Press Release: IMF Regional Outlook Report Cites High Growth and Low Inflation in Africa But Calls for More Efforts to Attain the Millennium Development Goals

IMF News, April 14, 2005

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Canonical URL: Press Release: IMF Regional Outlook Report Cites High Growth and Low Inflation in Africa But Calls for More Efforts to Attain the Millennium Development Goals

Real GDP growth in Sub Saharan Africa accelerated in 2004 to an eight-year high of 5 percent.
Average inflation fell to below 10 percent for the first time in a quarter century.
Growth continued to be particularly strong in oil-producing countries; oil-importing countries also performed well despite world oil price hikes, with more than one-third of the countries achieving a growth rate of above 5 percent.
Growth picked up to 3.7 percent in South Africa, while it slowed to 3.5 percent in Nigeria from an extraordinarily high rate in 2003.
Productivity growth has improved strongly for the first time since the 1960s.
Total investment has not increased significantly for the fast-growing economies.

The report projects that both strong growth and subdued inflation will continue in 2005.
Lingering conflicts in the Great Lakes region, falling world cotton prices, and abolition of remaining textile quotas at the beginning of 2005 are identified as key challenges requiring well-crafted policy responses.
The 30 percent fall in the world cotton prices over the past year means that Benin, Burkina Faso, Mali, and Togo will all need to implement structural reforms to improve efficiency in the sector.
The worst-affected countries will need donor support to avert worsening poverty while implementing these reforms.
The report stresses that sustaining and accelerating economic growth is the most critical challenge for Sub-Saharan Africa and that recent growth rates still fall short of the level required to achieve the Millennium Development Goal of halving income poverty by 2015.

Abolition of textile quotas at the beginning of 2005 poses adjustment challenges for at least five Sub Saharan countries: Lesotho, Mauritius, Madagascar, Cape Verde, and Swaziland.
An appropriate mix of macroeconomic policies to improve export competitiveness while rigorously pursuing structural reforms to remove impediments to trade expansion is required for these countries.
Trade within Africa remains low; in terms of overall trade and foreign direct investment, the region is falling further behind the rest of the world.
Shipping cost example highlighting infrastructure deficits: shipping a car from Japan to Abidjan costs $1,500 while shipping the same car costs $5,000 from Addis Ababa to Abidjan.

Implement additional macroeconomic and structural reforms to boost investment and trade.
Improve the investment climate: 16 of the 20 countries in the world with the most difficult business conditions are in Sub Saharan Africa.
Make trade policy an integral part of the region's growth strategy:
- Reduce trade barriers on a broad, nondiscriminatory basis, including strong commitments to trade liberalization in the Doha Round of multilateral trade negotiations.
- Reduce trading costs at and behind the border and improve infrastructure.
- Mobilize domestic taxes early to address revenue concerns over tariff cuts.
Streamline existing regional trade arrangements (RTAs) to eliminate conflicting commitments; currently Africa is home to some 30 RTAs, and on average each African country belongs to four RTAs.

5 percent — Real GDP growth in Sub Saharan Africa in 2004 (eight-year high).
below 10 percent — Average inflation (first time in a quarter century).
more than one-third — Share of countries achieving growth above 5 percent despite oil price hikes.
3.7 percent — Growth in South Africa.
3.5 percent — Growth in Nigeria (slowed from an extraordinarily high rate in 2003).
30 percent fall — Decline in world cotton prices over the past year.
2005 — Year when textile quotas were abolished.
2015 — Target year for the Millennium Development Goal of halving income poverty.
16 of the 20 — Number of countries with the most difficult business conditions that are in Sub Saharan Africa.
$1,500 — Cost to ship a car from Japan to Abidjan.
$5,000 — Cost to ship a car from Addis Ababa to Abidjan.
some 30 — Approximate number of RTAs in Africa.
four — Average number of RTAs each African country belongs to.

International Monetary Fund — Press Release No. 05/86, April 14, 2005