By Joseph Deaux
23 April 2008 [MEDIAGLOBAL]: The Economic Commission for Africa (ECA) reported this month that economic growth increased over the past year, but much more needs to be accomplished.
Growth in Southern Africa exceeded expectations, and development of financial sectors in Northern Africa was mostly due to the rapid rise in gas and oil prices.
“East African countries lead with a growth of 6.2 percent,” said Pingfan Hong, Chief of the Global Economic Monitoring Unit.
The findings came as little surprise to the Commission, which has observed this trend for years.
Even though positive speculation has had results, it has not been enough to keep Africa on track to meet the United Nations’ Millennium Development Goals (MDGs).
Hong told MediaGlobal that the report presents a mixed picture. Eighty percent of exports were commodity based, which gives the 20 to 30 percent growth of all exports an inflated appearance—only 20 percent of exports were manufactured goods.
In order for sustainable growth to continue, African nations must improve their capacities to export manufactured goods.
The report warned that, “the vast majority of African countries will not meet the MDGs if current financing trends continue.”
Since the Monterrey Consensus in 2002, there has been very limited progress in realizing the objectives of Africa, said Richard Kozul-Wright, Chief of the Development Strategy and Policy Analysis Unit.
The Monterrey Consensus covered six core areas of concern. Of those, five lag behind their expected targets.
The report emphasized that “it is only through the implementation of these commitments that African countries and the international community can achieve meaningful results in poverty reduction and lay the foundation for a brighter future for the African people.”
The ECA’s recommendations for encouraging sustainable progress included boosting domestic savings, promoting the use of microfinance institutions and reducing capital flight.
Beyond the obvious economic transformations that must occur, Kozul-Wright argued that further discussion of aid is crucial.
“Aid flows to Africa remain quite weak,” he said, adding that funds are well below the $50 billion target hoped for by African officials. Disbursements have fallen short of initial commitments, and other typical pitfalls of aid have occurred.
A significant part of aid has been debt relief – another snare in the process. Although debt relief is widely practiced, it fails to promote new development throughout economically stricken regions of Africa.
Kozul-Wright maintained that, from a development perspective, states must move from debt relief and sponsor tangible aid. He stated that the sustainability of African development is in doubt.
Hong told MediaGlobal that Africa has increased ties with China and India, and as a result of these new partnerships, African exports to China have quadrupled.
According to the report, “from the perspective of African countries, the remaining challenges are to ensure that the negotiations result in a final agreement with concrete reductions in agriculture tariffs, domestic support and liberalization of industrial goods.”
A key point of contention in the report was the question of whether Africa could benefit if developed nations opened up their markets to the continent.
As for future prospects, the ECA expressed concern over worsening economic conditions within the United States.
“Most African countries have appreciated against the dollar,” said Hong, warning that many African currencies are pegged to the dollar and economies dependant on U.S. markets face heightened risk.
The report concluded that “it is through a democratic process…that these multilateral financial institutions can win back the trust and confidence of African countries and make progress in effectively integrating the continent into the global economy.”