PRESS CONFERENCE ON LAUNCH OF ‘ECONOMIC REPORT ON AFRICA 2007’

While African economies continued to sustain the rising trends of the past few years, the foundation upon which that “growth momentum” rested was very fragile, Ejeviome Eloho Otobo, a senior United Nations official, said at Headquarters this afternoon.

Speaking at a press conference to launch the Economic Report on Africa 2007, he said many African countries continued to perform below the 7 per cent growth level required to achieve any progress in reducing poverty –- the first of the Millennium Development Goals.  Only eight countries had grown above that rate: Angola, Mauritania, Sudan, Ethiopia, Liberia, Libya, Mozambique and Congo.

Mr. Otobo, a former economist with the Economic Commission for Africa (ECA) and currently Director of Strategic Planning in the Peacebuilding Support Office, said the Report also found that African economies had grown at a rate of 5.2 per cent in 2004, 5.3 per cent in 2005 and 5.6 per cent in 2006.  They were projected to grow at 5.8 per cent in 2007.  Growth had been driven mostly by the sudden and significant increases in oil prices and other primary commodities over the past 12 to 18 months.  That characteristic heavy dependence on primary commodities underscored the underlying fragility of African economies.

He said the Report called for new growth policies that would go beyond the traditional focus on the second generation of reform policies pressed on Africa by international financial institutions.  The first generation had emphasized macroeconomic stabilization –- focusing on fiscal deficits, exchange-rate devaluation, interest-rate liberalization and reduced tariffs -– and structural reforms, which stressed privatization and financial sector reform.  The second generation of reforms had focused on institutional and governance issues -- combating corruption, establishing robust public services and creating mechanisms for sound, efficient, market-friendly regulatory frameworks.

The Report argued that, in spite of progress made in the previous generations of reforms, the time had come for Africa to embark on more systematic efforts to diversify its economies, he said.  That could only come about through the promotion of more proactive growth policies.  The “old concept” of economic diversification had been “dressed up afresh”, having been one of the key economic tasks that African leaders had set themselves at independence.  However, it had been halted by a combination of debt and additional reforms pressed on the leadership in response to those debt crises.

What was new in the report were three sets of policies that would separate the old form of diversification from the current one: more flexible macroeconomic policies and trade and sectoral policies that supported diversification and institutional arrangements, including increased funding for research and development.

In the ensuing question-and-answer session, he told a correspondent, with respect to the impact of China’s rapidly growing investment in Africa, that little attention and even less reportage had been paid to China’s investment in infrastructure, particularly roads and railways, contrary to the popular view that its interest was only in oil-producing countries.  In Sierra Leone, China was investing in electricity, which was required to provide impetus to the West African country’s economic recovery and growth.

Asked whether countries without oil or commodities had experienced uneven development, he said some of them had actually regressed.  Zimbabwe had experienced a growth rate of minus 4.4 per cent, while Côte d’Ivoire, Comoros, Swaziland and the Seychelles had grown by a mere 1 per cent.

Responding to a question regarding what the Report proposed for those countries, Mr. Otobo emphasized that not all African States belonged in the same category, even though they were in the same region.  From the peace and development perspective, they could be classified into four categories: countries in conflict; those emerging from conflict, with a distinction between those that had emerged in the past five years and those that had emerged earlier; countries wracked by political tensions, but without conflict; and countries with stable economies buttressed by democratic governance.

Where each country lay in that peace-development spectrum, and the problems they faced internally, would determine the measures they should pursue, he said.  Some needed merely to overcome political tensions, while others must come to grips with peacebuilding in a post-conflict environment.  The Report classified African countries into five categories according to a “diversification spectrum”: those doing very well, like Mauritius, Tunisia and South Africa; those that were backsliding, Nigeria being one example; those that had stagnated, such as Kenya; those that had made no progress, including Burkina Faso and Senegal; and “non-starters” like the Democratic Republic of the Congo and Liberia.

Asked what international or market measures could support domestic efforts, he said the Report made the case for directing development financing into infrastructure and related capacity-building, since underdeveloped infrastructure could not support diversification.

Regarding the progress of Africa’s economic integration, he cited a study in ECA’s Annual Regional Assessment on Integration, which found least progress in the areas of greatest conflict.  Thus, Central Africa, where Burundi, the Democratic Republic of the Congo and Rwanda were located, lagged far behind the Southern African Development Community, which had suffered little significant political tension, with the exception of Zimbabwe.  In West Africa, conflict had reduced the Mano River Union -- grouping Guinea, Liberia and Sierra Leone -- to a decrepit headquarters building and the subregional body would have to rebuild from “ground zero”.

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For information media • not an official record