Africa is one of the world’s fastest growing regions and should remain so in the coming years. But its progress is hampered by an ever-widening income gap, development experts said at the Brussels launch of the 'African Economic Outlook 2013' report.
The 357-page report – whose authors include the United Nations and the Organisation for Economic Co-operation and Development – predicts that Africa's economy will grow by 4.8% in 2013.
Emerging from the uprisings in North Africa and the effect of the EU debt crisis, the authors predict a further acceleration to 5.3% in 2014.
But the report also flags continued conflict, trade fragmentation, political fragility, and the reliance of some African countries on overseas development aid as reasons for the continent’s unequal growth.
“The report shows this growth has been accompanied by insufficient poverty reduction, persisting unemployment, increased income inequalities and in some countries, deteriorating levels of health and education,” the authors said in a statement.
Africa’s strong economic performance becomes further tainted when its human development index – an indicator that combines education, life expectancy and other factors – is adjusted for inequality. The continent also has disproportionately low levels of poverty reduction compared to its overall growth, less than 1% compared to some 2% for the rest of the world, said Andris Piebalgs, the European commissioner for development.
“Africa is changing fast,” Piebalgs said yesterday (25 June) at the report's Brussels launch, organised by the Friends of Europe think tank. “One-quarter of the countries in the region grew at 7% or better… Although the proportion of poor people has been slowly falling, from 57% in 1990 to a projected 42% in 2015, absolute poverty remains a challenge. Africa will be the only region not to reach the goal of halving poverty by 2015.”
“People don’t see the transformation of growth in their own incomes,” he said. “Future growth strategies must focus on making growth more inclusive.”
Mario Pezzini, the OECD’s development director, warned that Africa’s economic transformation could lead to employment difficulties similar to those of the EU, whose soaring youth joblessness has seen widespread protests. He said the continent's governments had to match “the expectations of young people” to avoid uprisings such as in Tunisia, which in the 10 years leading up to the 2011 revolution saw yearly growth of 5% with no government deficits. “Growth in itself is not enough,” he said.
Development experts believe many African countries hold huge development potential due to their major reserves of oil, gas and other minerals and raw materials. In recent years, Angola, Nigeria and Ghana have begun exploiting vast, previously untapped reservoirs of crude oil.
But the proportion of the revenue that goes into health care, infrastructure and other development projects from natural resource exploitation depends greatly on the individual country. Piebalgs called for good governance and policy-making across the continent for Africans to reap the rewards of their resources.
“Africa's strong economic performance needs to translate into opportunities for all. That is why the responsible [exploitation] of natural resources is imperative for sustainable development,” he said.
Piebalgs said recent revisions to the EU’s accounting and transparency directives would help improve public confidence and that the EU would continue looking for ways to “optimise” mining legislation and taxation.
Analysts long have been frustrated by Africa’s paradoxical “resource curse” – while resource-rich it is extremely poor – and warned of its potential for so-called “Dutch disease”, a decline of the manufacturing sector following oil and gas exploitation.
“In Africa natural resources are contributing less than in other cases … Does it make sense to insist on resources”, Pezzini said, referring to the potential for further polarisation of society due to the effects of Dutch disease.
“The point is not the amount of resources used but the dependence on resources. Most of the big economies are not dependent on resources. It is important to have economic diversification.”
According to the report, natural resources have accounted for about 35% of Africa’s economic growth since 2000. Resource-based raw materials and semi-processed goods accounted for some 80% of the continent’s exports in 2011, compared to 60% for Brazil, 40% for India and 14% for China.