Sub-Saharan Africa (SSA) is finally on the move. After experiencing several decades of economic stagnation or outright decline, economic growth has finally returned to the region. In fact, six of the ten fastest growing economies in the last ten years were in SSA.
The key results of the report are:
Growth in SSA this year is expected to average 5.5%, and 6% in 2012. The only region currently growing faster is East Asia.
The debt burden for the region, as measured by the stock of external debt to GDP, decreased from an average of 120% in 1994 to only 21% in 2009.
From 2004, FDI inflows to Africa reached US$72 billion in 2008, the continent’s highest level of inward FDI since 1970.
Progress in diversification, however, has not been impressive. The top 5 exports for the largest economies still account for more than 70% of total export earnings.
The paper finds that despite the recent gains, the continent has a lot of catching up to do. In 2010, the average real per capita income was US$688, or approximately the same level it was in 1980. In 2008, half of Africans lived in poverty, compared to 25% in the rest of the developing world.
The primary sector in both agriculture and minerals still dominates the region’s economy. The commodity boom was one of the major engines of growth this past decade, there was also a fundamental change in the macroeconomic and business environments. Inflation, budget deficits and debt levels, for example, have been reduced and the ease of “doing business” has increased.
According to the report, substantial challenges remain with the top factors affecting business in most African countries included insufficient access to financing, corruption, followed by inadequate infrastructure.
The paper recommends if the SSA countries are to become true economic lions, they will need to increase substantially their industrial capabilities and also improve their urbanization strategies centered on key cities across SSA.