With the global economy mired in the fallout of subprime crises, costly oil and financial market volatility, it may seem a little surprising to learn that for the fourth consecutive year, Africa has experienced record economic growth. According to the 2008 edition of the African Economic Outlook (AEO) launched in May, the headlines are good indeed: 5.7% GDP growth and a per capita increase of 3.7% in 2007, with estimates looking quite bright for 2008 too. However, behind those numbers lies something more complex.
For a start, growth has been uneven from country to country and where there has been growth, the trickle-down of benefits to people in general has been limited.A very significant fact to remember is that oil exports account for a disproportionate amount of the continent’s economic growth. In 2008, average real GDP growth rates for oil exporters are expected to reach 6.8%, and only 4.9% for oil importers, but there is important intra-group variance. The gap between the two groups, however, is likely to narrow in 2009 due to a strongly reduced growth forecast in Angola, and some recovery among non-oil importers, including Kenya, South Africa and Senegal, who are expected to recover their growth paths.To capitalise on current gains, African oil-exporting countries must boost capacity in non-extractive sectors (as some oil importers have begun to do), improve the business environment and use the oil bounty to finance more diversified paths of development. Diversification remains quite a challenge: the seven least diversified countries in Africa and four of the five bottom spenders on education (as a percentage of their GDP) are oil exporters. Notable exceptions are Algeria and Nigeria.Skyrocketing food prices have been critical in recent months. Oil-importing countries have found themselves grappling with sustained rises in both fuel prices and international food prices. Oil exporters have also suffered, with strong growth in domestic demand pushing prices higher for their consumers. The 2008 AEO concludes that increasing local food production and fostering regional integration could offset the negative effects of rising food prices on long-term growth and political stability across the continent.Africa continues to be hampered by widespread shortages of qualified staff, by obsolete equipment, ill-adapted programmes and weak links with the job market. According to a special focus on developing technical skills in this year’s African Economic Outlook, the shortfall in African human capital development has resulted in workforces often ill-adapted to labour market demands.
African countries, however, have grown aware of these shortcomings and how critical technical skills training is for competitiveness, social inclusion, improved employment and poverty reduction. In response, more countries are attempting to reform their training systems, but require funds and guidance in best practices. Policy recommendations include effective training guidelines integrated into education and employment policies, and early identification of, and focus on, those sectors with best employment prospects. A strong partnership with the private sector also proves crucial to developing the skills that the labour market is calling for.What of the broader outlook? Thanks to improved macroeconomic stability and additional resources for oil and mineral exporters, African countries have an opportunity to make the most of the strong, steady growth, both in terms of poverty reduction as well as in social and infrastructure development. But there are new threats too. Governments have to brace themselves against the shocks from rising food prices, not least resulting in political unrest. Vulnerabilities persist from over-dependency on a single commodity, energy shortages and the global economic slowdown. Political and economic governance in Africa will be severely tested as a result. RJCNote
: African Economic Outlook
Now in its seventh year, the comprehensive African Economic Outlook
has become a barometer of economic, social and political developments in 35 countries, which together cover 87% of the continent’s population and 95% of its output. It has been published since the start by the OECD Development Centre
and the African Development Bank, and since 2008 also by the United Nations Economic Commission for Africa (UNECA). It incorporates work from local African research centres too, making it the fruit of a unique partnership. It can be ordered at www.oecdbookshop.org
, ISBN 9264045856.©OECD Observer No 267 May-June 2008