UN report on African economies calls for boost to manufacturing and exports

Africa is starting to enjoy economic growth again after years of dismal statistics, but to cut poverty and be more competitive its countries must invest more in manufacturing and improve their export performance, a major United Nations report on the continent has found.

The flagship annual report of the UN Economic Commission for Africa (ECA), released today, also recommends that African nations diversify their export base beyond primary commodities to strengthen their economies against price and climatic shocks.

The countries that have successfully promoted new forms of manufacturing exports, such as Mauritius and Tunisia, have performed best recently and, along with South Africa and Namibia, they lead the continent in economic competitiveness, the report states.

The ECA report shows that Africa was the second-fastest growing region in the developing world last year, with gross development product (GDP) up by 3.8 per cent in real terms from 2002. Higher oil prices and production, relatively good weather conditions and greater foreign investment spurred the growth.

North Africa was the healthiest region within the continent, growing by 4.8 per cent, compared to 4 per cent for central and West Africa and 2.5 per cent for East and southern Africa. The picture was not uniform: seven countries endured negative growth in 2003, mainly because of continuing conflict or political tensions. Zimbabwe's economy, for example, shrank for the fifth consecutive year.

The growth rates of most African countries are also well below the annual average of 7 per cent needed to achieve the Millennium Development Goals (MDGs) by their target date of 2015.

The report's authors say liberalizing trade did not always bring positive benefits for Africa because many countries applied the policies haphazardly and without targets. To achieve results the trade policies must be dynamic and be coupled with tax and domestic budget reforms.

Industrialized countries should also reduce - or remove altogether - their barriers to trade, such as high tariffs and export subsidies, to allow African States to compete more evenly with them.

The report concludes that "the economic recovery is fragile and in some parts of Africa has been overly dependent on favourable climate, something that cannot be counted on with certainty in the future." It also warns that ongoing conflicts and instability could jeopardize growth.

But it says there are now positive examples for African nations to see how saving and investing more, improving human capital and diversifying and strengthening the export base could achieve tangible improvements for the long-suffering economies.