-organised by the African Development Bank and the ECA.
According to the World Bank's Africa Development Indicators 2007 released Wednesday, many African economies appear to be on a path of faster and steadier economic growth.
Speaking at the annual release of the continent's development indicators, World Bank Country Director Ritva Reinikka said African economies' performance over 1995-2005 reverses the collapses over 1975-1985 and the stagnations witnesses over 1985-1995.
"Average growth in the Sub-Saharan economies was 5.4 percent in 2005 and 2006. The consensus projection is 5.3 percent for 2007 and 5.4 percent for 2008.
"Leading the way are the oil and mineral exporters thanks to high prices, but [also] 18 non-mineral economies, with more than a third of the Sub-Saharan African people, have also been doing well," said Ms Reinikka.
Chief Economist at the World Bank for the Africa Region, John Page, in his presentation of the indicators explained that African economies could be divided into three groups.
The groups can be divided as follows: the slow growth economies such as Zambia, Guinea and Zimbabwe; the diversified economies with Gross Domestic Product (GDP) growth of about 4 percent a year such as Mozambique, Rwanda, Uganda and Ghana; and finally the oil exporting economies such as Equatorial Guinea, Chad, Angola, Sudan and Nigeria.
The theme of the development report questions whether Africa's steady growth could be attributed to good policies or luck.
Mr Page said in his opinion it seemed to be a bit of both, quoting Einstein: "Fortune favours the prepared mind."
He said that if a country, or collectively a continent, has the correct policies in place, that it is more likely to experience stronger economic growth.
One of the worrying factors that Mr Page highlighted in the report was the lack of export diversification in many of the African economies.
"Many of these countries' exports that were important in 1975 are still important today. Despite the spread of growth in exports across the continent, the lack of diversification is still a worrying factor," he said.
With regard to the trend of GDP across the continent over the last decade, Mr Page said the trend for Africa had never really managed to top 2 percent.
Whilst the actual GDP growth of many African countries has in many cases experienced real growth, the volatility of Africa's actual growth remains a problem, he said.
Over the short to medium term much has happened in Africa, explained Mr Page.
"There have been several episodes of growth acceleration, but acceleration was usually followed by growth collapses.
"Thus the very slow long run growth cycles in which growth and then collapse preceded each other in an almost predictable pattern."
However, economists have, since 2005, noticed that the frequency between what he referred to as "the good and bad times" has started to shift in favour of the good times for the continent.
Explaining the term 'good times', Mr Page said it is when savings and investment are higher, trade is substantially greater and policies and institutions including government function effectively.
He highlighted that despite Africa managing to grow in tandem with many of the world's developed economies, the fact that the continent was a natural resource hub for the rest of the world made it increasingly vulnerable to outside shocks and changes in commodity prices.
Crucial to the acceleration of growth on the continent is increasing private investment and Mr Page highlighted that improving the investment climate, bolstering infrastructure, spurring innovation, and building institutional capacity are therefore crucial. - BuaNews-NNN
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