Africa was catching up with the rest of the world — although it was still regarded as the poorest region — but it needed two to three decades of rapid growth to make a substantial dent in the level of poverty, South African Finance Minister Trevor Manuel said at Parliament on Friday.
Speaking at a World Bank parliamentary forum, Manuel — flanked by World Bank President Paul Wolfowitz — said economic growth had been sustained and was more rapid than in decades.
“Macroeconomic policy reforms and outcomes in terms of stability underline the improving performance. Since the turn of the century, growth has averaged 4,8% reaching 5,2% in 2006.”
Lower and more stable inflation, manageable debt levels, sound fiscal policies and improved public financial management were providing a firm foundation for this accelerating economic growth.
“Strong commodity prices, in particular oil, have also supported growth in recent years and this combined with sound macroeconomic performance has provided a framework for resilient growth in most African countries.”
African governments had done well to create fiscal space in recent years, he added. In 2006, despite rising public expenditure, many African countries recorded surpluses or moderate deficits, reflecting improved domestic revenue collection and significant current grants.
“Debt relief efforts are helping and progress is being made to reduce the burden of interest costs,” said Manuel.
But he said: “Africa needs two to three decades of rapid growth to make a substantial dent in the level of poverty. Half of Africa is today regarded as poor, while in regions such as Asia, the number of people living in poverty has halved in the past three decades. Thus, a challenge on the continent is to sustain this rapid economic growth through further acceleration of investment in physical and human capital.
“And central to that effort are three important areas of work. First, African governments need to continue to increase fiscal space for development via a range of reforms, prudent fiscal decisions and the development of government institutions affecting revenue collection and administration and effective government expenditure.”
Second, the continent’s capacity to trade “must be enhanced through a pragmatic approach to regional economic integration”.
And third, “the efforts of recent decades to improve governance needs to be strengthened, accelerated, and made irrevocable, in large part be ensuring that we make major strides forward to improve global governance. As economic integration proceeds and deepens and the issues associated with globalisation reach further into our social, political, and economic lives, we need a system of global governance that is representative and effective”. ‒ I-Net Bridge