World bank expresses guarded optimism about Africa's growth
Regional, Economics, 4/29/1999

The World Bank has said that although Africa has recorded positive growth in the past three successive years, optimism about the region must remain guarded because performance levels still fall short of levels needed to substantially reduce poverty and deliver growth to all layers of society.

In its 1998 annual report released at the ongoing spring meetings of the Bank and the International Monetary Fund (IMF) in Washington, the financial institution noted that Africa's average gross domestic growth was 3.8 percent in 1997, with 37 countries recording positive growth, 21 of them at 5 percent or more.

But the bank also drew attention to serious challenges to recent progress, which include the threat of HIV/AIDS, the region's dependence on development assistance, the rapid rise of domestic debts and the potentially damaging effects of the east Asian crisis.

"The majority of African economies have responded positively to growing social stability and sound policies, but the plight of Africans in some eight or so countries still severely affected by social and political instability must not be forgotten," the Bank warned.

The Bank also deems that the continent needs growth in trade and investment.

Currently 61% of exports are made up of agricultural products, minerals and metals, and only 19 percent manufactured," the Bank pointed out. While noting that Africa was able to attract an increase of long-term capital flows from four billion dollars in 1996 to eight billion dollars in 1998, the Bank also noted that the flow was still a small fraction of the 256 billion dollars total flows to developing countries.

The bank advised that "Africa must attract more investment, not only from foreigners, but from Africans themselves: Some 37 percent of African assets are held abroad..., higher than any other region."

To support Africa in trade reform, the bank said it helped a number of African countries in 1998 fiscal year to lower trade barriers and increase competitiveness.

Currently, the bank is discussing with the Francophone West African Economic and Monetary Union, ways of strengthening their fiscal policies and reduce trade taxes that account for up to 40 percent of fiscal revenue in some countries.

In other areas, the bank is also supporting financial sector reforms in about 30 countries where about 397 million dollars has been committed in loans.

Aside from supporting country projects, the bank reported that it was also assisting the West African and Central African Economic and Monetary Unions to develop common payment systems and improve banking supervision.

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