The 2019 Annual Meetings of the African Development Bank Group will be held from 11-14 June 2019, in Malabo, Republic of Equatorial Guinea. Find out more
AfDB: Championing inclusive growth across Africa. A blog by the former Chief Economist and Vice-President
For the past decade, Africa has had strong growth. A new economic momentum has been created. The continent weathered the financial crisis and has bounced back. But headline economic growth is not enough. Deliberate policies to reduce inequalities and promote inclusion are now needed more than ever before. It is time to focus on what people want: decent work, a living wage, access to basic service, more democracy and accountable governments. Africa and its people aim to be a pole of growth in the decades ahead. Read more
Africa’s integration into the global economy is relatively low compared with other developing regions. This could be an impediment to the region’s continued and sustainable economic growth over the long run. As much as trade encourages competitiveness, enhanced competitiveness can in turn increase the level of trade with the rest of the world by raising the standards of product quality and facilitating access to new and larger markets. Moreover, better competitiveness may also attract foreign direct investment and other forms of capital flows seeking enhanced returns and greater diversification.
Following a decade of average increases in real GDP exceeding 5%, African economies are expected to sustain high levels of economic growth over the next decade boosted in part by domestic demand due to a steady increase in private and public investment1. In turn, rising real incomes will lead to higher consumer spending which is projected to almost double in the next decade. A growth of 4.5% in per capita GDP compounded annually through 2015 would result in an increase of more than 35% in consumer spending in Africa2. Although the expansion in consumer spending will be led by South Africa and Nigeria, the two largest economies in Africa, which account for 51 percent of Sub Saharan Africa expenditure, emerging markets across the continent are also making their mark.
In spite of good macroeconomic performance over the past decade, inflation in four leading East African economies – Ethiopia, Kenya, Tanzania and Uganda – has risen sharply. The inflation rate in Ethiopia was nearly 40 percent in October 2011 before leveling off to 32 percent in January 2012. Although inflation in Uganda decelerated to 25.7 percent in January 2012 from a high of 30.4 percent in October 2011, it is still far higher than expected, compared to the 3 percent rate at the end of 2010.
Trend and composition: Foreign capital inflows have recovered in post-crisis period, reaching a high of US$72.1 billion in 2010, but still below the pre-crisis peak of US$79.0 billion. Recent trends in capital inflows have principally been driven by foreign portfolio investment (FPI), which peaked at US$22 billion since the crisis (Figure 1). In the meantime, foreign direct investment (FDI) in Africa, which has largely been directed towards extractive sectors, has continued on the downward path.