Africa’s economic growth continues upward trend

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Africa’s economic growth, estimated at 5.7 percent in 2007, is expected to continue at a slightly higher level of about 5.9 % over the next two years, according to a new report launched Friday.

According to the report, African Economic Outlook (AEO) 2008, last year was the fourth consecutive year for the continent to maintain growth above 5 percent.

“Prospects are, therefore, favourable for the continent overall,” the report said, noting, however, that at the level of individual countries, there were marked differences between the oil-exporters and the others.

The former group continues to benefit from the boom in oil exports and persistently high prices, though production in some countries is either already falling or set to do so.

For this group, the challenge remains to invest in the future through improved infrastructure and services including education, training and health.

Regarding the oil importers, the report pointed out that once again the outlook was somewhat less favourable, although many of them, particularly exporters of minerals, were also doing well.

Nonetheless, most of them must either contain or finance expanding current account deficits that have been heavily impacted by increases in the international prices of food and fuel.

According to the report, both groups of countries need to make greater efforts to contain inflation, which has begun to tick upwards.

Within each group of countries the largest factor explaining different performances appears to be the quality of governance.

Elsewhere, the report finds the economy to be at risk from unresolved or new crises caused by the breakdown in governance structures or continuing competition for scarce resources.

“There have been positive moves by international organisations, including the African Union and the African Development Bank, to help bring an end to conflict, but its resolution will also require the goodwill of African leaders in government and in opposition.

“The continent’s political leaders will need to show more maturity and more forbearance if we are to see an end to political disruption, armed conflict and displaced populations. This remains Africa’s greatest challenge,” said the report, jointly produced by the African Development Bank, the Organisation for Economic Cooperation and Development (OECD) and the UN Economic Commission for Africa (ECA).

According to a senior economist at ECA, Leonce Ndikumana, factors that give hope for faster growth in Africa in 2008 include high global demand for primary commodities — both oil and non-oil commodities.

Referring to the continent’s good performance over the past four years, Ndikumana explained that one very important factor was macroeconomic stability.

On account of that, he said the general outlook was promising. “Economic reforms of the 1990s and early 2000s are starting to pay off in terms of lower inflation, and many countries are now registering more stable budget balances and more stable current account balances,” he said.

While political stabilisation is expected to consolidate in African countries that were riddled with conflict in the past, Ndikumana added: “We expect higher capital flows for foreign direct investment in Africa and debt relief as promised by international development partners.”

The 2008 AEO sheds its spotlight on technical and vocational skills development (TVSD) as a way of promoting economic growth.

Despite the increasing recognition that higher technical and vocational skills are crucial in enhancing competitiveness and contributing to social inclusion, decent employment, and poverty reduction, the report showed that technical and vocational systems in Africa remained influenced by multiple constraints that limit their expansion and impact.

It also found that fewer than 5 percent of secondary school students were enrolled in technical and vocational programmes, which is very low compared to other regions, and that their share in educational budgets was only about 2 to 6 per cent.

Few countries have training policies which emphasise skills development in the informal sector, the largest employer and provider of training in Africa.

The report demonstrated that opportunities offered by the private-enterprise sector, including that part of what is generally called “informal”, held the most promise for the training of Africa’s youth and the next generation of entrepreneurs likely to provide employment and prosperity.

At the same time, many countries are reforming their training systems to adapt them better to the needs of both the formal and the informal labour markets, and are introducing or strengthening partnerships between school-based training and apprenticeships in both the formal and informal sectors. Panapress .

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