Africa Records Highest Growth in Two Decades
Africa’s economic growth in 2006 was well above the long-term trend for the fourth consecutive year, and is expected to accelerate in 2007, says AfDB-OECD Report
Shanghai, 13 May 2007 – Africa has experienced its highest economic growth in the last two decades, with the GDP growth rate, which averaged about 5 percent annually in the past six years, rising to 5.5 percent in 2006, and is expected to reach 6 percent in 2007, according to a new major report by the African Development Bank and the OECD released in Shanghai on Sunday.
The African Economic Outlook 2006/2007 notes that the main factors supporting this growth performance were strong external demand for oil and non-oil minerals, increased investment in these sectors, and good weather conditions for agriculture. The continuation of sound macroeconomic policies in most of the countries has also increased business confidence leading to a pickup in private investment generally.
"Yet, the continent still needs to accelerate and sustain growth to the level of 7 to 8 percent to be able to achieve the Millennium Development Goal (MDG) of halving the proportion of people living in extreme poverty by 2015" says Dr. Louis Kasekende, Chief Economist of the African Development Bank.
Growth has been robust in Africa’s four largest economies, (South Africa, Algeria, Nigeria, and Egypt), termed the SANE, which account for half of the continent’s GDP and nearly a third of its population. The SANE countries averaged 5.1 percent growth rate. In the remaining African countries, economic growth rates were even higher at an average of 6 percent. Net oil exporters across the board enjoyed high growth, averaging 5.9 percent, while net oil importers recorded an average growth rate of 5.2 percent.
Going by sub-regions, the average growth rate for Southern Africa is projected to increase from 5.4 per cent in 2006 to 6.1 per cent in 2007. Angola’s growth rate is expected to nearly double to 27 per cent in 2007 (largely due to rising oil sector activity in new oil fields, and to a lesser extent by increased diamond mining). In South Africa growth — at 5 percent, its highest since the end of Apartheid — has been broad-based and mainly driven by domestic demand. The projections for South Africa indicate that GDP growth should remain robust at about 4.5 percent in both 2007 and 2008, marking an important break from the relatively slow growth rates experienced over the past ten years. In Zimbabwe, economic activity continued to decline in 2006, contracting by about 5 percent.
Real GDP growth in North African countries is expected to remain high at.6 per cent, in both 2007 and 2008 on account of the exceptionally high growth rates estimated for Mauritania and Sudan mainly due to increases in oil and gas production. Strong growth was also recorded in Egypt (6.8 percent). In Morocco, the recovery of agricultural output with the ending of the drought led to a GDP growth of 7.3 percent in 2006.
Economic growth in the countries of West Africa is projected to accelerate from 4.8 percent in 2006 to 5.9 percent in 2007. In Nigeria, GDP growth of 5.3 percent in 2006 is projected to accelerate to 7 percent in 2007 on account of recent increase in oil prices, increased oil production as stability is restored to the Niger Delta area, and non-oil sectors of agriculture and services continued their rapid growth. Sierra Leone’s and Ghana’s performance continued to be relatively strong in 2006 (7.4 per cent and 6.1 per cent, respectively). In the West African Economic and Monetary Union (WAEMU), economic performance in 2006 were affected by the political situation in Côte d’Ivoire, reductions in the output of cereals and groundnuts, as well as industrial output.
Average GDP growth in Central Africa is projected to increase from 3.9 percent in 2006 to 5.2 per cent in 2007 and an acceleration of growth to 6.3 per cent in 2008. Positive growth trends are, however, observed for Central African Republic and Rwanda Growth is projected to remain broadly at 2006 levels for the Democratic Republic of Congo (6.2 per cent) due mainly to donor¬ supported reconstruction efforts.
Economic growth in East Africa averaged 5.1 per cent in 2006, and is projected to accelerate to 5.8 and 6 per cent in 2007 and 2008, respectively. Ethiopia, Tanzania, and Uganda remain the fastest growing countries in the sub-region. The growth prospects of Mauritius and Madagascar continue to be negatively affected by the increased competition from Asian textile producers and the end of the Multi¬-Fibre Agreement.
The Outlook also includes a focus on a topic of high relevance for policy makers in African countries. The Outlook 2006/2007 includes the thematic analysis of issues on ‘Access to Drinking Water and Sanitation’. One of the important targets of the MDG is Access to Drinking Water and Sanitation. The report examines this theme and makes clear that progress remains inadequate in relation to needs and, as with other targets, the likelihood of reaching the MDG access targets for drinking water and sanitation is low.
Some important exceptions are also noted. "Mauritius and Tunisia present a positive picture, having advanced well beyond the MDG goals for drinking water and sanitation. The situation in Tanzania, where access to sanitation is estimated at about 90 percent also demonstrates that progress is possible in Africa," says Mr. Kasekende.
Dr. Katseli, Director, Paris-based OECD Development Center notes "that ensuring adequate financing remains a challenge for improving water and sanitation in Africa."