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."


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

You May Like

Video Americans, Tourists, Reflect on Meaning of Thanksgiving

VOA garnered opinions from several people soon after November 13 Paris attacks, which colored many of their thoughts

Video Thais Send Security Concerns Down the River

In northern Thailand, the annual tradition of constructing floating baskets to carry away the year’s bad spirits highlights the Loy Krathong festival

Video Tree Houses - A Branch of American Dream

Workshops aimed at teaching people how to build tree houses have become widely popular in America in recent years

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

By the Numbers

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Islamic State Unfazed by Losses in Iraq, Syriai
November 26, 2015 5:21 AM
Progress in the U.S.-led effort to beat Islamic State on its home turf in Iraq and Syria has led some to speculate the terror group may be growing desperate. But counterterror officials say that is not the case, and warn the recent spate of terror attacks is merely part of the group’s evolution. VOA National Security correspondent Jeff Seldin has more.

Video Islamic State Unfazed by Losses in Iraq, Syria

Progress in the U.S.-led effort to beat Islamic State on its home turf in Iraq and Syria has led some to speculate the terror group may be growing desperate. But counterterror officials say that is not the case, and warn the recent spate of terror attacks is merely part of the group’s evolution. VOA National Security correspondent Jeff Seldin has more.

Video Taiwan Looks for Role in South China Sea Dispute

The Taiwanese government is one of several that claims territory in the hotly contested South China Sea, but Taipei has long been sidelined in the dispute, overshadowed by China. Now, as the Philippines challenges Beijing’s claims in an international court at The Hague, Taipei is looking to publicly assert its claims. VOA’s Bill Ide has more from Beijing.

Video Syrian Refugees in US Express Concern for Those Left Behind

Syrian immigrants in the United States are concerned about the negative tide of public opinion and the politicians who want to block a U.S. plan to accept 10,000 Syrian refugees. Zlatica Hoke reports many Americans are fighting to dispel suspicions linking refugees to terrorists.

Video After Paris Attacks, France Steps Up Fight Against IS

The November 13 Paris attacks have drawn increased attention to Syria, where many of the suspected perpetrators are said to have received training. French President Francois Hollande is working to build a broad international coalition to defeat Islamic State in Syria and in Iraq. Zlatica Hoke reports.

Video US, Cambodian Navies Pair Up in Gulf of Thailand

The U.S. Navy has deployed one of its newest and most advanced ships to Cambodia to conduct joint training drills in the Gulf of Thailand. Riding hull-to-hull with Cambodian ships, the seamen of the USS Fort Worth are executing joint-training drills that will help build relations in Southeast Asia. David Boyle reports for VOA from Preah Sihanouk province.

Video Americans Sharpen Focus on Terrorism

Washington will be quieter than usual this week due to the Thanksgiving holiday, even as Americans across the nation register heightened concerns over possible terrorist threats. VOA’s Michael Bowman reports new polling data from ABC News and the Washington Post newspaper show an electorate increasingly focused on security issues after the deadly Islamic State attacks in Paris.

Video World Leaders Head to Paris for Climate Deal

Heads of state from nearly 80 countries are heading to Paris (November 30-December 11) to craft a global climate change agreement. The new accord will replace the Kyoto Protocol on Climate Change that expired in 2012.

Video Uncertain Future for Syrian Refugee Resettlement in Illinois

For the trickle of Syrian refugees finding new homes in the Midwest city of Chicago, the call to end resettlement in many U.S. states is adding another dimension to their long journey fleeing war. Organizations working to help them integrate say the backlash since the Paris attacks is both harming and helping their efforts to provide refugees sanctuary. VOA's Kane Farabaugh reports.

Video Creating Physical Virtual Reality With Tiny Drones

As many computer gamers know, virtual reality is a three-dimensional picture, projected inside special googles. It can fool your brain into thinking the computer world is the real world. But If you try to touch it, it’s not there. Now Canadian researchers say it may be possible to create a physical virtual reality using tiny drones. VOA’s George Putic reports.

Video New American Indian Village Takes Visitors Back in Time

There is precious little opportunity to experience what life was like in the United States before its colonization by European settlers. Now, an American Indian village built in a park outside Washington is taking visitors back in time to experience the way of life of America's indigenous people. Carol Pearson narrates this report from VOA's June Soh.

Video Even With Hometown Liberated, Yazidi Refugees Fear Return

While the northern Iraqi town of Sinjar has been liberated from Islamic State forces, it's not clear whether Yazidi residents who fled the militants will now return home. VOA’s Mahmut Bozarslan talked with Yazidis, a religious and ethnic minority, at a Turkish refugee camp in Diyarbakır. Robert Raffaele narrates his report.

Video Nairobi Tailors Make Pope Francis’ Vestments

To ensure the pope is properly attired during his visit, the Kenya Conference of Catholic Bishops asked the Dolly Craft Sewing Project in the Nairobi slum of Kangemi to make the pope's vestments, the garments he will wear during the various ceremonies. Jill Craig reports.

Video Cross-Border Terrorism Puts Europe’s Passport-Free Travel in Doubt

The fallout from the Islamic State terror attacks in Paris has put the future of Europe’s passport-free travel area, known as the "Schengen Zone," in doubt. Several of the perpetrators were known to intelligence agencies, but were not intercepted. Henry Ridgwell reports from London European ministers are to hold an emergency meeting Friday in Brussels to look at ways of improving security.

Video El Niño Brings Unexpected Fish From Mexico to California

Fish in an unexpected spectrum of sizes, shapes and colors are moving north, through El Niño's warm currents from Mexican waters to the Pacific Ocean off California’s coast. El Nino is the periodic warming of the eastern and central Pacific Ocean. As Faiza Elmasry tells us, this phenomenon thrills scientists and gives anglers the chance of a once-in-a-lifetime big catch. Faith Lapidus narrates.

Video Terrorism in Many Forms Continues to Plague Africa

While the world's attention is on Paris in the wake of Friday night's deadly attacks, terrorism from various sides remains a looming threat in many African countries. Nigerian cities have been targeted this week by attacks many believe were staged by the violent Islamist group Boko Haram. In addition, residents in many regions are forced to flee their homes as they are terrorized by armed militias. Zlatica Hoke reports.

Video Study: Underage Marriage Rate Higher for Females in Pakistan

While attitudes about the societal role of females in Pakistan are evolving, research by child advocacy group Plan International suggests that underage marriage of girls remains a particularly big issue in the country. VOA’s Ayesha Tanzeem reports how such marriages leads to further social problems.

VOA Blogs