FDI was boosted by new oil and gas discoveries in many countries including Angola, Mozambique and Tanzania, said the bank’s latest edition of Africa’s Pulse – a twice-yearly analysis of the continent’s economic prospects.
Capital flows to sub-Saharan Africa also increased, reaching an estimated 5.3% of regional gross domestic product (GDP) in 2013, which the report said was “significantly above the developing-country average of 3.9%”.
Economic growth in sub-Saharan Africa is projected to rise to 5.2% in 2014 from 4.7% last year, which the report said was “boosted by rising investment in natural resources and infrastructure, and strong household spending”.
According to the report, “growth was notably buoyant in resource-rich countries, including Sierra Leone and the Democratic Republic of Congo”. Growth remained steady in Cote d’Ivoire, while rebounding in Mali, supported by improved political stability and security, the report said. “Non-resource-rich countries, particularly Ethiopia and Rwanda, also experienced solid economic growth in 2013.”
Inflation in sub-Saharan Africa slowed – growing at an annual rate of 6.3% in 2013 compared to 10.7% a year ago – in response to lower international food and fuel prices and what the report said was “prudent monetary policy”.
The report added: “Some countries, such as Ghana and Malawi, have seen an uptick in inflation because of depreciating currencies. Remittances to the region grew 6.2% to $32bn in 2013, exceeding the record of $30bn reached in 2011. These inflows, combined with lower food prices, boosted household real incomes and spending.”
“Tourism also grew notably in 2013, helping to support the balance of payments of many countries in the region,” the report added.
According to the UN World Tourism Organization, international tourist arrivals in sub-Saharan Africa grew by 5.2% in 2013, reaching a record 36 million, up from 34m in 2012, which has contributed to government revenue, private incomes, and jobs.
The World Bank’s vice-president for Africa Makhtar Diop said a number of African countries are now “routinely among the world’s fastest-growing countries as a result of sound macroeconomic reforms in recent years and the fact that the rest of the world has steadily updated its reality of the continent as a high opportunity region for trade, investment, business, science and technology, and tourism”.
Diop added: “Poor physical infrastructure will, however, continue to limit the region’s growth potential. Significantly more infrastructure spending is needed in most countries in the region if they are to achieve a lasting transformation of their economies.”
Chief economist for World Bank Africa region Francisco Ferreira added: “Although sub-Saharan Africa’s exports remain concentrated in a few strategic commodities, the region’s countries have made substantial progress in diversifying their trading partners.”
Ferreira said: “Over the last decade, exports to emerging markets such as the BRICs – Brazil, Russia, India, China – have grown robustly, primarily due to the prolonged boom in commodities demand. The BRICs received only 9% of sub-Saharan Africa’s exports in 2000 but accounted for 34% of total exports a decade later.”
EY’s third ‘Africa Attractiveness Survey’, published in May 2013, noted “an important shift in emphasis in investment into the (African) continent over the past few years, in terms of both destination markets and sectors”. The report said: “While investment into North Africa has largely stagnated, FDI projects into sub-Saharan Africa have grown at a compound rate of 22% since 2007. Among the star performers attracting growing numbers of projects have been Ghana, Nigeria, Kenya, Tanzania, Zambia Mozambique, Mauritius and South Africa.”