Africa mustn't let growth go to its head
Ranked as the poorest continent in the world, Africa has posted strong growth rates in recent years, second only to Asia, drawing rising inward investment and giving rise to talk of its economic resilience, accompanied by much self-congratulation among officials.
“I’ll be cautioning against excessive exuberance,” Donald Kaberuka, AfDB president said at the launch of its African Economic Outlook, at the start of the bank’s annual meeting.
The AfDB’s forecast for 2012 outpaces the 3.4% growth rate posted in 2011, after the Arab spring in North Africa cut the northern region’s growth in economic output to 0.5%.
In contrast, sub-Saharan Africa grew by more than 5%, with the exception of South Africa, the continent’s most advanced economy, which expanded output by 3.1%.
The eurozone and other rich nations would take some time to resolve the issues bedevilling their economies, Kaberuka said.
“That will have implications on the growth of the continent,” he said, adding that any economic slowdown by large emerging markets like China would cause further problems.
Vital economic partner
Despite the growing economic role of large emerging markets like the Brics in Africa, Europe remained a vital economic partner for the continent, accounting for more than half of external trade, said Mthuli Ncube, AfDB chief economist.
The eurozone crisis could hit demand for Africa’s export commodities, denting growth in economies like Kenya, which also depend on Europe as a source of visitors.
“The visitors from Europe will certainly feel the pressure to travel less,” Ncube said, adding that remittances from Africans living there could also be hurt.
The AfDB said the continent’s economic growth also faced risks from political crises with the potential to spill over to neighbouring states, thus curbing overall growth.
Mali and Guinea Bissau have both experienced coups this year while Uganda, Burundi, Kenya and other nations in the horn are all militarily involved in efforts to secure peace in Somalia, after decades of conflict.
The impact of the political turmoil had already started to be noticed in development studies carried out by the bank on key indicators, Kaberuka said.
“Mali was scoring very well, now we are back to square one,” he said.
Governments on the continent also needed to do more to ensure they were creating jobs for the legions of young people who could pose a social challenge if they felt left out of the economic growth, AfDB said.
“Africa is on a good path but of course it needs to be inclusive, it needs to create jobs for it to be a better quality of economic growth,” Ncube said.
AfDB says youth unemployment in most African countries is at least 25%. – Reuters