Africa: from North to South, the economy is recovering

By on October 25, 2010
graph-fmiFrom north to south, white or black, Africa is on the right track. No more recessions of 2009 in Gabon, Botswana or South Africa. Figures released by the institution of the IMF are announcing the return to a growth of 5% in 2010, partly due to the sound macroeconomic policies implemented by most African states before the crisis.

The adjustment process and the drastic remedies applied by the Africa Fund and the World Bank have not been all bad. They have helped to reduce Africa’s debt and the adoption by governments of more virtuous fiscal behaviour enabled them to accumulate reserves welcomed today.    The figures and comments published by the IMF in Washington, Wednesday, October 6, speak for themselves: the Maghreb (Mauritania, Morocco, Algeria, Tunisia and Libya), which grew 2.4% in 2009, is expected to grow and finish at a 5% in 2010 and 4.6% in 2011. Egypt accelerated 4.7% in 2009, 5.3% in 2010 and 5.5% in 2011. Sub-Saharan Africa reached a 5% in 2010 and will have a 5.5% in 2011. There are of course some «small China” oil champions like the Congo (10.6% this year) and Nigeria (7.4%), but also some poorest nations such as Ethiopia with 8.5% in 2011 and Tanzania with 6.7%. Despite its political instability, the Ivory Coast shows a very respectable 4%. The only continent’s economies that grow at a pace of that of “Europe”, less than 2%, are Madagascar and Equatorial Guinea. If Africa has gone through the worst crisis, since nearly a century, and has recovered so quickly, in just one year, it only says that States have the means to cushion its effects. The list compiled by the World Bank of the countercyclical policy practiced on the continent is rich: Ghana has launched a program of cash payments for the most disadvantaged and public works to combat food insecurity. Tanzania has bucked the falling prices of cotton and coffee through a supporting program representing 0.5% of GDP. The Burkina Faso and Mali have followed it. South Africa has increased the salaries of the civil service and given priority to education budget, social protection and housing allocations. All these efforts were supported by the international financial institutions, which offset the broken promises of the rich countries. The World Bank, the  IMF, the African Development Bank (ADB), the  European Investment Bank (EIB), the French Development Agency (AFD) and its German and British counterparts have brought billions of dollars that were essential to prevent the continent from collapsing under the purview of the developed economies bankruptcy. Billions of dollars came also from China, India and Brazil as huge purchases of raw materials (oil, iron, cotton, cocoa, manganese, copper, etc.).

Experts are optimistic. While advanced economies will experience for two or three years growth sluggish, the demand for mineral and agricultural wealth of Africa is undeniable. Investors are beginning to discover that “the continent is not as risky as we think in Wall Street (Obiageli Ezekwesili, WB, 2010); however, poverty has increased in Africa, and the  World Bank has calculated that the crisis has prevented 20 million Africans to get out of poverty (less than $ 1.25 per day). Economic growth, especially of the poorest, is more than ever a burning issue.

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