World Bank: African Economies Turning A Corner
World Bank: African Economies Turning a Corner
The World Bank says economic growth rates in sub-Saharan Africa have turned a corner and after decades of stagnation are catching up with the rest of the world. The organization made the statement in its annual report on African economies issued Wednesday in South Africa.
The World Bank director for southern Africa, Ritva Reinikka, Wednesday said something new is on the horizon in Africa that began in the mid-1990s.
"Many African economies appear to have turned the corner and moved to a path of faster and steadier growth. And for the first time in three decades, they are growing in tandem with the rest of the world," she said.
She said annual growth rates of more than five-percent from 1995 to 2005 reversed 20 years of stagnation and decline from 1975 to 1995. The World Bank's Economic Indicators report issued Wednesday forecast these rates will continue through next year.
The World Bank's Chief Economist for Africa, John Page, said for the first time African economies are growing at the same rate as other developing nations and for the first time they are growing faster than developed countries.
He asks whether the new trend is the result of good policies or what he calls the "good luck" coming from the sustained rise of trade and foreign investment across the global economy.
"Our summary judgment is that it is a little bit of both. But good policies have made it possible for [African] countries to seize the opportunities offered by the current commodities boom in a way that they were unable to seize in previous decades," he said.
Page says policies of many African governments have lowered inflation and budget deficits and stabilized exchange rates and foreign debt repayments. He says these policies, along with better governance and lower trade barriers, have helped them weather economic hard times.
But Page notes that 40 percent of Africa's 750 million people still live on less than $1 per day. And the average live expectancy in many countries has been dramatically lowered by AIDS, tuberculosis, malaria and other diseases.
He says the economic indicators also reveal important disparities among African economies. Seven oil exporting nations have registered growth rates as high as 30 percent and 18 countries registered sustained growth rates of four to eight percent.
But 17 countries registered growth rates of less than four percent. These represent more than one-third of the total population and include many countries involved in or recovering from war.
The report was praised for its wealth of data but was criticized by some economists for failing to focus its analysis on Africa's alarming figures for health, education and income-gaps.
An economist with South Africa's Center for Policy Studies, Chris Landsberg, said economists must work more closely with experts on policy, governance and security in order to develop a more balanced and comprehensive perspective on African development.
"Growth matters as strongly as the report suggests it does, but human development matters just as much as growth," he noted.
Others noted that African growth rates still experience higher volatility than the global economy. They worry that the recent escalation of inflation and interest rates in many developed economies could foretell another severe downturn in Africa that might erase the gains of the past decade.