Commodities boost African growth

Oil exporting nations must fund domestic investment, the UN says

Growth in African economies in 2007 has not been translated into social development, the UN Economic Commission for Africa (ECA) has reported.

Africa's economy grew by 5.8% last year, thanks largely to "robust global demand" and rising commodity prices.

ECA's annual report predicted economic growth of 6.2% for the continent.

But it said a slowing US economy, a fall in global commodity demand, high oil prices, political instability and poor infrastructures could hit growth.

Economic reforms

"African economies continued to sustain the growth momentum of previous years, recording an overall real GDP growth rate of 5.8% in 2007," said the report.

"Although 30 countries recorded higher economic growth rates in 2007 than 2006... economic growth recovery in Africa has not yet translated into meaningful social development and has not benefited vulnerable groups," it added.

"Africa's growth performance was driven mainly by robust global demand and high commodity prices."

But ECA said there were a number of other factors that fuelled the growth.

These included continued consolidation and management of macroeconomic stability, commitment to economic reforms, increased private capital flows, debt relief and increasing non-fuel exports.

'Productive capacity'

The report also called on Africa's oil producers to spend their revenues wisely on other areas of the economy, instead of just pumping them into oil production.

"Rising oil revenue fuels rapid increases in domestic demand that cause prices to rise in oil producing countries," the report stated.

"Oil exporting countries must direct a sizeable proportion of oil revenue to finance domestic investment. This will help to build productive capacity instead of fuelling government and private consumption."

Africa recorded an average budget surplus of 2.4% of gross domestic product in 2007, of which 13 oil producing countries accounted for a bigger chunk of that, with an average surplus of 5.3%, down from 6.1% in 2006.

The continent's official debt to governments and multilateral institutions declined to $144.5bn in 2007 from $205.7bn in 1999, thanks to relief programmes.

Debt to banks and other private creditors by African nations rose from $92.4bn in 1999 to $110.2bn last year, the report added.