Another poor growth year

Conflict, floods and low commodity prices have again held back Africa’s economic growth, according to a report released on Tuesday by the UN’s Conference on Trade and Development (UNCTAD).

UNCTAD’s annual ‘Trade and Development Report’ said that output growth in Africa in 1999 was slightly lower than the three percent attained in the previous two years, barely keeping pace with population growth. “The poor economic performance,” the report said, “suggests that domestic and external conditions are nowhere close to what is needed to produce the much hoped-for take-off into rapid and sustained growth, particularly in sub-Saharan Africa.”

Relative to 1998, growth was lower in Central, North and West Africa, but improved in East and Southern Africa. However, to begin to pull the sub-Saharan region out of its poverty, growth rates of six percent would have to be maintained for at least a decade, the report noted.

Although debt relief under the Heavily Indebted Poor Countries (HIPC) initiative can play a role, “the scale of its impact would be limited,” UNCTAD observed. “Many African countries are unable to meet their external debt-servicing obligations, and for them debt relief will simply formally acknowledge a situation that already exists and stop the accumulation of arrears which are unlikely ever to be paid.”
Instead, the report called for “a large injection of aid accompanied by appropriate domestic policies” over 10 years that would gradually diminish the need for official financing, as alternative sources of private capital come forward. The report did not clarify what the domestic policy environment should be.

“The region really looking the worst by far is Africa,” Brian Kahn, a senior official at South Africa’s Reserve Bank, who launched the report in IRIN’S office in Johannesburg said.
Although he acknowledged “the report says very little on the solution for Africa,” he added that it was a “valuable addition to the debate that I think does emphasise the need for global coordination and cooperation, and regional solutions as part of the process.”