2010 AFRICA ECONOMIC OUTLOOK
By Paul Ndiho,Washington D.C.
November 2, 2010
The International Monetary fund (IMF) says Sub-Saharan Africa’s accelerating economic growth is expected to be broad-based this year and next. Strong domestic demand and resurgent exports are projected to boost growth as high as 5.5 percent.
Economists say sub-Saharan Africa was in a strong economic position going into the global financial slowdown. This allowed fiscal and monetary policies to be put in place to soften the impact of the global downturn. For countries that were hard hit by the crisis, Antoinette Sayeh, IMF regional director for Africa, offers this advice:
“Now that the growth seems to be in hand and returning, the recovery is returning, it’s important that the authorities now work to rebuild those savings that they used in the course of the crisis so that when the next crisis hits they’re able again to draw on their reserves and their savings to respond. So that’s really the challenge ahead to continue good macroeconomic policies to rebuild, as we call them, the policy buffers that have helped so much during this crisis,”
In Africa, domestic demand is expected to remain strong on the basis of rising real incomes and investment. And many African governments have implemented investment-friendly frameworks to attract more foreign capital.
“Sub-Saharan Africa needs investment. A large part of that investment in the social sectors and some infrastructure investments will depend on the public sector. But most investments should come from the private sector. And so the challenge going forward will be for Sub-Saharan African governments to improve the enabling environment for private investments so that they continue to attract capital from abroad and so that investments in infrastructure in other manufacturing and other facilities help to sustain growth,”
Antoinette Sayeh says that there is still work to be done in Africa to enable business and business startups.
“There is still work to be done on the overall enabling environment and regulatory policies and how long it takes to register businesses, how easy it is to import. Despite the fact that there’s been tremendous progress in these areas it still takes too long to establish new business in many countries and there’s still significant work to be done to make sure that the private sector is able to make the long term investments and commitment that are needed to sustain growth,”
Analysts say that in recent years, international trade has increased exponentially, but Africa’s share in world trade has remained low. Africa accounts for only about 3% of world exports, partly due to trade protection outside Africa against African products.