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Note: This document is from the archive of the Africa Policy E-Journal, published
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Africa: Modest Economic Upturn
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Africa: Modest Economic Upturn
Date Distributed (ymd): 950313
Modest economic upturn for Africa:
But more genuine support needed from donors, says ECA head
By Nii K. Bentsi-Enchill
Africa Recovery, United Nations, Vol.8 No.3, December 1994
Africa's 2.8 per cent growth rate in 1994, the highest in
five years, permits "modest optimism" for 1995. But with
its population growing even faster, at 3 per cent a year,
per capita incomes continue to fall and enormous challenges
remain, warned UN Economic Commission for Africa (ECA)
Executive Secretary Layashi Yaker in an end-of-year review
of Africa's economic prospects. Mr. Yaker said in Addis
Ababa on 15 December that assuming "normal conditions",
economic output could rise by 3 per cent in 1995, continuing
the steady climb from negative growth in 1992.
He stressed that promising results from African initiatives
could founder without donor support: just when aid is most
needed to buttress Africa's drive for economic reform,
democratization, capacity-building and regional integration,
current trends in aid budgets "point towards contraction."
With per capita output falling by nearly 1.5 per cent a year
since 1990 and poverty spreading rapidly, Africa is losing
ground "both in absolute and relative terms," Mr. Yaker
said. Faced with potential annual losses of some $2.6 bn
under the Uruguay Round's "sweeping liberalization" of
global trade, he stressed that Africa had no choice but to
proceed "without delay on an equally sweeping overhaul of
its economic structure." This meant reforms to inject
efficiency and dynamism, empower the private sector, attract
domestic and foreign investment and promote popular
participation in conditions of peace and stability.
Performance in 1994
Africa's modest overall improvement in growth had
significant subregional variations. The six North African
countries posted 2.5 per cent growth, well up on their 0.8
per cent in 1993, while growth in 16 West African countries
fell from an average 3.2 per cent to 2.6 per cent in 1994.
In East and Southern Africa, average growth in 21 countries
jumped from 1.5 to 3.7 per cent. Seven Southern African
countries, including South Africa, did even better, moving
from 1.2 per cent in 1993 to 3.8 per cent in 1994. There
was even a turnaround in 10 Central African countries where
negative growth slowed from -4.8 per cent in 1993 to -0.4
per cent in 1994. Overall, only 11 African countries had
negative growth in 1994 (down from 17 in 1993) while 12
countries exceeded 5 per cent growth, the same number as in
1993.
Despite surging commodity prices, the ECA estimated that
Africa's exports rose only 4.2 percent in nominal value
(from $91.3 bn to $95.2 bn), and only 2 per cent in volume.
But imports rose by some 6.5 per cent, resulting in a
bigger current account deficit of $7.8 bn. The impressive
rally of commodity prices saw a turnaround in Africa's term
so trade from a 4.9 per cent fall in 1993 to a 0.6 per cent
gain in 1994. However, Mr. Yaker pointed out, while the
gain for non-oil commodity exporters was 17 per cent, terms
of trade worsened by 9 per cent for oil-exporters.
After the CFA franc devaluation, exports had revived in some
countries but had yet to reach levels appropriate to this
"quantum leap" in competitiveness. Devaluation had largely
curbed domestic demand and slowed imports, but it had also
"repressed economic growth somewhat." Initial negative
effects should lessen in time, but other factors determining
competitiveness such as infrastructure, labor skills and
incentives needed "at least as much attentions
macroeconomic stabilization" in the CFA countries'
adjustment programmes.
Turning to the crucial agricultural sector, Mr. Yaker said
favourable weather boosted total output by 3.1 per cent
from 1.8 per cent in 1993. But up to mid-1994, failed rains
brought famine conditions to 22 million people in 10
countries of the Horn and massive death and displacement
was averted only through timely distribution of food imports
and food aid. Adequate rains in the same subregion were
now bringing good harvests, above-average harvests were
likely in the Sahel belt and coastal West Africa, while
bumper grain harvests were expected in Egypt and Morocco as
well as in Zimbabwe and South Africa.
Continued favourable conditions could see agricultural
output rising by 5 per cent in 1995, although growth in the
food subsector had slowed from an "impressive" 4 per cent in
1993 to only 2.5 per cent this year. With population
growth still high at 3 per cent, per capita food output was
down 0.5 per cent, leaving Africa "no nearer its goal of
food self-sufficiency." Important factors for higher
production included good supply of inputs and less damage
from pests, but rural infrastructure, incentives for
producers and marketing structures all had to be improved.
Market Reforms
African countries had made progress in market and tax
reforms aimed at improving investment conditions But
privatization had often been "thwarted by the paucity of
domestic savings" as well as by the "understandable
reluctance ... to dispose of public enterprises entirely to
foreign investors often at give-away prices." Mr. Yaker
argued that privatization should "accelerate economic
growth and development with equity, rather than widening
disparities in society by increasing the concentration of
economic power."
He noted that some perennial social problems had worsened.
Africa now had 7 million refugees, a third of the world's
total, and some 21 million people internally displaced.
Population growth was outstripping food and economic output,
while "severe" spending cuts and the "emphasis on
cost-recovery and cost-sharing" continued to hit education
and health. Yet development in all its aspects was
"essential" for slowing population growth. Africa had to
build and fully utilize the critical human, institutional
and infrastructural capacities "for managing a modern
economy and polity."
This applied at national and continental levels as Africans
also had to work collectively to cope with world economic
trends. The African Economic Community (AEC) was a
"strategic response" to a world economy evolving around
trading blocs, and he urged African and donor countries to
make a priority of supporting the AEC's first
phase-strengthening Africa's subregional economic
communities.
Meaningful support
Turning to the UN's New Agenda for the Development of Africa
in the 1990's (UN-NADAF), Mr. Yaker said African countries
were fulfilling their commitments, unlike the donor
countries. Annual net resource transfers had "fallen far
short" of UN-NADAF targets. At some $14 bn, net external
funding for Africa (including South Africa) in 1994 was only
slightly better than 1993. And with its economies not yet
able to attract adequate foreign investment, Africa would
still need more substantial development aid.
Donors had also taken "no meaningful steps" to significantly
reduce the debt stock of any African country except Egypt.
In 1991-94, Mr. Yaker said, 21 African countries had $7.14
bn of debt rescheduled, compared to Africa's $301.8 bn
aggregate debt at end-1993 (including South Africa).
Mr. Yaker recalled that"much of what passed for aid during
the Cold War" promoted ideology and military sales, not
development. Now that Africa needed more support for its
economic and political reforms, donors seemed more reluctant
to provide that support. This "so-called 'aid fatigue'"
contradicted growing international cooperation on issues of
sustainable development, he argued.
Calling on the UN system to facilitate the transfer of
experience from Asia and other regions, he says South-South
cooperation was vital for Africa. Mr. Yaker stressed
Africa's enormous potential and the shared responsibility
of African and donor countries. "Africa cannot afford to
be left behind in the development race," he concluded.
-------------------------------------------------------
Africa Recovery is published by the United Nations
Department of Public Information, with support from the UNDP
and UNICEF. Subscriptions are available to individuals for
$20 and to institutions for $35. A limited number of
complimentary subscriptions is available. Correspondence
should be addressed to:
The Editor, Africa Recovery
Secretariat Room 931
United Nations
New York, NY 10017
Tel: (212) 963-6857
Fax: (212) 963-4556
*******************************************************
This material is being reposted for wider distribution
by the Africa Policy Information Center (APIC). APIC's
primary objective is to widen the policy debate in the
United States around African issues and the U.S. role
in Africa, by concentrating on providing accessible
policy-relevant information and analysis usable by a
wide range of groups and individuals. APIC is
affiliated with the Washington Office on Africa (WOA),
a not-for-profit church, trade union and civil rights
group supported organization that works with Congress
on Africa-related legislation.
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