Posted by: APO | 16 May 2008

African Economic Outlook (AEO) 2008 / Press briefing containing the main points

 

African Economic Outlook (AEO) 2008

Media Briefing

According to the AEO 2008, the rate of real GDP growth was well above the long term African trend for the fifth year in a row at 5.7%. The report predicts that GDP growth is set to strengthen to 6% in 2008 and remain bouyant in 2009. The growth is, however, not improving welfare in many African countries, partly due to the rise in food prices. AEO country speacialist Federica Marzo describes the recent inflation of food prices where staples such as rice have risen in price by “up to 100% due to the rising prices of transport, fuel and fertilizers, among other factors” as a “potential crisis”. In fact it has already led to social unrest in Burkina Faso, Egypt, Niger and Senegal where the urban poor have been disproportionately affected by the issue. However, economic growth is becoming more broad-based with most countries expected to achieve a rate of GDP growth above 5.0%.

 

Sound macroeconomic policies in most African countries have increased business confidence leading to a general pick-up in private investment, while recent initiatives such as the Multilateral Debt Relief Initiative have created more room for increased public investment in many countries.

 

“Yet, the continent still needs to accelerate and sustain growth to the rate of 7 to 8 per cent to be able to achieve the Millennium Development Goal (MDG) of halving the proportion of people living in extreme poverty by 2015,” says Dr. Louis Kasekende, Chief AfDB Economist.

 

The average growth rate for Southern Africa is projected at 5.2 per cent in 2008 and 2009 down from 7 per cent in 2007. While Botswana is expected to grow slightly above 4.0 per cent and Malawi by about 5.0 per cent in 2008 and 2009, the projections for South Africa indicate that GDP growth will slow to 4.0 per cent in both years due to insufficient electricity production growth. Angola’s growth rate is also projected to slow considerably from 19.8 per cent in 2007 to 11.5 per cent in 2008 and to 5.0 per cent in 2009 due to an oil production slow-down. On the other hand, growth is expected to remain strong in Madagascar and Mauritius.

 

Real GDP growth in North African countries is expected to strengthen from 5.3 per cent in 2007 to 6.2 per cent, in both 2008 and 2009, sustained by high prices for oil and gas, and strong growth in tourism. Growth is projected to remain strong in Egypt, Libya, and Tunisia, with moderate expansion expected in Algeria, Mauritania and Morocco.

 

Economic growth in West African countries is projected to accelerate from 3.5 per cent in 2007 to 5.6 per cent in 2008 and to remain high at 5.7 in 2009. Nigeria’s growth rate is expected to accelerate due to high oil prices. Increased production is expected to propel growth in the entire sub-region. Growth in the West African Economic and Monetary Union (WAEMU) countries continues to be affected by the slow recovery from the political crisis in Côte d’Ivoire. However, expansion in agricultural production in several of the countries will sustain high growth. Growth in Ghana and Cape Verde will remain strong. Similarly, post-conflict spending on infrastructure and the recovery of agricultural production will boost growth in Liberia and Sierra Leone.

 

Average GDP growth in Central Africa is projected to increase from 4.1 per cent in 2007 to 5.1 per cent in 2008, but slow to only 4.4 per cent in 2009. Positive growth trends are, however, observed for the Democratic Republic of Congo due, mainly, to donor- supported reconstruction efforts. The projections for Cameroon and the Republic of Congo also show some strengthening of growth for 2008 and 2009.

 

Economic growth in East Africa, which averaged 8.0 per cent in 2007, is projected to remain high at 7.3 and 7.9 per cent in 2008 and 2009, respectively. Ethiopia, Sudan, Tanzania and Uganda, which were the fastest growing countries in the sub-region in 2007, are projected to maintain or increase their high growth rates in 2008 and 2009. On the other hand, Kenya which exhibited strong growth in 2007 is projected to slow down sharply in 2008 and 2009 due to the negative impact of the recent political violence on tourism and agricultural production.

 

While wiser management of oil windfall gains has occurred, more needs to be done in diversification and the development of non-oil sectors. The economies of African oil-producing countries are less diversified compared to the rest of the continent, but especially to top-ranking oil-importing countries like Tunisia, Morocco, Tanzania, South Africa and Senegal. In fact, the seven least diversified countries are oil exporters. Diversification remains fundamental to reducing dependency on commodities, increasing the export base and creating the premises for sustainable, broad-based growth.

 

The AEO includes a yearly focus on an issue of high relevance to policy makers in African countries. For the 2007/8 edition this is Technical Skills Development and Vocational Training in Africa. The Outlook concludes that educational and vocational training in Africa remain influenced by numerous constraints that limit their impact. Principal author Lucia Wegner highlighted the problem at the Paris launch of the Report: “60,000 pupils do not manage to find places in secondary education due to the lack of places and of qualified teachers”.

 

The report, however, notes some important positive developments in Ethiopia, the Gambia, Ghana, Mauritius, Mozambique, Rwanda and South Africa. In order to improve the situation across the continent, ECA’s Mahamat Abdoulahi advised that “both governments and the private sector will need to respond to improve education, as well as train and upgrade skills of the workforce.”

 

Kiichiro Fukasaku, Counsellor and Head of Regional Desks, OECD Development Centre,
underscored: “Technological Change and Globalization are increasing the demand for a more educated and skilled workforce and that Africa needs skills training to enhance competitiveness.”

 

The 2008 AEO was published by the African Development Bank, the OECD Development Centre and the United Nations Economic Commission for Africa, with support from the European Commisssion, on 13 May 2008.


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