Economic growth in Africa slowed to 3,2% last year from 4,3% in 2001, the United Nations Economic Commission for Africa (Uneca) estimated. South Africa’s growth by contrast accelerated to 3,0% last year from 2,1% in 2001.
The continental slowdown was a reflection of the weaker global economy, lower commodity prices, droughts in various parts of southern and eastern Africa, and the political and armed conflicts in some parts of the region, notably, Côte d’Ivoire, Zimbabwe, Madagascar, and the Central African Republic.
However, some well-managed reformers with a record of stability and good governance, like Uganda, Rwanda and Mozambique, managed to buck the trend with growth rates of 6,2%, 9,9% and 12% respectively.
The importance of fiscal discipline is clearly demonstrated by the performance of Ghana, which was hobbled by massive public expenditure hikes during electoral cycles.
The Mozambican experience demonstrated the importance of implementing pro-poor policies in order to tackle deep pockets of poverty. Although the Mozambique economy has grown by over 10% in the past few years, over 60% of the population still lives in poverty.
Using Uneca’s unique Economic Policy Stance Index, countries where second-generation reforms are entrenched, like Mauritius, have managed steady growth over long periods with lower poverty rates. These economies provide the best opportunities for the private entrepreneurs to flourish.
The experience of Egypt shows that public sector reforms need to focus on strengthening the sector’s ability to manage the economy, rather than concentrating on quantitative targets like overall wage bill and staffing levels.
Medium-term prospects for Africa depend to a great extent on external developments.
Unfortunately for Africa, the World Trade Organisation talks on farm trade reform — by far the most important issue in the Doha development round for Africa — appear to have faltered.
The American decision in May 2002 to introduce a six-year $51,7-billion Farm Bill increasing crop and dairy subsidies by 67% will not help Africa’s prospects. The Uneca warned that the subsidy would reduce global agricultural prices, making it difficult for small African – countries to compete. – I-Net Bridge