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Friday, 16 February, 2001, 12:52 GMT
Africa's economy under spotlight
women in Ethiopia
Ethiopia is one of the poorest countries in Africa
On the eve of a groundbreaking visit to Africa by the leaders of the World Bank and the International Monetary Fund, a new report has shown that foreign aid and direct investment to the region has slumped.

The research by the World Bank also showed that growth in Sub-Saharan Africa slowed significantly after 1998.

Average per capita GDP fell by almost 1% in 1998-99.

The bank attributes this to regional and civil wars, poor governance in some countries, and serious external shocks such as the rapid rise in oil prices.

The report also warns that growth is well below the 5% annual level needed to prevent a rise in the numbers of poor people on the continent.

It says some 300 million Africans live on barely 65 cents (45p) a day, with the lowest incomes in Ethiopia, the Democratic Republic of the Congo, Burundi and Sierra Leone.

Official aid

Foreign aid to Sub-Saharan Africa dropped significantly during the 1990s.

Official aid levels to the region in 1999, for example, was $10.8bn, compared with $17.9bn in 1992 when development assistance reached its highest-ever levels.

Foreign direct investment, another important source of finance, has also tailed off significantly.

During the last decade, $2.52bn flowed into the region, but three countries accounted for much of that total - Angola ($626m), Lesotho ($170m) and Nigeria ($876m).

If South Africa is excluded, five other countries accounted for another $576m - Republic of Congo, Ivory Coast, Equatorial Guinea, Namibia and Sudan.

The remaining 40 countries are competing for just $275m annually in foreign direct investment.

Solid growth for some

Although overall growth trends for the region remained depressed, some African countries are doing well.

Mozambique, Uganda and the Democratic Republic of the Congo have all grown at 7% a year or higher.

Fourteen others - including Rwanda, Sudan, Tanzania and Ghana - have grown on average by at least 4% a year during the 1990s.

"These figures show us that economic reforms over recent years have slowly but surely improved growth in many African countries and allowed the private sector to take root," said Alan Gelb, the World Bank's chief economist for the region.

"However countries are still vulnerable to conflict and external shocks in world markets," he added.

'Extremely significant' visit

The study comes as the World Bank's President James Wolfensohn is preparing to join his counterpart at the IMF Horst Koehler to leave for Africa next week, for what has been described as an 'extremely significant' visit.

Both the World Bank and the IMF have pledged to make the region central to their activities, a radical departure from the way they dealt with it in the past.

The two officials will begin their visit in Mali on Sunday, meeting up with leaders of western and central African nations.

They will then journey on to Nigeria and Tanzania, where they will meet up with 10 heads of state from southern and east Africa.

Their trip will end with a one-day stop in Kenya.

It is hoped that the meetings will help African markets integrate into a global economy.

"The main issue is how can Africa catch up with other parts of the world," said G Gondwe, head of the IMF's African department.

"How to accelerate growth in a sustained manner and how to reduce the colossal amount of poverty that Africa is experiencing now", he added.

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See also:

31 May 00 | Business
African economies 'in reverse'
18 Jan 01 | Africa
IMF withholds Kenyan aid
07 Jul 00 | Africa
IMF boss's promise to Africa
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