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African incomes to drop for first time in 15 years

Per capita income in Africa will fall in 2009 for the first time in 15 years, the head of the African Development Bank warned on Tuesday, in the latest grim assessment for the world’s poorest continent.

“Our economic outlook for Africa forecasts that in 2009, and for the first time since 1994, per capita growth for the continent will be negative as a whole,” Donald Kaberuka said in a round-table on
the effects of the global financial crisis for the continent.

The downturn would affect “economies wealthy in petrol and minerals as well as countries dependent on their agricultural exports,” he added, without giving any breakdown of figures.

Revised forecasts for May show a continent-wide growth rate for 2009 of 2,3%, down from February forecasts of 2,8% growth, according to a joint AfDB and Organisation for Economic Cooperation and Development report.

The figure for 2008 was 5,7%.

Kaberuka, who was speaking ahead of the annual assemblies of the pan-African bank in the Senegalese capital Dakar on Wednesday and Thursday, said he was still optimistic about the continent’s economic future.

However, his optimism for Africa’s longer-term prospects was dampened by a separate AfDB report also published on Tuesday that warned that “the worst is perhaps to come”.

“The most worrying point is that with a deepening of recession, the crisis in growth could become a crisis in development,” it said.

The OECD warned on Monday that the global economic crisis has heightened the risk that “tensions could explode” in Africa.

In assessments compiled by the OECD, AfDB and UN Economic Commission for Africa, experts identified “signs of increasing political tension that cannot be ignored”.

Stressing that “optimistic” estimates were being used, this report forecast a moderate 4,5% recovery in gross domestic product in 2010.

“The situation remains tense in some countries and new tensions could explode in the coming months due to the worsening of economic conditions due to the global crisis,” it added.

The authors highlighted widespread fall-out from the crisis already seen in mass lay-offs in the key mining sector.

“Although several governments managed the situation in 2008 by implementing support measures and containing social discontent, the
situation is likely to be more challenging in 2009, in a context of reduced public resources.”

As delegates readied for two days of tough talking, Kaberuka was at pains to point out regional fluctuations.

“I remain resolutely optimistic. There are regions, like in East Africa, where the growth rate will remain over 5% in spite of the crisis,” the chairperson told the round-table.

Referring to the 15-nation Economic Community of West African States, he added that “within Ecowas, the growth rate is around 3,5%. That shows to what point African economies are really resilient.

“I feel that next year, we’re going to see a recovery. That’s why economic reforms must not be abandoned.

“The solutions lie in meeting the crisis with short-term means, but remaining focused on the constraints for African growth in the longer term.”

Kaberuka said the way forward was to stress infrastructure development and regional integration, with strong institutions to oversee such processes. – AFP

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