Africa’s economic growth highest in eight years but must be sustained – IMF report
Economic growth in sub-Saharan African (SSA) jumped last year to an eight-year high of 5 per cent and average inflation fell to a 25-year low, the International Monetary Fund (IMF) reports, but it cautioned that increased growth rates have to be sustained if the greater part of the continent is to meet the United Nations goal of halving extreme poverty by 2015.
The “Africa Regional Economic Outlook” says real gross domestic product (GDP) in 2004 rose by 2.7 per cent and was even encouraging in oil-importing countries, while average inflation fell to 9.1 per cent and 28 countries had inflation rates in single digits, compared to just 10 countries a decade ago.
“Nonetheless, growth remains below the level required for SSA countries to reach the Millennium Development Goal (MDG) of halving income poverty by 2015 and is lower than in other emerging market and developing country regions,” it says.
Pointing to the risks from unresolved hostilities, natural disasters and uncertainties in foreign currency exchange, particular commodity prices and oil markets, the report calls on Governments to accelerate growth by improving the private investment climate.
“Sixteen of the 20 countries in the world with the most difficult business conditions are in SSA,” it says.
Well-targeted and efficient public investment can attract private investment and induce productivity improvements, it adds. On the issue of domestic infrastructure, for instance, it says shipping a car from Japan to Côte d’Ivoire, costs $1,500, while shipping the same car from Ethiopia to Côte d’Ivoire costs $5,000.
Africa’s regional trade arrangements (RTAs) have not promoted trade and investment as well as expected, it says. “Trade within Africa remains low and, in terms of overall trade and foreign direct investment inflows, the region is falling further behind the rest of the world,” the report says.
Meanwhile, the IMF said a group of its African governors met IMF Managing Director Rodrigo Rato on Friday, the day before the two-day spring meetings of the World Bank and IMF, to raise “their many concerns and interests.”
They said although conditions put on Governments for getting loans had been somewhat streamlined, “there is a tendency to impose politically sensitive and legally protracted prior actions, which makes it difficult to keep programmes on track.”
On the question of the African Regional Technical Assistance Centres (AFRITAC), they suggested de-linking the evaluation of the existing two centres in Tanzania and in Mali and the establishing of new ones.
The African governors also said the Fund’s image in Africa has been declining because people did not see poverty being reduced after they implemented policies to make them eligible for the Poverty Reduction and Growth Facility, the IMF’s low-interest lending arm for low-income countries, and the Heavily Indebted Poor Country (HIPC) Initiative, which the World Bank says accelerates and deepens the delivery of debt relief.