ECA Press Release No. 3/2001
AFRICA NEEDS A NEW DEVELOPMENT AGENDA TO CONSOLIDATE RECENT GROWTH GAINS
Algiers, 07 May 2001 (ECA) Africa needs a new development agenda to consolidate recent gains in economic growth and to accelerate poverty reduction. This is the central message of 'Transforming Africa's Economies', the latest flagship report in an annual series published by the Economic Commission for Africa (ECA) on Africa's economic performance and prospects.
The report charts the impressive economic progress made by African countries in the last half of the decade with average growth rates of 4 % per year well above the growth rate of 0.5 % in the first half of the decade. For the first time in many years, several countries sustained double-digit growth. Botswana, Mauritius, Morocco, South Africa and Tunisia are well on the way to transforming their economies into robust engines for growth and poverty reduction. Fourteen other countries including Benin, Burkina Faso and Uganda and Ghana _ have established the prerequisites for sustainable growth and have good prospects for take-off in the coming years.
Export growth nearly doubled over the decade with the demand for African manufactured goods increasing in Europe and the United States. The business climate became more conducive to domestic and foreign investment.
Private entrepreneurs in many countries responded strongly to the improvement in business climate. For instance, liberalization and privatization in the telecommunications sector has resulted in explosive growth in wireless telephony across the continent.
However, the good news masks some disturbing trends. Poverty is increasing on the continent. The number of people living on less than $1 a day increased from 217 million in 1987 to 310 million in 1999. It is clear that at current trends Africa will not meet the international development goals of halving the absolute number of poor people by 2015, reducing infant and maternal mortality and ensuring universal primary education. Furthermore, Africa is the continent with the greatest disparity in incomes between rich and poor.
The recent economic recovery is fragile. Domestic savings rates remain well below the levels required to grow at the target rate 7 %. Natural disasters such as the floods in Mozambique, external shocks such as the recent increase in oil prices and cross border spillovers of civil conflicts such as in Sierra Leone have undermined the recent recovery.
It is against this backdrop that ECA is proposing a new pro-poor development agenda, based on the need for a structural transformation of Africa's economies. The agenda entails a renewed emphasis on modern agriculture as a basis for resource based industrialization; improving the quality of human capital through investments in education; harnessing the benefits of information and communication technologies and narrowing the digital divide to in commerce and health; and tackling diseases that deepen poverty including HIV/AIDS, tuberculosis and malaria.
Stressing that only high-quality governments can deliver essential social services to those who need it most, the report places good governance at the centre of Africa's efforts to reduce poverty. It argues that high-quality governments are better able to design and implement effective policies, are more transparent, manage national finances soundly and provide citizens with peace, security and the economic freedoms for markets to flourish.
The report is based on an innovative set of indices developed by ECA that track progress towards sustainable growth and poverty reduction. The Economic Policy Stance Index measures macroeconomic performance using both quantitative and qualitative data. The Economic Sustainability Index measures the ability of African countries to record good economic performance over a long period of time.
The Economic Sustainability index shows that most African economies have not yet developed the capacity to produce outcomes that are consistent with long-term structural change. Of the 47 countries ranked, 24 score below what is regarded as sustainable. The top five countries according to this index are Egypt, Mauritius, Seychelles, South Africa and Tunisia.
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However, according to Patrick Asea, who led the team that prepared the report, there are grounds for optimism.
Since 1987 several African countries have recorded improvements in Economic Sustainability Index. Of the 20 countries that registered positive changes in the index, 18 saw increases of more than 10%. At the regional level West Africa scored the highest increase of 12.3 %, followed by North Africa (7.8%) and East Africa (4.3%).
However, Southern Africa suffered a decline of 6.9 % and Central Africa a decline of 2.8%.
Mozambique ranks first on the Economic Policy Stance Index, bolstered by strong performance across the board.
Uganda emerges second, having made significant progress towards liberalization and sound macroeconomic performance in recent years. South Africa, Gabon and Namibia round out the top five. Sierra Leone, Central African Republic, Kenya and Sao Tome have the lowest scores mostly because of civil conflict and poor economic governance.
'Transforming Africa's Economies' is released on the eve of the Ninth Session of the point Conference of African Ministers of Finance and Ministers of Planning and Economic Development, organized by ECA and hosted by the Government of the People's Democratic Republic of Algeria. The conference takes place from 8 _ 10 May at the Palais des Nations, Algiers, under the theme "Compact for African Recovery: Operationalizing the Millennium Partnership for the African Recovery Programme".
Discussions will focus on the Millennium Plan (MAP) -- an initiative proposed last year by Presidents Abdelaziz Bouteflika of Algeria, Olusegun Obasanjo of Nigeria, and Thabo Mbeki of South Africa. With the MAP emerging as the agreed African initiative for development, bringing together all partnership initiatives within a single framework, the Compact is designed to provide technical and analytical support to the MAP. The MAP and Compact both focus on selected key priority areas intended to enable Africa to achieve accelerated growth and development.
The Compact for African Recovery was developed by ECA following the last Conference of African Ministers of Finance in Addis Ababa in November 2000. At that meeting, ECA's Executive Secretary, K.Y. Amoako, called for a new compact with Africa in which the developed countries would invest the necessary resources through aid, debt relief and market access to give African economies the jump-start they need. In turn, Africa should be able to put in place the necessary political reforms to ensure that their economies take off. In endorsing the idea, the Ministers asked ECA to develop a concrete set of proposals, and it is these proposals that are on the table at this year's conference.
At the end of the conference, Ministers will issue a statement articulating their vision for development based on African ownership, which will form the basis for partnership between Africa and its development partners.
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The Compact and other key conference documents will shortly be available on the web at www.uneca.org and click on "What's New".
Media Contact in Algiers is Peter da Costa Cellphone: +213-61-535-172
Fax: +213-21-394-408 E-mail: dacosta@igc.org
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