16 October 2013

Africa: New Report On Africa Shows Economic Growth and Natural Resource Potential

A new report, launched Sept. 26 in Addis Ababa, Ethiopia, indicates that African economic growth has been resilient amidst global economic downturns and regional crises.

The 2013 African Economic Outlook Report (AEO), sponsored by the African Development Bank (AfDB) and the Organization for Economic Cooperation and Development (OECD), examines Africa's current growth and highlights room for development in the realm of natural resources.

With a priority theme entitled "Structural Transformation and Natural Resources," the Report indicates that Africa's economic growth was 4.2 percent in 2012 and is projected to accelerate to 4.5 percent in 2013 and further to 5.2 percent in 2014. The AEO recommends that in light of continent-wide economic growth, harnessing Africa's strong natural resource sector is of greater importance now more than ever in order to catalyze structural transformation.

"The general intended audience for the AEO 2013 Report is academics, civil society leaders, and governments as a basis to help them make informed decisions," explains Steve Kayizzi-Mugerwa, Director of Development Research at AfDB, to MediaGlobal News.

"Governments like the fact that it is a tool that has been generated by Africans in collaboration with others instead of relying solely on multilateral organizations."

According to the United Nations Economic Commission for Africa (UNECA), "the main sources of dynamism" are expected to be the expansion of agriculture and a rise in oil production as well as mining.

The AEO's country case studies demonstrate variability in the stock of natural resources across the continent, but also indicate that each nation's available resources provides a unique starting point for "structural transformation" through linkages with other sectors.

Henri-Bernard Solignac-Lecomte, Head of the Europe, Middle East, and Africa Unit of OECD, analyzed the case study findings as they relate to this year's priority theme.

"We always come to the example of Botswana that has been able to manage very wisely their immense wealth of its resources. However, it is very difficult to see where to invest the revenues," Solignac-Lecomte tells MediaGlobal News.

"In terms of Least Developed Countries, for example, you can look at the recent results of Burkina Faso and Mali. There is a case in saying that the mining industry has created new opportunities in economic development."

In West Africa, the OECD and AfDB foresee rapid regional growth with rates of 6.7 percent and 7.4 percent in 2013 and 2014 respectively, taking into account the importance of continuing the growth seen in the oil and mining sectors. In West African LDCs such as Benin, Cape Verde, and Guinea-Bissau, growth will remain relatively subdued, depending on these nation's abilities to better allocate resources and drive growth in the "demand side" through increased consumption and investment.

Similar growth projects are seen for the majority of East Africa, including LDCs such as Tanzania, Ethiopia, and Uganda. In Central Africa, the AEO projects above-average growth in Chad and the Democratic Republic of Congo in light of increased mining and construction projects, but remains reserved due to needed progress in political stability and security.

According to the UN Development Programme (UNDP), African nations must extract natural resource wealth in order to accelerate the pace of the economic growth. The AEO, in addition to outlining country case studies, recommends certain initiatives for African nations to spearhead this structural transformation.

Firstly, African countries should allow for the right conditions for such a transformation to occur, including "infrastructure, education, and the creation of larger and more competitive markets."

The Report also recommends more sound practices in land management, tax and incentive mechanisms, and diversification of resources.

Thirdly, government leaders and financial investors must ensure that a "fair share" of proceeds from natural resource extraction and utilization contributes to society. Lastly, the report recommends that African nations must achieve this economic diversification actively, through developments in power, transportation, and communication channels.

Kayizzi-Mugerwa explains to MediaGlobal News that with most African economic updates, there is always mixed reaction.

"It is 54 governments, so obviously some would not be happy with a few aspects. The aspects of the reports are huge - it does not mean they do not agree with the main conclusions of the Report," Kayizzi-Mugerwa continues.

"They do respond, some negatively depending on the circumstances. Sometimes they don't have figures or sometimes their own figures are biased. You always receive some sort of controversy. Generally, I think the intended reception has been good."

Similar to last year's eleventh annual AEO, the report also indicated general continent-wide trends in human development, gender rights, and good governance.

"It is indivisible that some would not like the updates," Solignac-Lecomte tells MediaGlobal News. "If you were only giving good news, the report would not be helpful."

Additionally, as with previous editions, the AEO 2013 provides largely medium-term projections on economic growth and selected macroeconomic indicators, covering 53 countries -excluding only Somalia, which did not provide statistics.

The AfDB underscores, however, that challenges remain, with political crises in Mali and elsewhere putting a "scar on the continent's growth prospects."

"There is already a lot being done by various governments and also collectively in the framework of the African Union. In the past couple of years, I have seen a lot of initiatives taken," OECD's Solignac-Lecomte tells MediaGlobal News.

"Now, we have the frameworks, initiatives and tools, but it just depends on how effectively they are going to be implemented. It depends on the initiative that governments take on making the most of their resources."

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