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Wednesday, 26 September, 2001, 13:44 GMT 14:44 UK
Price and exports falls hit Africa
Economic growth in Africa is projected to reach 4% this year, according to a report by the International Monetary Fund (IMF).

Local influences still play the dominant role in the economic prospects of most African countries

International Monetary Fund
Growth is expected to be held back by low non-oil commodity prices which will hurt exports earnings for many African countries, the Fund said in its bi-annual World Economic Outlook report, noting that many countries suffer from large trade deficits.

"Among food and beverages, the most significant development has been the severe drop in coffee prices - down more than 60% since 1997," the report said.

Aluminium and copper prices have also fallen this year and "could fall further as global demand weakens", the Fund warned.

In addition to falling commodity prices, the global economic slowdown is expected to slash export volumes, the report said.

But the improving security situation, with fewer African wars this year than last, will help some countries recover.

Local factors

Exports account for about one third of Africa's gross domestic product (GDP).

Poor woman cooks food
Education and poverty relief is key to bring about growth
But the Fund warned against overemphasising the importance of the global economy and the financial markets for Africa's economies.

"Global and commodity market developments notwithstanding, local influences still play the dominant role in the economic prospects of most African countries," the report said.

"In particular, the outlook for private investment, economic diversification and longer-term growth is generally brighter in countries that have pursued sound macroeconomic and structural policies."

The IMF report was published on Wednesday but written on the basis of information gathered ahead of the terrorist attacks on the US on 11 September.

Regional differences

Within Africa, there are important regional differences, according to the IMF report.

Child squatters in Johannesburg
The next generation of Africans
Oil and gas producers such as Algeria and Nigeria have benefited from high oil prices for much of this year, the report said.

A sharp fall in global oil prices will reduce their energy exports earnings.

The fall in energy prices will benefit oil importers which have suffered from the high prices earlier this year.

Weak global food prices have hit Kenya and Uganda hard while Benin, Chad and Mali have been hit by falls in cotton prices.

Malawi and Zimbabwe have been hurt by falling tobacco prices, while aluminium and copper price falls have hit Mozambique and Zambia.

The challenge

African countries are still burdened by the size of their debts and by the cost of servicing them, the fund pointed out.

"The central challenge remains how best to improve the environment for growth and investment, particularly through improving public service delivery," the Fund said.

The IMF said that this should be done by:

  • improving education and poverty relief
  • promoting conflict resolution and prevention
  • strengthening infrastructure
  • liberalising trade to reverse Africa's declining share of world trade
  • improving governance

"The main responsibility for such progress must, of course, lie with African governments themselves," the IMF said.

See also:

07 Sep 01 | Business
Zimbabwe's economic crisis
30 Aug 01 | Business
Strike shakes South Africa
16 Aug 01 | Business
Africa insures foreign investors
19 Jul 01 | Business
India/South Africa trade zone talks
30 May 01 | Business
African bank hit by protests
29 May 01 | Business
West urged to lift African imports
28 Apr 01 | Business
Africa pushes for more IMF reforms
18 Jul 01 | Business
World inequality
17 Jul 01 | Business
African exchanges plan alliances
30 Apr 01 | Business
Uganda hit by coffee price fall
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