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June 14, 2013

African Economies Growing, But Vulnerable

by Moki Edwin Kindzeka

The economic report for Africa prepared by the United Nations Economic Commission for Africa and the African Union Commission has been presented officially in Cameroon.  It predicts that African economies will continue to grow in the next couple of years but dependence on exports could open African economies to shocks.  It also complains of the wealth not being evenly distributed so that all the people benefit.  

The report states that after two decades of economic stagnation, Africa since 2000 has seen a prolonged commodity boom and sustained growth trend.

Hit by the global financial crisis and a steep rise in food and fuel prices in the latter part of the last decade, Africa quickly recovered with a growth rate of 4.6 percent in 2010.

The continent’s growth slipped in 2011 because of political unrest in North Africa, but rebounded strongly to 5 percent in 2012.

Joseph Barichaco, the economic affairs officer at the Central Africa office for the U.N. Economic Commission for Africa, said the boom in Africa economies is mainly commodity driven.  He says it is bolstered by strengthening domestic demand, rising incomes and urbanization, along with increased public spending and foreign investment.

Barichaco says the surprising thing about Africa's growth is that it is not beneficial to all of the people.

"Africa has recorded very good growth performances since a number of years.  However, this kind of growth does not really benefit all the citizens, because they are growth-driven mainly by exports of primary commodities," said Barichaco.

Widespread corruption, especially in extractive industries like oil production and mining, widens the gap between the rich and the poor.

Ndi Richard Tantoh, an official of the Extractive Industries Transparency Initiative (EITI), insists that countries should declare the revenues they receive from oil, gas, and minerals, so that citizens can hold them accountable.

"A kind of norm that will help to put some transparency around resources from this sector, could help people to know what resources they get from their petroleum and extractive industries, and probably they will be able hold their governments accountable for the amounts they received from these companies so that they can make the amounts relevant to the development of the people," said Tantoh.

The U.N. Economic Commission for Africa recommends that more effort be made to add value to the continent's abundant raw materials, through factories and refineries. The U.N.'s Joseph Barichaco says that kind of development will spare the continent from shocks.

"If you start destroying the forest, at a given time you have the problem of climate change.  If you continue depending on oil, at a given point it will be off.  If we transform our economies, we try to diversify our sources of growth, the shock will not be too much," he said.

The report concludes that only when African countries improve market access for their value-added products abroad will it avoid marginalizing itself from the world's economy and achieve inclusive growth.