Economic growth rates in sub-Saharan Africa have over the past 10 years started to catch up with the rest of the developing world, the World Bank said on Wednesday in a survey reflecting cautious optimism in the markets about the continent’s business prospects.
The report, Africa Development Indicators 2007, concluded that growth in the decade from 1995 contrasted strikingly with the “collapses” of the years between 1975 and 1985 and the “stagnations” of the next 10 years.
“For the first time in three decades African economies are growing with the rest of the world,” the report said. “Average growth in the sub-Saharan economies was 5.4 per cent in 2005 and 2006. The consensus projection is 5.3 per cent for 2007 and 5.4 per cent for 2008.”
The findings echo the conclusions of a recent report by the International Monetary Fund, which said that sub-Saharan Africa was benefiting from the strongest economic growth and lowest inflation in more than 30 years.
Businesspeople have seized on such statistics to pronounce a new era in Africa. The authors of the World Bank report were more cautious, but expressed tentative optimism that an important change was occurring in Africa.
John Page, the World Bank’s chief economist for Africa, told the Financial Times he was “prudently optimistic” that this was not a “premature Africa turning point”, a reference to several false dawns in the past 30 years. He highlighted that while oil and mineral exporters were driving the increase in growth rates 18 “non-mineral” economies, accounting for 36 per cent of sub-Saharan Africa’s population were also doing well.
Further grounds for hope, he said, stemmed from the fact that the countries in this second group had prospered for a range of different reasons, and that it appeared that “geology and geography” were no longer so crucial in determining a country’s future.
The report, however, cautioned there was also a third tier of countries where growth remained stagnant. More than 40 per cent of the population of sub-Saharan Africa lived on less than $1 a day and life expectancy had stalled and retreated in a number of countries, the report found.
While Africa’s export base remains concentrated and rates of private investment are still low, Mr Page argues the key change in the region has been a marked improvement in macro-economic management, and governance.
“Inflation, budget deficits, exchange rates and foreign debt payments are more manageable,” the report said. “Economies are more open to trade and private enterprise. Governance is also on the mend with more democracies and more assaults on corruption.”
The overall growth rate was primed by the rise in the continent’s oil revenues from countries such as Equatorial Guinea where gross domestic product rose by 30.8 per cent between 1995 and 2005 and Angola, which recorded an 8 per cent rise in the same period.
But the Central African Republic, Cote d’Ivoire, Eritrea and Zimbabwe had suffered “large declines in governance indicators” the report found. Also in southern Africa in particular Aids had had a devastating impact.
Mr Page said China’s expanding investment in the continent had clearly fuelled the growth rate, but that it was impossible to quantify the effect of its involvement.
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