Out of Africa -- Some Good News

According to the World Bank’s Africa Development Indicators 2007 (ADI), the economic outlook for Africa is improving, with overall growth comparable to global rates over the past ten years – some 5.4 percent per annum. In addition to macro economic indicators, the report also found progress in such indicators as telephone access (up by 326 percent), improved water (up 18 percent) and access to grid electricity (up 44 percent). These are from very low starting points to be sure, but taken together provide the first sustained good news out of Africa for a long time. According to the World Bank’s chief economist for Africa,

For the first time in almost 30 years we’ve seen a large number of African countries that have begun to show sustained economic growth at rates that are similar to those in the rest of the developing world and actually today exceed the rate of growth in most of the advanced economies.

Before breaking out the champagne, though, it’s worth digging a little more deeply into the numbers. The gross numbers hide some extremely wide variations. The report itself differentiates among three major classes of countries: the oil exporters, the diversified, sustained-growth economies, and the slow-growth economies. The first group includes Equatorial Guinea, Nigeria, Angola, Sudan, Chad all of which (except Nigeria) grew at an average annual rate over the past decade of more than 6 percent. (Equatorial Guinea averaged nearly 31 percent annual GDP growth!). However, these high rates of growth do not necessarily correspond with progress relative to the other social indicators.

The second group includes such countries as Mozambique, Botswana, Uganda, Cape Verde, Ghana and Namibia, with growth rates ranging from 8.3 percent (Mozambique) to 4 percent (Namibia), which tend to score better on the social indicators. The third group all grew at less than 4 percent, with Zimbabwe actually registering a 2.2 percent annual decline over this period.

Thus, the report can be seen as confirming, in its own way, the distinctions drawn by Paul Collier in his recent The Bottom Billion, with widening income gaps between those countries that are on a growth trajectory and those that are not. Many of the slower growing group are landlocked (Zimbabwe, Central African Republic, Lesotho, Zambia, Malawi, Niger, Burundi) and/or small (Guinea-Bissau, Togo), with the associated problems of scale and market access. Ironically, some of the faster growing countries are also the most conflicted or poorly governed (Sudan, Angola, Equatorial Guinea), and this only serves to highlight another of Collier’s points, namely that natural resource wealth is frequently associated with instability and conflict in the absence of strong institutions that direct the wealth into productive investment -- i.e., it can be more a curse than a blessing.

Finally, even with the higher rates of growth being observed, no sub-Saharan African country is likely to achieve all of the Millennium Development Goals, and 23 are unlikely to achieve any. There’s still plenty of work to do.