ECONOMIC RECOVERY CONFIRMED IN AFRICA

Press Release
ECA/672

ECONOMIC RECOVERY CONFIRMED IN AFRICA

ADDIS ABABA, 23 May (ECA) -- The African economy experienced its highest annual growth rate since the beginning of the decade in 1995, with the overall gross domestic product (GDP) climbing by 2.3 per cent during the year compared to 2.1 per cent in 1994 and 0.7 per cent in 1993, according to the "Report on the Economic and Social Situation in Africa, 1996" issued by the Economic Commission for Africa (ECA).

"This is a further positive confirmation of the recovery that has taken place in Africa in recent years," said the report, which was released earlier this month. Only three African countries experienced negative growth in 1995 compared to 14 the previous year; eight countries recorded 6 per cent growth compared to two in 1994.

The improving economic situation also bodes well for the implementation of the unprecedented United Nations System-Wide Initiative on Africa, a 10- year, $25 billion endeavour aimed at ensuring basic education, improved health services delivery and food security on the continent, among other objectives. The Initiative, which was the result of a consensus between African governments and their development partners on how to meet the continent's major challenges, was launched in March by Secretary-General Boutros Boutros- Ghali and United Nations agency heads.

Another indication of the positive economic upturn was that the region's 33 least developed countries also recorded a positive economic performance for the first time since 1992, with total GDP increasing to 2.4 per cent in 1995 compared to -2.4 per cent and -1.6 per cent in 1993 and 1994, the report said.

Although these average growth rates for the continent mask variations in country and sub-regional performances, the report noted that for the first time since the 1970s numerous national economies are now growing faster than their populations. This is "a welcome sign that overall growth trends in Africa are beginning to gather momentum towards the recovery evident in the global economy", the report said. Nineteen countries (five in southern Africa and eight in eastern Africa) experienced GDP growth in excess of Africa's current 2.9 per cent population growth rate.

But even with the recovery in GDP growth rates, the continent's share of aggregate world trade and output remains far below its percentage of world population. Africa's share in world trade has fallen steadily over the years, from 5 per cent in 1980 to 3.1 per cent in 1990, to 2.3 per cent in 1995, and 2.2 per cent in 1995. The decline of Africa's percentage in the trade of developing countries as a whole has been even more dramatic: from 14.9 per cent in 1980, to 10.9 per cent in 1990, and 6.4 per cent in 1995. Compared with the 1980s, Africa's GDP in the 1990s has accounted for less and less of the global GDP.

In addition, Africa's share of the world's population is on the increase: it reached an estimated 12 per cent in 1995. Therefore, the continent's overall GDP growth rate has yet to keep pace with its population growth rate. Given a population growth rate of 2.3 per cent in 1995, average per capita income actually declined 0.6 per cent for the region as a whole.

The report noted that in addition to the problem of a rapidly growing population, many of the factors responsible for the weak economic performance in Africa over the years are still present. Nevertheless, the prospects of the continent emerging from these problems and challenges are better than ever.

"Africa is no longer an undifferentiated mass of poorly performing economies", the report said. "Differences among individual African countries and groups of countries with the potential for rapid growth and socio-economic transformation have persisted, but current indications are that the capacity of African societies and economies for real and sustained growth are being increasingly realized."

The eight countries with the most impressive GDP growth rates in 1995 were Burkina Faso (6 per cent), Cote d'Ivoire (6.6 per cent), Ghana (6.9 per cent), Kenya (6.1 per cent), Malawi (6.2 per cent), Mali (6 per cent), Togo (6.7 per cent) and Tunisia (6.7 per cent), the report said. The recovery in GDP growth was related mainly to a strong performance by the manufacturing sector and a modest rebound by the mining sector, the report said.

The manufacturing sector recorded a positive growth rate of 4.2 per cent in value added in 1995, mainly because of the availability of better input supplies and improvements in the importation of raw materials for agro-allied industries. Capacity utilization, encouraged by remedial policy measures such as the rationalization of industries under structural adjustment programmes, was a main contributor to the positive growth, the report said.

Extensive reforms in the mining sector over recent years have lead to increased exploration and mining investment in several countries, the report noted. But the overall improvements in the mining sector were related to an

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almost 20 per cent increase in mineral and metal ore prices and a 7.9 per cent increase in the oil sector. Copper prices were 27.3 per cent higher in 1995 than in 1994, while prices of other minerals and metal ores also increased: of nickel (30 per cent), aluminum (22.3 per cent), cobalt (19.9 per cent), lead (14.6 per cent) and iron ore (6 per cent).

Growth in the agricultural sector -- the traditional mainstay of most African economies -- was lacklustre. According to the Food and Agriculture Organization (FAO), the incidence of drought in the third quarter of 1994 and the first quarter of 1995 precipitated famine conditions that affected some 10 countries in the northern, eastern and southern subregions.

Overall, agricultural output in the region stagnated. There was a drastic reduction in per capita agricultural output in some subregions, with the growth rate decreasing from 4.2 per cent in 1994 to 1.5 per cent in 1995. The loss was more pronounced in the northern, southern and eastern subregions than elsewhere. The southern sub-region registered a negative 7 per cent growth rate for 1995, while the eastern subregion recorded a negative 3 per cent. West Africa performed better, but its agricultural growth rate still fell from 5.8 per cent in 1994 to 4.2 per cent in 1995.

Africa's external trade benefitted from price increases for primary commodities, which according to ECA provisional estimates boosted export earnings by 1.1 per cent in 1995 compared to a 4.9 per cent increase in 1994.

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Note: For further information, please contact: Africa Recovery, Room S-931, United Nations Headquarters, New York (tel. 212-963-6857) or Information Service, ECA, Addis Ababa, Ethiopia (tel. 251-1-510-172).