News / Africa

African Economies Expected to Continue to Grow

The Africa Development Bank Community Agriculture Infrastructure Improvement Project reduced transport costs and helped farmers earn higher incomes form agricultural commodities. (Photo: AfDB)
The Africa Development Bank Community Agriculture Infrastructure Improvement Project reduced transport costs and helped farmers earn higher incomes form agricultural commodities. (Photo: AfDB)
William Eagle

Good news for Africa, say the experts. Growth is healthy and broad-based, fueled in part by infrastructure spending, domestic demand and trade.  

"A lot of people think growth in Africa is only driven by mineral wealth or oil-exporting countries, but we find that even countries that are not resource rich are still growing.…," said Angela Lusigi, an economist and policy advisor for the Regional Bureau for Africa in the United Nations Development Program. "This is mainly because of their agricultural sector and growth in services [including tourism] and a little in manufacturing."

Trade

The report found that Africa’s main foreign commercial partner is Europe, which accounted for nearly 40 percent of African trade, while 25 percent was with Asia and about 12 percent with North America.

This year’s African Economic Outlook notes that African countries traded $81 million worth of goods among themselves in 2012, and that such trade is growing faster than the continent’s exports to the rest of the world. In the decade ending in 2010, inter-African trade experienced over 13 percent annual growth. 

Much of that trade is in light manufacturing of such goods as textiles, clothing, leather, building material, farm implements and wood products.

Lusigi says there’s also strong domestic demand for manufactured goods, including television sets, phones and other mobile technology.  She says many of these products can be made in Africa.  

Regional performance

According to the report, two regions – East and West Africa -- are leading the economic expansion, with over 6 percent growth. 

Ethiopia, with a nearly 10 percent growth rate, leads the pack in East Africa. Tanzania, Uganda, and Rwanda are predicted to achieve rates of between 6.5 percent and 7.5 percent -- thanks in large part to agriculture, industry and services. Kenya, because of the financial sector and communications technology, is expected to reach nearly 6 percent.

Economists expect vigorous growth in West Africa as well, with a rate of over 7 percent over the next two years. While oil is an important source of revenue, other sectors are also showing promise. Nigeria is supported by agriculture, trade and information, and communications technology. Manufacturing is important to Ghana, and Sierra Leone is the fastest growing country in the region because of its iron ore exports, agriculture and construction.

In Southern Africa, Angola, Mozambique and Zambia have grown between 5 percent and 7 percent. With labor unrest and weak foreign export markets, South African growth is expected to be a bit slower, reaching nearly 3 percent over the next two years.

Reasons behind growth

The report attributes growth in part to lower inflation, particularly in energy and food prices, and to prudent macroeconomic policies by African nations. They include efforts to reduce deficits by cutting spending, or limiting growth, and improving tax collection. 

The report notes the country with the most impressive record of fiscal consolidation is Zambia, which has nearly balanced a budget that just two years ago had a deficit of 11 percent of GDP. Other countries, including Egypt, Mozambique, Angola, and Cameroon, have met the economic downturn in recent years with greater spending and higher deficits. The funds that had been saved for emergencies helped provide a social safety net, including funds for health and education services.

The report urges these countries to restore the funds that provided a buffer against recession, and also to create policies that ensure that everyone benefits from growth.

"The report says the underlying macroeconomic framework is in place, " said Luigi.  A lot of countries are working to balance their budgets,  they do not yet have unstainable debt, they are managing their exchange rate, and right now a lot of countries are putting their focus in borrowing to investing in infrastructure, and this is happening not just in oil-exporting countries but even those not considered to be resource rich.

"There’s been a lot of change where a lot of countries have stable macro and fiscal policies,  and the next step is how to translate this stable framework into inclusive growth that touches the lives of people – because we are seeing a lot of inequality.  We have to see how growth can impact all people, not just one group."

External Inflows

The report says external inflows of cash to Africa have remained stable or are growing.

Official development assistance (ODA) – estimated to be about $55 billion US -- remains an important life line for poor countries that lack sufficient foreign direct investment. 

Remittances from Africans abroad have remained healthy. They have rebounded since the economic downturn in 2009 and are expected to reach about $67 billion US this year. Remittances are now the largest single external flow of funds to the continent and an important contributor to education and health care expenses.

The report quotes World Bank figures showing countries with the largest increases in diaspora funds are Sudan, Uganda, Burkina Faso, and Niger. It notes that funding from the diaspora continues to play an import contributor to GDP in the Gambia, Lethoso, Liberia and Senegal. 

Following close behind revenues from remittances is foreign direct investment, currently at nearly $40 billion. The report predicts that with sustained interest by investors in manufacturing and services, FDI could be more than $54 billion over the next three years.  

Henri-Bernard Solignac Lecompte,  the head of the Africa Desk at the OECD Development Center in Paris,  said " We also see a rise in greenfield FDI in some light manufacturing, some agro-processing and market-seeking investments of people who are putting together [market-seeking investments].  So, you have [retailers like the South African firm] Massmart investing in Eastern Africa,  signally that investors are increasingly recognizing Africa as not just a repository of commodities, but also as a market. 

The report says a decade of strong growth has reduced poverty in sub-Saharan Africa – with the number of people living on less than $1.25 per day, falling from nearly 60 percent to just below 50 percent.

Continued growth, it says, depends upon the ability of countries to participate in so-called global value chains – as South Africa has done with manufacturing car parts. It also depends on creating an environment that attracts investors and a work force with the skills that contribute to global manufacturing. 

Listen to report on African Economic Outlook
Listen to report on African Economic Outlooki
|| 0:00:00
...    
🔇
X

You May Like

Multimedia Ferguson Grand Jury Reaches Decision

Missouri town, many Americans on edge over whether jurors will indict white police officer in August shooting death of unarmed black teen More

Corruption Fighters Want More From World’s Strongest Nations

Anti-corruption activists say final communique fell short of expectations and failed to fully address systemic problems More

Philippines Leery of Development on Reef Reclamation in S. China Sea

Chinese land reclamation projects in area have been ongoing for years, but new satellite imagery reportedly shows China’s massive construction project More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Ukraine Marks Anniversary of Deadly 1930s Faminei
X
Daniel Schearf
November 23, 2014 4:32 PM
During a commemoration for millions who died of starvation in Ukraine in the early 1930s, President Petro Poroshenko lashed out at Soviet-era totalitarianism for causing the deaths and accused today’s Russian-backed rebels in the east of using similar tactics. VOA’s Daniel Shearf reports from Kyiv.
Video

Video Ukraine Marks Anniversary of Deadly 1930s Famine

During a commemoration for millions who died of starvation in Ukraine in the early 1930s, President Petro Poroshenko lashed out at Soviet-era totalitarianism for causing the deaths and accused today’s Russian-backed rebels in the east of using similar tactics. VOA’s Daniel Shearf reports from Kyiv.
Video

Video Hong Kong Protests at a Crossroads

New public opinion polls in Hong Kong indicate declining support for pro-democracy demonstrations after weeks of street protests. VOA’s Bill Ide in Guangzhou and Pros Laput in Hong Kong spoke with protesters and observers about whether demonstrators have been too aggressive in pushing for change.
Video

Video Law Enforcement, Activists in Ferguson Agree to Keep Peace

Authorities in Ferguson, Missouri, say they have agreed with protest leaders to maintain peace when a grand jury reaches its decision on whether to indict a white police officer in the shooting death of a black teenager. Ferguson, a suburb of St. Louis, has been the scene of intermittent violence since the August 9 shooting intensified long-simmering antagonism between the police and the African-American community. VOA's Zlatica Hoke reports.
Video

Video US Immigration Relief Imminent for Mixed-Status Families

Tens of thousands of undocumented immigrants in the Washington, D.C., area may benefit from a controversial presidential order announced this week. It's not a path to citizenship, as some activists hoped. But it will allow more immigrants who arrived as children or who have citizen children, to avoid deportation and work legally. VOA's Victoria Macchi talks with one young man who benefited from an earlier presidential order, and whose parents may now benefit after years of living in fear.
Video

Video New Skateboard Defies Gravity

A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the United States are benefiting from gas prices below $3 a gallon. But as VOA’s Kane Farabaugh reports, the decreasing price of petroleum has a downside for the hydraulic fracturing industry in the United States.
Video

Video Tensions Build on Korean Peninsula Amid Military Drills

It has been another tense week on the Korean peninsula as Pyongyang threatened to again test nuclear weapons while the U.S. and South Korean forces held joint military exercises in a show of force. VOA’s Brian Padden reports from the Kunsan Air Base in South Korea.
Video

Video Mama Sarah Obama Honored at UN Women’s Entrepreneurship Day

President Barack Obama's step-grandmother is in the United States to raise money to build a $12 million school and hospital center in Kogelo, Kenya, the birthplace of the president's father, Barack Obama, Sr. She was honored for her decades of work to aid poor Kenyans at a Women's Entrepreneurship Day at the United Nations.
Video

Video Gay Evangelicals Argue That Bible Does Not Condemn Homosexuality

More than 30 U.S. states now recognize same-sex marriages, and an increasing number of mainline American churches are blessing them. But evangelical church members- which account for around 30 percent of the U.S. adult population - believe the Bible unequivocally condemns homosexuality. VOA's Jerome Socolovsky reports that gay, lesbian, bisexual and transgender evangelicals are coming out. Backed by a prominent evangelical scholar, they argue that the traditional reading of the bible is wrong.
Video

Video Ebola Economic Toll Stirs W. Africa Food Security Concerns

The World Bank said Wednesday that it expects the economic impact of the Ebola outbreak on the sub-Saharan economy to cost somewhere betweenf $3 billion to $4 billion - well below a previously-outlined worst-case scenario of $32 billion. Some economists, however, paint a gloomier picture - warning that the disruption to regional markets and trading is considerable. Henry Ridgwell reports from London.
Video

Video Chaos, Abuse Defy Solution in Libya

The political and security crisis in Libya is deepening, with competing governments and, according to Amnesty International, widespread human rights violations committed with impunity. VOA’s Al Pessin reports from London.
Video

Video US Hosts Record 866,000 Foreign Students

Close to 900,000 international students are studying at American universities and colleges, more than ever before. About half of them come from Asia, mostly China. The United States hosts more foreign students than any other country in the world, and its foreign student population is steadily growing. Zlatica Hoke reports.

All About America

AppleAndroid