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Finance & Development
A quarterly magazine of the IMF
December 2006, Volume 43, Number 4

From the Editor

Africa's upturn

AFRICA has been through so many bad times that it may be hard to grasp that things are starting to go right. Countries long ravaged by conflict, HIV/AIDS, and a misuse of resources are seeing a revival of growth, supported by sound economic policies and better-run institutions. Growth in sub-Saharan Africa, which reached 5.6 percent in 2005, is projected to pick up to almost 6.0 percent in 2007—its strongest performance in decades. Moreover, the gains are broad-based: Africa's oil exporters have benefited from higher prices and production, but oil importers have done well, too, with more than half of them posting growth above 5 percent this year. Africa's inflation has also been dampened down to its lowest level in a quarter century.

This issue of F&D looks at how Africa can capitalize on this welcome opportunity, which is supported externally by big debt relief and promises of scaled-up aid (although much of this new aid has yet to materialize). To transform the upturn from a glimmer of hope to a sustained boost in living standards, Africa will have to accelerate growth while grappling with an array of complex development problems. Our Africa series explores the region's biggest challenges—from deepening financial reform and liberalizing trade to improving the business climate and attracting badly needed foreign direct investment. It pulls together the latest research from the IMF and the World Bank, along with insights from academics and policymakers. Paul Toungui, Gabon's Economy and Finance Minister, explains how his country is grappling with whether to spend the windfall oil revenues now or save them for future generations. Ambroise Fayolle, a French Treasury aid expert, assesses donor help for "fragile states," including postconflict countries. His verdict: donors have to "be more realistic in helping fragile states recover from their torment."

* * * * *

Also in this issue, we explore whether all the hype and money being devoted to improving the health of the world's poor will lead to results. "Getting Real on Health Financing" notes that, despite significant increases in development assistance for health, without major reforms on the donor and recipient sides, both parties "risk squandering this historic opportunity." The reality is that developing countries continue to face 90 percent of the global disease burden but account for only 12 percent of all global health outlays.

In "Straight Talk," Raghuram Rajan tackles the increasingly desperate search by many countries to acquire commodity-producing firms in other (typically poor, developing) nations—all in the name of economic security. He argues that the "new mercantilism" won't make countries more secure. "Indeed, anyone who takes or keeps control of an asset that someone else can manage more productively is contributing to both individual and collective insecurity." And he's not just talking about oil.

Laura Wallace