4. The slowdown in regional economic growth was due to the decline in sub-regional growth, which will be explained later. Given the significance of agriculture in the African economies, smaller harvests had adverse consequences on income, consumption and on the performance of the processing industries. Poor rainfall and drought in Morocco reduced its GDP growth for the fourth time in the last six years and necessitated higher cereal imports. The El Nino-induced weather condition in Southern and parts of East Africa provoked critical food shortages, eliciting urgent calls for international food aid in some countries such as Ethiopia - which had achieved food self-sufficiency in 1996 - Eritrea, Somalia, Rwanda, the Sudan, Tanzania and Uganda. Modest growth was nevertheless recorded in West and Central Africa although severe food shortages were reported in Burundi, the Republic of Congo and the Democratic Republic of Congo.

5. Despite the slowdown in the regional production due to low oil prices and poor agricultural output, exports continued to expand on the strength of increases in volume and this was the most significant factor behind GDP growth in several countries in 1997. Global output is estimated to have grown at a steady rate of more than 3 per cent in 1997. The financial turmoil in Southeast Asia did dampen its performance and may have reduced global growth by as much as one percentage point. Fortunately for Africa, its major trading partners successfully sterilised the negative fallout from Asia and strengthened their growth momentum. The strong rebound in Europe and particularly the robust recovery in France and Germany as well as the resilience of North American economies provided the stimulus for the high growth of world output and trade.

6. The volume of world trade is estimated to have grown by 9.4 per cent in 1997 as against 5.3 per cent in 1996. Africa's trade volume increased by 8 per cent. The larger export volumes boosted export revenues and made up for the decline in the prices of the continent's exportables. Africa's total export revenue increased by 5.9 per cent in 1997. However, despite the increase in export volume and earnings, the continent's share of world trade continued to decline, shrinking from 2 per cent in 1996 to 1.9 per cent in 1997.

7. Inflation moved up from 25.1 per cent in 1996 to 28.3 per cent in 1997, due mainly to food price increases. It jumped to double digits - the highest level in recent years - in Kenya and Uganda, two countries that had earlier reduced inflation to single-digit level, and remained high in Angola, Burundi, the Democratic Republic of Congo and the Sudan, where political factors disrupted the production and distribution of goods. Wage increases contributed to inflationary pressures in countries such as Benin and Zimbabwe, while in Ghana, inflation remained high as a result of exchange-rate depreciation and increases in the administered prices of petrol and electricity, among other things. In CFA zone countries, prices were generally stable, averaging a 2.5-per cent increase, with the exception of Cote d'Ivoire where the inflation rate more than doubled from 2.5 per cent in 1996 to 6 per cent in 1997.

8. In 1997, the overall policy thrust focused on minimizing the negative impact of the slowdown in agriculture on the economy and society through proactive and countercyclical measures, and on sustaining the growth momentum of the last three years. Although strong attempts were made to stabilise the economy through restrictive fiscal and monetary policies, the degree of freedom in some countries such as Morocco, Ethiopia, Zambia and Zimbabwe was circumscribed by their need to cushion the social impact of declining harvests. In other respects, African governments continued to deepen and widen the reform programmes, including trade and financial-sector liberalization, institution-building, and the reformulation of investment-related legislation to create an environment friendlier to foreign investment.

9. At the same time that these reforms were taking place, African governments sought to diversify their production base. The diversification drive focused on the horizontal dimension not only because that is where African countries have their comparative advantage but also because other options, and more so the dynamic expansion of the manufacturing industries, continue to face impossible impediments.

I.A.1. Growth of Agricultural Output

10. The strong recovery of agricultural output in 1996 was not sustained in 1997. For the African region as a whole, agricultural production growth decelerated to 1.7 per cent in 1997, after bumper crops had raised output by a record 5.2 per cent in 1996. This was essentially due to weather conditions that affected production in major producer nations. The production of the major export commodities fell in 1997 below their 1996 levels and this decline was particularly noticeable in the case of cocoa and coffee.

11. In the food sub-sector, regional production in 1997 was adversely affected by the erratic changes in weather conditions, mainly because most countries depend overwhelmingly on rain-fed agriculture. Civil strife also played a significant part in accentuating the region's food-supply difficulties. According to data from the United Nations Food and Agricultural Organization (FAO), cereal production fell by about 10.5 per cent from 126 million metric tons in 1996 to 113 million metric tons in 1997. Fruits, jute and vegetable production was slightly lower than in 1996, while the production of pulses increased.

12. Due to poor performance, difficulties are emerging in the eastern and north-eastern parts of the region. In Tanzania, for example, the 1997 cereal crop declined by one-third. In Rwanda and Burundi, although production has been recovering, it remained well below pre-crisis level. In Ethiopia and Eritrea food production fell drastically. Stocks were exhausted in an effort to make up for the shortfall and this required an urgent call for assistance to the international community to contain an impending disaster. ...

13. In West Africa, the performance of agriculture was mixed, but the already precarious food situation in some countries such as Sierra Leone continued to deteriorate as a result of the negative impact of civil strife. Improvement was achieved in Liberia following the conclusion of the civil war and the installation of the democratically elected government.

14. The generally negative or poor record of 1997 points to serious gaps in food supply for the majority of African countries. Again this is likely to lead to a sharp decline in the stock-to-utilisation ratio in 1998, pushing it below the minimum level necessary to safeguard regional food security. Of the 31 countries projected by the FAO to face critical food deficits, 20 are located in Africa. The replenishment of stocks might be suspended by low-income countries and the resumption of such efforts will require sizeable improvements in production techniques and increases in actual production in the coming year otherwise these countries will revert to long-term dependence on food aid.

15. Among the subregions, the most drastic falls in cereal production were recorded in North Africa, where production declined by 50-60 per cent in Algeria, Morocco and Tunisia, and by about 30 per cent n the subregion as a whole. Performance was poor in Central Africa and mixed in West, East and Southern Africa.

16. Shortfalls in the production of cereals and other food crops triggered an increase in food prices and required significantly larger imports, particularly wheat. Preliminary estimates by the FAO put the 1997/1998 wheat imports by African countries at a record 21 millions tons, with imports by Algeria, Egypt, Morocco and Tunisia forecast to exceed 14 million tons.

17. Major commercial crops did not do well in 1997, again as a result of adverse weather conditions. The cocoa bean harvest declined by 9 per cent. Most of the shortfall came from Cote d'Ivoire, which reported climatic disruptions during the planting and harvesting seasons. Similarly, tea and sugar production declined by 7.8 per cent and 0.48 per cent respectively, in 1997. The region's negative tea output resulted mainly from a poor harvest in Kenya.

18. The production of green coffee was much lower in 1997 than in 1996 in Kenya, Madagascar, Rwanda, Tanzania and Uganda as well as in Côte d'Ivoire. Ethiopia managed to increase production by some 7.8 per cent, but the prevailing adverse conditions in Kenya and Uganda resulted in a 21- and 25.8-per cent fall in the two countries respectively. In consequence, the regional output of coffee fell by 7 per cent from about 1.2 million metric tons in 1996 to about 1.1 million metric tons in 1997. The generic decline in commercial-crop production was equally evident in other crops, with total seed cotton production declining by 1.4 per cent.

I.A.2. Growth in the Industrial Sector

19. The output of the industrial sector (broadly defined to include non-agricultural commodity production) increased by 3.3 per cent in 1997, well below the 1996 rate of 5.4 per cent, due mainly to the slowdown in the mining subsector (3.3 per cent in 1997 as against 6.5 per cent in 1996). Manufacturing industries maintained their growth rate of 2.5 per cent. The booming industrial activities in 1997 as in the previous years, were construction (5.4 per cent) and energy and water (3.1 per cent).

20. Performance indicators of the African mining industry in 1997 were similar to those for 1996 despite the surge in investment. The production results of the 15 main minerals representing over 90 per cent of the sector's total output show that, with few exceptions, output either declined or stagnated in 1997. The overall mining-production index (excluding oil) remained virtually unchanged in 1997, increasing marginally by 0.6 per cent over 1996.

21. In Ghana, gold production in the first half of 1997 increased by 10 per cent at the Ashanti Goldfield at Obuasi, the country's largest. Despite this early surge in output, production was estimated to have remained unchanged at 44.4 tons for 1997 due to considerable slowdown during the second half of the year.

22. In South Africa, most mines continued to face significant productivity problems associated with working conditions, dwindling reserves and slender profit margins. Output in the sector fell by 0.5 per cent in the first quarter of 1997. Gold production was particularly affected due to the declining quality and quantity of the ore milled. Production in 1997 was estimated at 484 tons, down from 495 tons in 1996. The increase in copper production in Zambia was overshadowed by a steep decline in production in the Democratic Republic of Congo.

23. The oil sector continued to pursue dynamic development in 1997. The favourable conditions under which African countries offer concessions to the oil companies, coupled with low exploration and production costs, due to technological developments, have continued to attract investment to the continent. Important new oil discoveries were reported, particularly in Algeria, Angola, Egypt and Equatorial Guinea, and exploration and drilling activities have been booming across the continent.

24. Crude oil production in Africa increased from 368.4 million tons in 1996 to 378.4 million tons in 1997. Production from members of the Organization of Petroleum Exporting Countries (OPEC) increased marginally to 252.10 million tons, 2.8 per cent more than in 1996, due to the quota system imposed on member countries by the organization. Production from non-OPEC oil-producing countries rose to 126.30 million tons in 1997 from 123.24 millions tons in 1996.

Table 1.4: Crude Oil Production in Africa, 1993-1997 (Millions of tons)