12 December 2013

African Economies Remain Resilient in 2013

Johannesburg — The African continent maintained relatively strong economic growth in 2013 despite the inevitable effects of the doldrums in Europe and the United States.

Economic growth in sub-Saharan Africa, in particular, has rebounded quite robustly since 2009, when growth was significantly reduced. The International Monetary Fund (IMF) predicted the region would grow by an average of 5 percent this year and 6 percent next year.

"What we would see then is the return of the region to the very high levels of growth before the global crisis," Antoinette Sayeh, director of the IMF's Africa Department, told Xinhua in a recent interview.

Scott Firsing, director of Pretoria-based North American International School (NAIS), said Africa's "old and new" resource-rich countries, in particular, led the continent's economic growth.

"The old" includes South Africa, Algeria, Angola, Equatorial Guinea, Gabon and Nigeria, while Ghana, Kenya and Tanzania are from "the new."

Major contributors to Africa's economic growth are a relatively stable political situation, growing international trade, especially trade with emerging markets, and a trend toward economic diversification.

"China has become, for example, the most important trading partner for sub-Sahara Africa and it has helped through the last few years" by providing a robust market for African exports, Sayeh said, adding "that was not Europe."

Mohamed Barrada, professor of economics at Nouakchott University in Mauritania, said "China is the driving force for Africa's growth."

The countries worst affected by the global crisis in the past few years are the middle income countries that were more fully integrated with the global economy and international financial market. Those countries have seen a shaper reduction in their growth rate.

South Africa, for example, is among those not growing as robustly as the rest of the continent.

"So we don't want to give the sense that Africa is immune from the global development," Sayeh said. "On the contrary, Africa is very much influenced by what happened in emerging markets and the global economy as a whole."

Referring to Africa's future economic development, Barrada said the continent had its own advantages, including a young and better trained labor force, a growing middle class and rich resources.

The growing middle class would be potential consumers and an expanding market, and the demography dividend "can also be a major contributor to growth if managed properly," Sayeh said.

To achieve sustainable development, more attention needs to be paid to domestic sectors and intra-African trade. The dominant agriculture sector can help reduce poverty and lead to growth in other fields like services, and wholesale and retail trade.

"Good agricultural output is important because of how crucial the sector is to so many African economies," Firsing said.

"There has to be domestic internal growth triggers, which are typically set off by a growing middle class, which we see taking place in Africa," he said.

On the other hand, Africa needs to improve policy frameworks in order to attract both foreign and local investment and large capital flows, Firsing said.

He said policies keeping currency rates at a low level were important to help export-oriented sectors compete on the global stage.

It was difficult to predict which areas would see rapid growth in Africa, as this depended on global markets, including the markets in China, the United States and Europe, he said.

"In the long term, the goal for African political and economic leaders is to create more reliable industries and employment," Firsing said.

As for the challenges facing Africa, Sayeh considered translating economic growth into improved standards of living as the biggest one for most African countries.

"One of the challenges the region has to face now is to continue to sustain the growth performance in an uncertain world as global uncertainty may mitigate or reduce some growth if African countries don't respond appropriately," Sayeh said.

In Firsing's view, inadequate infrastructure, lack of skills, and poor education are among the major obstacles hampering Africa's economic growth, so he called for developing and modernizing the infrastructure which "remains critical to Africa's future economic growth."

Echoing his words, Barrada said "among many obstacles, poor infrastructure is the most obvious, particularly transportation."

This had led to the lack of a regional market, which was important for promoting trade among African countries, he said.

Moreover, Africa needs assistance to improve its education system and manufacturing sectors, according to Firsing.

Ads by Google

Copyright © 2013 Forum on China-Africa Cooperation. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.