African economies grew more than 5 percent in 2004, their highest growth in eight years, spurred by high commodity prices, a new report has said, according to the World Bank press Review Thursday.
The “African Economic Outlook,” produced by the OECD Development Centre and the African Development Bank, praised “steadily prudent economic policies.”
But it pointed out that Africa was still vulnerable to regional conflicts. And it called for more debt relief, action against corruption and support for small businesses. Growth in the region benefited from new oilfields coming on stream in Angola, Chad and Equatorial Guinea.
Central Africa saw a 14,4 percent rise in growth in 2004 due to the expansion of its oil production capacity. East Africa grew by 6,8 percent, while West Africa grew by just half that amount, 3,4 percent.
Greater political stability in some countries and a significant rise in official development aid to Africa helped foster growth. African agricultural production also took a turn for the better after the ending of the drought of 2003, which hit Ethiopia, Malawi and Rwanda.
However, the OECD and the African Development Bank expect average African growth to be a little slower next year as no new oil fields will be coming on stream in Central Africa.
The report also highlighted the humanitarian crisis in the Darfur region in Sudan, economic collapse in Zimbabwe and conflicts in Ivory Coast and parts of the Democratic Republic of Congo as factors constraining growth.
The reportfurther warned that only six countries – most in North Africa – are expected to meet one of the UN Millennium Development Goals by halving the proportion of their populations living on under a dollar a day by 2015.
The outlook also added that while reduced conflict has fostered democratic practices in many countries, “corruption is tenacious almost everywhere.” It looked to the home-grown development program NEPADs peer review mechanism “to provide a candid assessment of the situation in African countries and foster progress in this area.”
The report said that “more needs to be done to ensure an environment conducive to private-sector development and the emergence of a robust fabric of small and medium enterprises (SMEs).”
African SMEs, described as the “missing middle” between very large, often multinational firms and the informal sector, need sustained efforts and a multi-pronged approach to help them emerge and grow to their efficient size. These include a better investment climate, improved capacity to cope with banks requirements, and more diverse sources of financing from financial institutions and the existing large enterprises.
The BBC further notes that the lack of access to affordable bank loans and credit is the biggest obstacle to the development of African SMEs. Leasing, franchising and credit-guarantee schemes can all help small businesses avail of credit, it said.
Too much regulation is also a problem, the report found. While it takes just two weeks to set up a business in Morocco, it can take five months in Angola. Other obstacles to setting up SMEs include political unrest and the lack of such basic services as electricity and water.
The report was launched in Abuja, Nigeria, at the African Development Bank meeting.
Kilde: www.worldbank.org
