IMF optimistic about Africa development prospects
 
2008-02-19 10:11:54
By Theo Mushi

A recent report published by ``IMF Survey`` has revealed that growth in Sub - Saharan Africa is expected to hit 6.7 percent in 2008. It has divided African countries into four categories. These are oil producers, middle income countries, low income countries and fragile economies.

Each of these has separate economic forecasts and oil producing countries are expected to grow at 10.6 percent while middle income countries will achieve 4.2 pc growth rate. For low income and fragile countries the projected economic growth rate is 7 per cent and 5.5 pc respectively.

IMF notes that Africa has been experiencing the lowest inflation rate and the strongest growth, thus expansion of economies has been attributed to rising productive in oil exporters and strong domestic investment.

Other contributory factors are the progress in macro-economic stability and reforms and strong demand for commodities has also contributed to high economic growth rate in Sub-Saharan Africa (SSA).

Other factors which have contributed to strong growth rates in Africa in recent years are increased capital flows and debt relief received under HIPC.

Average inflation rate is expected to drop further for oil producing counties and this is due to stabilization gains in Angola and Nigeria. Middle income countries will experience an inflation rate of around 6.5 percent.

For low income countries, the inflation rate may drop due to an increase in food supply and the fait that monetary policies will check out inflation expectations and the effects of higher fuel prices.

It is noted that in fragile economies which are experiencing political strife and civil wars inflation will remain high with large differences among the countries.

It has been asked if SSA can sustain high economic growth rates. It all depends on how to use higher incomes to accelerate socio-economic development.

The future of the economies of sub-Saharan Africa depends on continued structural and institutional reforms to increase productivity.

There is a need to strengthen resilience of African economies to shocks and these include volatile terms of trade, weak institutions. There is a need to create favourable climates to attract investment in non-commodity sectors.

There are in perceived risks to Africa growth prospects and the Regional Economic Outwork is positive but is clouded by external and internal risks.

For East Africa growth prospects have been adversely affected by the political crisis in Kenya which has been the hub of economic growth in East Africa.

There are four landlocked countries which use Mombasa put for their exports and imports.

These included Uganda, Rwanda, Burundi and Eastern Democratic Republic of Congo (DRC).

Most of the tourists who visit Tanzania Mainland and Zanzibar land in Kenya first and then proceed to Tanzania.

The original target was to receive 1 million tourists by 2010 but this may not be achieved.

Tourism is now the third important contributor to foreign exchange earnings in Tanzania as USD600million was realised from tourism in 2006/7.

Tanzania is enjoying zero tariffs for it’s to exports to Kenya under the East African Customs Union framework. But the post election political crisis means the window was no longer stable.

There are threats to the Tanzanian economy whose growth rate is projected to be over 7 percent and inflation rate of five percent.

• SOURCE: Guardian