Out-Law News | 16 Apr 2014 | 5:24 pm | 2 min. read
Ndulu told the spring meetings of the World Bank and International Monetary Fund (IMF) in Washington DC last weekend that the last two decades of growth in Africa as a whole represented “a quantum jump”, compared to the average annual growth rate of 0.8% posted by the continent between 1960 and 1994.
Africa’s economy is now bigger than Australia’s (estimated at $1.5 trillion) and “about the same size as the economies of Canada and India”, Ndulu added. He said growth was being helped by higher contributions from taxation.
Ndulu said: “We need to promote labour intensive industrialisation and technology-driven innovations.” He stressed the “leap frogging potential” that technology and “cheap, young labour” offer the African continent.
The World Bank praised Africa for being on course to post a GDP growth rate of 5.1% in 2014, but warned against “any complacency in tackling Africa’s enduring development challenges”.
However, Cote d’Ivoire’s industry and mining minister Jean-Claude Brou told the meeting: “Africa’s problem going forward is not only to invest more, but to invest better.” Brou called for increased regional integration and intra-African trade which, according to him, currently accounts for less than 20% of Africa’s total trade – which he said was “far below the 60% and 50% figures reported respectively for intra-European and intra-Asian trade”.
The chair of the African Caucus group of finance ministers and central bank governors Bader Eldin Mahmoud Abbas said: “While sub-Saharan Africa has so far sustained a healthy growth rate, it could be vulnerable to a slowdown in emerging economies given the continent’s dependence on trade, particularly with China, and on commodity prices.”
Abbas said: “Against this backdrop, African countries recognise that they need to do a rebalancing of their own and generate growth in sectors like manufacturing and agriculture that can benefit the population in terms of employment opportunities, including through tackling infrastructure and energy gaps. However, access to funding remains challenging. In this context, African countries look to the IMF to continue its effective engagement with Africa and reform its policies, including the debt limits policy in fund-supported programmes, with a view to facilitating greater flexibility in managing borrowing options and providing policy space to meet Africa’s tremendous investment needs.”
According to the World Bank Africa’s GDP per capita has expanded 40% since 1995. Some of “the fastest per capita growers” include Equatorial Guinea (15.7% increase in the last 17 years); Liberia (23% increase over the last seven years); Mauritius (above 3.9% increase for the past 29 years); and resource-poor Burkina Faso – whose per capita income has risen over the last 18 years, the bank said.
The chief economist for the Africa region at the World Bank, Francisco Ferreira, said Africa’s growth is widespread and has, “almost everywhere, been investment-driven rather than consumption-led... increasing the possibility of impacting more Africans than otherwise”.
According to Ferreira, “four major changes” are unfolding at sector level across Africa. Agriculture is growing faster than anywhere else, but Ferreira said growth “seems to be bypassing Africa’s manufacturing sector (now accounting for only 7-8% of GDP) and performing at about the same level as in other developing countries. According to Ferreira, Africa’s natural resources sector has tripled its contribution to growth while growth in the services sector “has been enormous and is bound to be a lot higher than estimated now, given the recent rebasing of the Nigerian economy”.