Washington, DC — In a promising assessment of Africa's economic health, a new report says economic activity rose five percent during 2005 and is projected to reach 6 percent in 2006 and 2007. The report was issued this week by the African Development Bank (ADB) and the Organization for Economic Cooperation and Development (OECD).
"Africa has recorded good economic performance overall," said Celine Kauffmann, OECD economist and a team leader on the preparation of the study, which is titled "The 2005/06 African Economic Outlook" and profiles 30 countries. ADB membership includes 53 countries in Africa and 25 countries from Asia, Europe and North and South America. The OECD includes 30 developed democracies, including the United States and all members of the European Union.
Kauffman noted that the continent has also made significant strides in democratic gains with the "decline of political instability." She said some countries that were fragile are strengthening, and that peaceful political transitions are holding sway, though tensions still tend to flare around election time.
Among signs that the continent is stirring, the report noted "the combination of better fiscal discipline, rising commodity prices, debt reduction and low inflation has led to a more favorable outlook than it has been for many years."
Natural resource and raw material exports are still the mainstay of Africa’s contribution to the global economy. Not surprising, oil is leading the growth. Oil exporting countries including Angola, Equatorial Guinea and Nigeria edged out the others, "though trends for oil importers also looked good." Higher coffee prices helped both Ethiopia and Uganda.
Many countries are making concerted efforts to diversify and add value to their commodities, especially in food processing. There is also a rising output of metals and minerals for export as more countries de-emphasize aid in favor of trade and investment. And with the boom in commodities, investments are on the rise, said Antoine van Agtmael, President and CEO of Emerging Market Investors Corporation, who participated in a breakfast presentation of the report in Washington, DC.
The emphasis on trade and investment appears to present OECD countries with more competition for Africa’s resources unlike what happened in the past. New players including China and India along with some Islamic countries are finding their feet and driving a south-south flow in investment and trade. Van Agtmael envisions a not so distant future where OECD countries’ role in the continent will be trumped by emerging countries.
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The Outlook highlights internal and external reasons for setbacks in development and poverty eradication. There’s the adverse consequence of the recent spikes in global oil prices. Oil importing countries are expected to have deficits that will squeeze resources from sustainable development and anti-poverty programs. Furthermore, the lack of transportation infrastructure remains a serious barrier to social progress.
Many Africans are still stranded without options for moving around. The result of limited road access means that "the rural poor spend quite considerable and wholly unproductive time." The consequence on personal time used in running daily errands like "collecting water, obtaining fuel, getting to school, clinic, or the market" leave people with little time for other necessary social engagements. And where there is transportation, safety is a big concern.
Then there’s the shortfall in donor commitments, which will retard continental efforts towards the Millennium Development Goals (MDG). Donors fell 50 percent short of commitments on development aid in 2005, though debt cancellations helped in some countries.
The report notes a renewed donor interest in financing infrastructure projects, especially in the transportation sector and says this could benefit countries that have a transportation development plan.
For all its upbeat projections, the Africa Economic Outlook offers only a broad view of economic prospects on the continent. It does not predict the possibility of broad-based growth or how individual African lives will benefit.
