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Last Updated: Tuesday, 16 May 2006, 11:44 GMT 12:44 UK
African growth prospects improve
Nigerian boy selling petrol
African governments have reduced petrol subsidies
The prospects for Africa's economies have improved over the past year, according to the OECD.

The Paris-based think tank says that Africa as a whole is set to grow by 5.8% this year and 5.5% in 2007.

But there is a big difference between countries who were oil exporters and those who have to import oil.

In 2005 oil exporting African countries grew by 5.5%, compared to just 4.4% for those who were oil importers.

Conflicts and natural disasters in countries like Sudan, Zimbabwe, Ethiopia and Nigeria also continue to dampen overall economic growth.

The joint study by the Organisation for Economic Cooperation and Development (OECD) and the African Development Bank highlights the importance of rising commodity prices, including oil, for boosting African growth.

It says that Africa's economies expanded overall by 4.9% in 2005, with per capita income rising by 3%.

AFRICA'S ECONOMY
Can exports boost growth?

But the report noted that oil-importing countries faced very different challenges" from those who benefited from rising oil and commodity prices.

The report notes that democracy has started to take root in a number of countries in the last decade and that there are fewer conflicts. However many countries are still riddled by corruption, which is hindering private-sector development.

Using the windfall gains

The OECD urges those countries who have benefited from higher oil and commodity prices to use their windfall gains wisely.

"Gains will need to be managed carefully, with a sizeable proportion used for investment in transport and other infrastructure and in human resource development to ensure sustained economic growth" once the boom is over, it advises.

The shortfall in infrastructure development, such as roads, ports, and airports, has been a key factor hindering the prospects for long-term growth, The OECD says.

Child in Africa
Child poverty is still endemic in Africa despite economic growth

Only 20% of Africa's roads are paved, compared to 40% in South Asia. Only one African seaport is owned by one of the five largest global port operators, and most container terminals are under-equipped and facing capacity limits.

And only six African airports meet the FAA's highest category I status required for international flights. The continent has just 4.5% of global air traffic - but 25% of accidents.

Development goals

For countries who are oil importers, the report warns that higher oil prices will stoke up inflationary pressures from which consumers have so far been shielded by subsidies and price controls.

Their trade balances are also under pressure, as higher oil import bills combine with lower prices for agricultural products such as cocoa and cotton.

And the OECD says that although development aid is set to increase, it is unlikely to be high enough to "allow countries to achieve the Millennium Development Goals by 2015".

The international community has pledged to try to eliminate extreme poverty and hunger, achieve universal primary and education, and reduce disease mortality by 2015.

At the G8 summit in Gleneagles, Scotland in July 2005, leading industrialised countries pledged to double aid to Africa.

But despite recent economic growth and increased aid, projections by the World Bank show that Africa is not on target to meet these objectives.


SEE ALSO:
Africa 'coping' with oil prices
05 May 06 |  Africa
Nigeria settles Paris Club debt
21 Apr 06 |  Business
Business must take African stand
19 Jan 06 |  Business
African growth at eight-year high
18 May 05 |  Business
G8 leaders agree $50bn aid boost
08 Jul 05 |  Business


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