Africa’s economy to grow by 4,8pc

Harare Bureau
AFRICA’S economy will grow by 4,8 percent this year and further expand 5,3 percent next year, but its progress has been accompanied by insufficient poverty reduction, a United Nations development report has said. The 357-page report compiled by the United Nations and the Organisation for Economic Co-operation and Development is tilted Africa Economic Outlook 2013 and was recently launched in Brussels.
The report also flags continued conflict, trade fragmentation, political fragility, and the reliance of some African countries on overseas development aid as reasons for the continent’s unequal growth.

It further argues that the question is not whether Africa can industrialize by ignoring its commodities, but rather how it benefit from value addition, new services and technological capabilities.

But this may not apply to all African countries and should not be the only way African resource-rich countries industrialize.
Making most of Africa’s commodities requires appropriate development planning frameworks and effective industrial policies that are evidence based and take into account what influences linkage breadth and depth, as well as the structural and country-specific linkage drivers, the report says.

“The report shows this growth has been accompanied by insufficient poverty reduction, persisting unemployment, increased income inequalities and in some countries, deteriorating levels of health and education,” says the report. It says Africa’s strong economic performance becomes further tainted when its human development index – an indicator that combines education, life expectancy and other factors – is adjusted for inequality. The continent has disproportionately low levels of poverty reduction compared to its overall growth, less than 1 percent compared to some 2 percent for the rest of the world, said Andris Piebalgs, the European commissioner for development at the launch of the report organized by the Friends of Europe.

“Africa is changing fast,” he said. “One-quarter of the countries in the region grew at 7 percent or better… Although the proportion of poor people has been slowly falling, from 57 percent in 1990 to a projected 42 percent in 2015, absolute poverty remains a challenge. Africa will be the only region not to reach the goal of halving poverty by 2015. People don’t see the transformation of growth in their own incomes. Future growth strategies must focus on making growth more inclusive.”

Mario Pezzini, the OECD’s development director, warned that Africa’s economic transformation could lead to employment difficulties similar to those of the EU, whose soaring youth joblessness has seen widespread protests. He said the continent’s governments had to match “the expectations of young people” to avoid uprisings such as in Tunisia, which in the 10 years leading up to the 2011 revolution saw yearly growth of 5 percent with no government deficits. “Growth in itself is not enough.”

Development experts believe many African countries hold huge development potential due to their major reserves of oil, gas and other minerals and raw materials. In recent years, Angola, Nigeria and Ghana have begun exploiting vast, previously untapped reservoirs of crude oil. But the proportion of the revenue that goes into health care, infrastructure and other development projects from natural resource exploitation depends greatly on the individual country. Mr Piebalgs called for good governance and policy-making across the continent for Africans to reap the rewards of their resources.

“Africa’’s strong economic performance needs to translate into opportunities for all. That is why the responsible [exploitation] of natural resources is imperative for sustainable development,” he said.

Mr Piebalgs said recent revision to the EU’s accounting and transparency directives would help improve public confidence and that the EU would continue looking for ways to “optimise” mining legislation and taxation.

He said analysts have long become frustrated by Africa’s paradoxical “resource curse” — while resource-rich it is extremely poor — and warned of its potential for so-called “Dutch disease”, a decline of the manufacturing sector following oil and gas exploitation. “In Africa natural resources are contributing less than in other cases…Does it make sense to insist on resources”, Mr Pezzini said, referring to the potential for further polarisation of society due to the effects of Dutch disease.

“The point is not the amount of resources used but the dependence on resources. Most of the big economies are not dependent on resources. It is important to have economic diversification.”

According to the report, natural resources have accounted for about 35 percent of Africa’s economic growth since 2000. Resource-based raw materials and semi-processed goods accounted for some 80 percent of the continent’s exports in 2011, compared to 60 percent for Brazil, 40 percent for India and 14 percent for China.