No end to poverty

Robert Laing

Robert Laing

The good news is that Africa's economic growth will reach nearly six percent this year on the back of soaring commodity prices.

The bad news is it needs to be eight percent to meaningfully reduce the continent's high poverty levels.

The bonanza enjoyed by Africa's oil exporters will outweigh the economic slowdown for importers like South Africa, lifting the continent's gross domestic product (GDP) growth to 5,9percent from 5,7percent last year, according to the 2008 African Economic Outlook.

Though South Africa is one of the few African countries that will fail to sustain its GDP growth above five percent this year - the official forecast is four percent - it still dominates the continent's economy, attracting half of Africa's foreign investment through the JSE, whose turnover is 100 times Africa's second biggest stock exchange in Nigeria.

The report concluded that Africa was doing better due to a favourable external environment but also due to internal factors such as improving democracy.

Prospects for sustained improvement are brightened by new drivers of growth such as increased economic relations with China and India.

At the same time, emerging risks including rising food prices cloud the future prospects.

Angola was rated the continent's star performer, averaging nearly 12 percent GDP growth over the past eight years, followed by other oil producers Sudan, Libya and Egypt.

While the oil producing countries are doing their best at the moment, the report warned that the continent's 10 least diversified economies are oil exporters.

Cape Verde is expected to be the best performing non-oil producer this year with an economic growth of eight percent.

High commodity prices and good weather would probably maintain Africa's GDP growth at six percent next year, but eight percent was needed to achieve the Millennium Development Goal of halving the proportion of people living in extreme poverty by 2015, African Development Bank chief economist Louis Kasekende said.