Steady growth puts Africa on course to dent poverty: World Bank

from Earthtimes

Johannesburg - A decade of healthy growth in Africa has put the continent on track to tackle its high poverty levels, the World Bank said Wednesday releasing its 2007 Africa Development Indicators (ADI). The ADI report is based on over 1,000 indicators covering the economy, human and private-sector development, governance, environment and aid.

"After years of stop-and-start results many African economies appear to be growing at the fast and steady rates needed to put a dent on the region's high poverty rate and attract global investment," the report found.

Growth in Africa has averaged 5.4 per cent over the past 10 years, a rate on par with the rest of the world described as "encouraging" by the World Bank.

Africa's ability to sustain and diversify the sources of that growth would determine its capacity to meet United Nations Millennium Development Goals, including halving extreme poverty by 2015, the bank's vice president for the Africa region, Obiageli Ezekwesili, said.

Here, the ADI identified lagging infrastructure as an "important emerging constraint to future growth" and continued volatility in sub-Saharan Africa as having a dampening effect on investment.

Poor infrastructure is partly responsible for the high business costs incurred by African companies - up to three times those of their Indian and Chinese counterparts, the World Bank noted.

The ADI valued at 22 billion dollars the infrastructure gap in Africa, where connectivity by road, rail and air in and between most countries is grossly underdeveloped.

Growth rates vary significantly across African countries. Oil-rich Equatorial Guinea posted growth of 30.8 per cent in 2005, while Zimbabwe's beleaguered economy actually shrunk by 2.2 per cent.

Africa's economy also emerged from the report as still being heavily skewed towards commodities.

Seven oil-producing countries account for over half of all exports and around 60 per cent of foreign direct investment into Africa.

Countries with reserves of other minerals, such as gold, platinum and copper have also benefited from record or near-record prices for these metals, the report said.

In a more long-term development, some 18 countries described as "resource poor" had managed to produce sustained growth rates of over 4 per cent over the past decade - as good if not better than some oil producers - by diversifying their economies.

Kenya's booming cut-flower business - the country's second export after tea - was cited as an example of successful diversification, which the World Bank sees as key to avoiding "growth collapses."

"Africa has learned to trade more effectively with the rest of the world, to rely more on the private sector and to avoid the very serious collapses in economic growth that characterized the 1970s, 1980s and even the early 1990s," John Page, the World Bank's chief economist for Africa, said.

Apart from improving infrastructure, other factors the ADI cited as key to boosting and maintaining growth were improving the climate for investment, encouraging innovation and building up governing institutions.