New data released by many African countries have shown that the economy of the African continent is in its "healthiest" period in three decades, yet tough challenges still lie ahead for many African countries, analysts said.
AFRICA'S HEALTHY ECONOMIC DEVELOPMENT
Africa is now "at its best period of sustainable development and low inflation," experts with the International Monetary Fund were quoted by the magazine "African Review of Business and Technology" as saying.
Africa has kept an average annual economic growth of more than 5 percent over the past five years, with its 2007 growth reaching a record 6.2 percent. Its annual growth rate of real per capita GDP soared to an impressive 3.6 percent in the 2003-2007 period from a mere 1 percent in the 1997-2002 period.
The steady economic growth of South Africa, Algeria, Nigeria and Egypt have contributed a great deal to Africa's good economic performance in 2007, with their GDP accounting for half of the continent's total, economists noted.
Besides the four economic Powers, economies in five major regions on the continent, namely northern, eastern, southern, central and western Africa, all registered marked increase. Northern, eastern and southern Africa led the economic revival with impressive growth rates of 6 percent, 5.5 percent and 6.1 percent.
A growing number of African countries have attained sustainable economic growth, including both oil and non-oil producing countries, indicating more African countries have managed to attain economy growth without depending solely on oil.
DRIVE FOR GROWTH
Experts generally attributed Africa's economy takeoff to a combination of different factors.
On top of the list is political stability. They noted that more African countries have put an end to chaos and embarked on the road to peaceful economic development and social progress. Thougha few countries are still plagued by violence, such as Somalia and Sudan, to seek peace rather than violence and concentrate on economic development has become the general trend prevailing the African continent.
Better macro-economic management by more African governments also helps boost the continent's economic growth as a whole. Improved financial situation have enabled many African governments to control inflation, attract more investment, and better prevent risks.
In the past two years, Africa has noted for its fastest improving business and investment environment in the world. Ghana and Tanzania rank among the Top 10 countries in the world with markedly improved trade environment.
The preferential economic policies adopted by many African governments have also yielded good results. Measures such as loosening foreign exchange control, lowering land rent, offering tax cuts and experimenting with new forms of cooperation proved effective in luring foreign investors.
From 2003 to 2005, Africa attracted foreign direct investments increased each year from 13.8 billion dollars to 18 billion dollars and to 30 billion dollars, compared to the average annual figure of mere 6.2 billion dollars in the 1990s. In 2006, the investment to Africa hit a record high of 38.8 billion dollars.
The soaring prices of oil and other natural resources such as gold, platinum, iron ore, are another major factor for Africa's strong economic growth. Greater revenues from raw material export have made it possible for many African governments to pour more to speed up their economic development.
Last but not the least, the African continent was blessed in 2007 with favorable weather condition. Except for few countries which were hit by floods, vast areas of the continent enjoyed a fertile year for its farm production.
PROSPECTS AND CHALLENGES
Analysts seem cautiously optimistic about Africa's economic prospects in 2008. As global need for Africa's primary products remains robust, and outside aid projects and debt relief programs for Africa are expected to continue, African countries are keen to keep their strong growth momentum and will stick to their policies of economic reforms and development. These all help make the continent's economy even better in 2008.
Yet, major obstacles and the grave challenges remain in the coming years for Africa, an impoverished continent for so long. It will take time for Africa to heal and gradually grow. The African economy has long been relying on primary products exports, with a simple industry vulnerable to competition pressure and international market turbulence.
High oil prices will affect the economic growth of some African oil importing countries. Some African countries are heavily indebted, leaving them very little for investment in private sectors.
African countries need to make still greater efforts at economic reforms and innovation and make their economic system more diversified rather than depend heavily on the export of natural resources so as to achieve long-term sustainable development, analysts said.
Editor: Yan Liang
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