Economy
African per capita income stagnates

afrol.com, 20 September - Africa saw growth stagnate in 1999, according to a fresh report released by the UN's Conference on Trade and Development (UNCTAD). Weak prices for some commodities, political conflicts and the weather proved too much of a burden across many parts of the continent. However, after a number of lean years, the economies of Nigeria and South Africa appear to have bottomed out.

Conflicts, floods and low commodity prices have again held back economic growth in Africa, according to the report. Africa was again unable in 1999 to match the growth peak of 1996. Indeed, with growth dipping even below the 3 per cent achieved in the previous two years, per capita income actually stagnated.

However, the report does note some positive signs in North and East Africa, where growth was above the regional trend, and the worst appears to be over in Nigeria and South Africa. The CFA countries benefited from the depreciation of the euro in 1999, which boosted their competitiveness and a combination of political stability, agricultural growth and increased capital inflows in North and East Africa produced some encouraging perform-ances. 

On the whole, neither the domestic nor the external conditions are yet right for an African growth revival. In many countries, political conflicts and the weather left economic policy makers with few options. Elsewhere, the vagaries of global commodity markets took their toll. Weak prices for beverages and a sharp downturn in cocoa and coffee prices were particularly damaging, and oil-importing countries have been badly hit by the hike in prices. 

Growth may accelerate moderately in 2000 if commodity prices strengthen, albeit with gains heavily concentrated in North Africa. But for sub-Saharan Africa the basic policy challenge remains how to overcome savings and foreign-exchange constraints and to raise investment to hit at least 6 per cent growth per annum. This will need in-creased official financing and debt relief along with a more pragmatic approach to domestic reforms.

"The poor economic performance," the report said, "suggests that domestic and external conditions are nowhere close to what is needed to produce the much hoped-for take-off into rapid and sustained growth, particularly in sub-Saharan Africa." 

Relative to 1998, growth was lower in Central, North and West Africa, but improved in East and Southern Africa. However, to begin to pull the sub-Saharan region out of its poverty, growth rates of six percent would have to be maintained for at least a decade, the report noted.

Although debt relief under the Heavily Indebted Poor Countries (HIPC) initiative can play a role, "the scale of its impact would be limited," UNCTAD observed. "Many African countries are unable to meet their external debt-servicing obligations, and for them debt relief will simply formally acknowledge a situation that already exists and stop the accumulation of arrears which are unlikely ever to be paid." 

Instead, the report called for "a large injection of aid accompanied by appropriate domestic policies" over 10 years that would gradually diminish the need for official financing, as alternative sources of private capital come forward. 

Source: UNCTAD

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