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Africa records highest growth in two decades

Africa has experienced its highest economic growth in the last two decades, with Gross Domestic Product (GDP) growth rate, which averaged about 5% annually in the past six years, rising to 5.5% in 2006, and is expected to reach 6% this year, according to a new report by the African Development Bank (AfDB) and the Organisation for Economic Cooperation and Development (OECD).

“The African Economic Outlook 2006/2007,” released here Sunday ahead of the AfDB Group Annual meetings, cited strong external demand for oil and non-oil minerals, increased investment in these sectors, and good weather conditions for agriculture, as the main factors behind the growth performance.

The continuation of sound macroeconomic policies in most of the countries has also increased business confidence leading to a pickup in private investment generally, according to the report.

“Yet, the continent still needs to accelerate and sustain growth to the level of 7 to 8 percent to be able to achieve the Millennium Development Goal (MDG) of halving the proportion of people living in extreme poverty by 2015,” observed Louis Kasekende, Chief Economist of the African Development Bank.

A breakdown showed that growth has been robust in Africa’s four largest economies, (South Africa, Algeria, Nigeria, and Egypt), termed the SANE, which account for half of the continent’s GDP and nearly a third of its population. The SANE countries averaged 5.1% growth rate.

In the remaining African countries, economic growth rates were even higher at an average of 6%, with net oil exporters across the board enjoying high growth, averaging 5.9%, while net oil importers recorded an average growth rate of 5.2% during the period under review.

Going by sub-regions, the average growth rate for Southern Africa is projected to increase from 5.4% in 2006 to 6.1% in 2007.

Angola’s growth rate is expected to nearly double to 27% in 2007 (largely due to rising oil sector activity in new oil fields, and to a lesser extent by increased diamond mining).

In South Africa growth – at 5%, its highest since the end of Apartheid in 1994 – has been broad-based and mainly driven by domestic demand.

The projections for South Africa indicate that GDP growth should remain robust at about 4.5% in both 2007 and 2008, marking an important break from the relatively slow growth rates experienced over the past ten years.

In Zimbabwe, economic activity continued to decline in 2006, contracting by about 5%.

Real GDP growth in North African countries is expected to remain high at 6%, in both 2007 and 2008 on account of the exceptionally high growth rates estimated for Mauritania and Sudan mainly due to increases in oil and gas production.

Strong growth was also recorded in Egypt (6.8%), while in Morocco, the recovery of agricultural output with the ending of the drought led to a GDP growth of 7.3% in 2006.

Economic growth in the countries of West Africa is projected to accelerate from 4.8% in 2006 to 5.9% in 2007.

In Nigeria, GDP growth of 5.3% in 2006 is projected to accelerate to 7% in 2007 on account of recent increase in oil prices, increased oil production as stability is restored to the Niger Delta area, and non-oil sectors of agriculture and services continued their rapid growth.

Sierra Leone’s and Ghana’s performance continued to be relatively strong in 2006 (7.4% and 6.1%, respectively).

In the West African Economic and Monetary Union (UEMOA)), economic performance in 2006 was affected by the political situation in Côte d’Ivoire, reductions in the output of cereals and groundnuts, as well as industrial output.

Average GDP growth in Central Africa is projected to increase from 3.9% in 2006 to 5.2% in 2007 and an acceleration of growth to 6.3% in 2008.

Positive growth trends are observed for the Central African Republic and Rwanda, while growth is projected to remain broadly at 2006 levels for the Democratic Republic of Congo (6.2%) due mainly to donor-supported reconstruction efforts.

Economic growth in East Africa averaged 5.1% in 2006, and is projected to accelerate to 5.8% and 6% in 2007 and 2008, respectively, with Ethiopia, Tanzania and Uganda as the fastest growing countries in the sub-region. The growth prospects of Mauritius and Madagascar continue to be negatively affected by the increased competition from Asian textile producers and the end of the Multi-Fibre Agreement.

The Report also includes a focus on a topic of high relevance for policy makers in African countries such as a thematic analysis of issues on “Access to Drinking Water and Sanitation.” One of the important targets of the Millennium Development Goals (MDGs) is Access to Drinking Water and Sanitation, and the report examines this issue, making it clear that progress remains inadequate in relation to needs, noting that the likelihood of reaching the MDG access targets for drinking water and sanitation is low. Some important exceptions were also noted. “Mauritius and Tunisia present a positive picture, having advanced well beyond the MDG goals for drinking water and sanitation. The situation in Tanzania, where access to sanitation is estimated at about 90 percent also demonstrates that progress is possible in Africa,” said Kasekende.

According to Louka Katseli, Director, Paris-based OECD Development Center: “ensuring adequate financing remains a challenge for improving water and sanitation in Africa.”

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