African Economic Outlook 2010

The annual African Economic Outlook (AEO) is published jointly by the African Development Bank, the OECD Development Centre and the United Nations Economic Commission for Africa, with financial support from the European Commission and the Committee of African, Caribbean and Pacific Group of States. The 2010 Outlook covers 50 African countries, up from 47 last year.

The AEO presents a promising outlook for the continent with average growth rebounding to 4.5 per cent in 2010 and 5.2% in 2011 after the global financial and economic crisis had induced a marked slowdown on the continent. Both the fiscal balance and the current account are expected to improve after their deterioration in 2009. After its drop from 10.5% in 2008 to 5.9% in 2009, (median) inflation is projected to further decline to 5.4% in 2010 and to 5.2% in 2011.

The recovery will also be uneven across the continent. While all African regions and almost all African countries are expected to achieve higher growth, the recession will leave its mark. Southern Africa, which was hardest hit in 2009, will recover more slowly than other regions. East Africa, which best weathered the global crisis, is projected to again achieve the highest average growth in 2010/2011.

The theme of the 2010 AEO is on “public resource mobilisation and aid.” Many African countries are still heavily dependent on aid and in the past, donors have devoted little attention to public resource mobilisation. But if a larger share of aid were targeted at this goal, countries would become less dependent on aid in the long run, to the benefit of recipients and donors. The report identifies in particular urban property taxation as an instrument that can be more easily implemented with the aid of development partners. This type of taxation is progressive and can be scaled up with Africa’s rapid pace of urbanization and the corresponding need for financing urban infrastructure.