The second annual African Economic Outlook forecasts only modest growth of 3.3% for Africa as a whole in 2003; this is far short of the 7% deemed by the NEPAD (New Partnership for Africa’s Development) as being necessary for African countries to begin to catch up with the rest of the world.
Sluggishness in the economy is largely due to the overall decrease in prices in the last two years for such key commodities as coffee, tea, cotton, oil and gold. The subsequent deterioration of export earnings has further discouraged trade-oriented foreign investment. The world price of cotton, for example, a major export for countries like Sudan and Egypt, is less than half what it was in 1995, and the tea and coffee markets are also low. The Outlook points to ongoing conflict and lack of good governance, in addition to the impacts of drought and disease, as further obstacles to growth.
The 2003 African Economic Outlook stresses the importance of privatisation for economic reform and market reorientation. Of 53 African countries, only nine had no privatisation activity, but the process elsewhere has been uneven. The good news is that development assistance granted by OECD countries is set to rise (see Databank), with commitments to 2006 from the EU of US$7 billion and from the US of US$5 billion. But aid will be increasingly selective, depending in particular on adherence to good governance practices and reform (see article on debt relief by Peter Walkenhorst, link below).
©OECD Observer No 237, May 2003