To spur the growth necessary to achieve the Millennium Development Goals (MDGs) – a set of targets to slash a host of social ills, including extreme poverty, by 2015 – African countries must pursue more ‘pro-active’ policies to develop of a wider range of goods, according to a United Nations report released today.
More than half of all African countries recorded improvements in overall real GDP growth last year. On average, the continent’s economies have maintained a “growth momentum” over the past several years, growing at 5.2 per cent in 2004, 5.3 per cent in 2005, 5.7 per cent in 2006 and a projected 5.8 per cent this year.
In spite of this growth, the report, entitled “Economic Report on Africa 2007,” said that African countries are heavily dependent on primary commodities, which are a common feature of production and exports throughout the continent, making the countries extremely vulnerable to external shocks.
“The time has come for Africa to embark on the more systematic effort at diversifying its economy,” Eloho Otobo, a UN economist, told reporters at the report’s launch. “This can only come about by promoting pro-active growth policies.”
The annual report, jointly produced by the UN Economic Commission for Africa and the Commission of the African Union (AU), said that while other developing regions have increased their share in global trade, Africa’s share has declined, even as global trade liberalization has progressed.
“One-size-fits-all” macroeconomic models rooted in stabilization and reform policies, the study noted, are partially to blame for the continent’s sluggish pace in achieving high and sustainable growth. “Besides sustaining macroeconomic stability, African countries needs to tailor their fiscal and monetary policies to promoting domestic investment, employment generation, and growth,” said the report.
The report calls for increased efforts to stimulate private investment through increasing access to cheaper credit to hasten diversification. It also stresses the importance of industrialization to deepen horizontal diversification in a range of goods.
Another key recommendation is for African countries to strengthen their institutions. Given that conflict undercuts industrialization, “it is important that countries invest in peace-building and peace-promoting institutions that can proactively deal with threats of conflict flare-up or resurgence,” the report stated.