Africa’s economy rebounds strongly, but poverty remain elusive, says World Bank Africa Pulse (Photo credit: Africa Renewal) |
But lessening poverty remains significantly
elusive
Economic growth in Sub-Saharan Africa is likely to reach more than 5
per cent on average in 2013-2015 as a result of high commodity prices worldwide
and strong consumer spending on the continent, the World Bank said on April 15.
This will ensure that the region remains amongst the fastest growing
in the world, according to the World Bank’s latest Africa’s Pulse, a
twice-yearly analysis of the issues shaping Africa’s economic prospects.
In 2012, about a quarter of African countries grew at 7 per cent or
higher and a number of African countries, notably Sierra Leone, Niger, Cote
d’Ivoire, Liberia, Ethiopia, Burkina Faso and Rwanda, are among the fastest
growing in the world.
The new World Bank report forecasts that medium-term growth prospects
remain strong and will be supported by a gradually improving world economy,
consistently high commodity prices, and more investment in regional
infrastructure, trade, and business growth.
From Washington, USA, the World Bank’s Vice President called on the
need for faster progress in areas such as electricity and food in the
vulnerable areas of The Sahel and the Horn of Africa.
Mr Makhtar Diop said that significantly more energy and
agricultural productivity were needed to raise the quality of life for Africans
throughout the continent and reduce poverty significantly.
“African countries will need to bring more electricity, nutritious
food, jobs and opportunity to families and communities across the continent in
order to better their lives, end extreme poverty, and promote shared
prosperity,” he said. “Without more electricity and higher agricultural
productivity, Africa’s development future cannot prosper. The good news is that
governments in Africa are intent on changing this.”
Diop also urged African governments and their development partners to
upgrade the continent’s statistical capacity so that citizens could better
measure and monitor their development progress and analyze the reasons for its
success and failure, especially in resource-rich countries and fragile states,
where data gathering and analysis remained weak.
New mineral discoveries drive growth
Africa’s Pulse says that recent discoveries of oil, natural gas,
copper, and other strategic minerals, and the expansion of several mines or the
building of new ones in Mozambique, Niger, Sierra Leone, and Zambia, together
with better political and economic governance, were sustaining solid economic
growth across the continent.
Looking forward, it is expected that by 2020, only 4 or 5 countries in
the region will not be involved in mineral exploitation of some kind, such is
Africa’s abundance of natural resources.
The World Bank says that given the considerable amounts of new mineral
revenues coming on stream across the region, resource-rich African countries
will consciously need to invest these new earnings in better health, education,
and jobs, and less poverty for their people in order to maximize their national
development prospects.
Consumer spending and private investment up
Consumer spending, which accounts for more than 60 per cent of
Africa’s GDP, remained strong in 2012.
This trend was driven by declining inflation, which fell from 9.5
percent in January 2012 to 7.6 percent in December 2012; improved access to
credit, for example in Angola, Ghana, Mozambique, South Africa, and Zambia;
lower interest rates–for every interest rate hike there were three cuts; and a
rebound in agricultural incomes, thanks to more favorable weather conditions in
countries such as Guinea, Mauritania and Niger, which all experienced better
rains compared with the 2010-2011 crop year; and the steady remittance inflows,
which are estimated at $31 billion in 2012 and 2011.
Increased investment flows are supporting the region’s growth
performance. In 2012, for example, net private capital flows to the region
increased by 3.3 percent to a record $54.5 billion; and foreign direct investment
inflows to the region increased by 5.5 percent in 2012 to $37.7 billion.
Africa’s Pulse notes that exports are also driving the continent’s
growth and that the traditional destination of these goods over the last decade
is changing as well.
Since 2000, the overall growth of Sub-Saharan exports to emerging
markets, including those of China, Brazil and India, and to countries in the
region has surpassed that to developed markets. Total exports to Brazil, India
and China were larger than to the EU market in 2011.
Africa’s impressive growth has not reduced poverty enough
After more than a decade of strong economic growth, the World Bank
says that Africa has been able to cut poverty on the continent, but not by
enough.
The World Bank’s Chief Economist for Africa, and lead author of the
new report, Shanta Devarajan said “While the broad picture emerging from
the data is that Africa’s economies have been expanding robustly and that
poverty is coming down, the aggregate hides a great deal of diversity in
performance, even among Africa’s faster growers.”
Devarajan adds that during the second half of the 2000s, Ethiopia and
Rwanda saw their economies expand at 8-10 percent, between 5 and 8 percent per
capita, which resulted in a 1.3 to 1.7 percentage point yearly fall in their
national poverty rates. In contrast, poverty reduction in some other countries
has lagged far behind growth.
Future offers prospects of more growth, much less poverty, and shared
prosperity
Africa’s Pulse suggests that a number of emerging trends on the
continent could help to transform its current state of development over the
coming years. These include the promise of large revenues from mineral
exploitation, rising incomes created by a dramatic expansion of agricultural
productivity, the large-scale migration of people from the countryside into
Africa’s towns and cities, and a demographic dividend potentially created by
Africa’s fast-growing population of young people.
“If properly harnessed to unleash their full potential, these trends
hold the promise of more growth, much less poverty, and accelerating shared
prosperity for African countries in the foreseeable future,” says Punam
Chuhan-Pole, a co-author of the Africa’s Pulse and a Lead Economist in the
World Bank’s Africa region.
SOURCE: The World Bank. Slight
modification: The North Bank Evening Standard.
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