November 14, 2007
A decade of economic growth averaging 5.4 percent has Africa's economies expanding fast enough to "put a dent" in poverty, the World Bank said in a report Wednesday. More investment is needed to sustain the development, it said, noting 60.5 percent of all foreign direct investment went to oil-exporting countries.
South Africa and Nigeria accounted for more than half of sub-Saharan Africa's gross domestic product. "Africa has learnt to trade more effectively with the rest of the world, to rely more on the private sector, and to avoid the very serious collapses in economic growth that characterized the 1970s, 1980s and even the early 1990s," said John Page, the bank's chief economist for Africa.
In 2005, the last year for which African Development Indicators 2007 quotes data, performance varied from a 2.2 percent loss in politically turbulent Zimbabwe — the only country to post a negative growth — to 30.8 percent in oil-producing Equatorial Guinea. Nine countries posted growth rates of near or above the 7 percent threshold considered necessary to reduce poverty on a sustained level. The report says many economies are growing fast enough "to put a dent on the region's high poverty rate and attract global investment."
The bank divided sub-Saharan countries into three categories.
The report credited a decade of reforms that have made inflation, budget deficits, exchange rates and foreign debt repayments more manageable. It said economies were more open to trade and private enterprise, governance was improving and there had been more assaults on corruption, which still bedevils much of the continent. Africa has become a better bet for investors, it said. Overall, investments in Africa increased from 16.8 percent of gross domestic product in 2000 to 19.5 percent of GDP in 2006.
While the continent's growth rate rivaled, and sometimes bettered, that of strong developed economies, African countries struggled to compete on a global level because of an infrastructure gap and levels of indirect costs that were two to three times as high as those in competing economies in Asia, Page said. Indirect costs of exporting from Africa — some 18 to 35 percent of total costs — were exorbitant compared to exporting from China — 8 percent of total costs, the report said. Despite such obstacles, African exports grew by over 11 percent between 2003 and 2006, according to the report.
Still, more than 40 percent of the people in sub-Saharan Africa live on less than US$1 a day, life expectancy gains had stalled in some countries and retreated in others, and poor health and poor schooling held back improvements in peoples productivity.
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