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Africa Watch

Africa Renewal
From Africa Renewal: 

Decade of Sustained Growth
Ghana's economy moves up another notch

Tema oil refinery in GhanaTema oil refinery in Ghana: As oil production rises, Ghana will need to carefully manage the revenue while also avoiding over-dependence on the sector.
Photograph: Reuters / Yaw Bibini

Buoyed by oil revenue, stronger fiscal discipline and a decade of sustained growth, Ghana officially entered the ranks of middle-income countries on 1 July. According to the World Bank's country classifications, Ghana's 2010 per capita gross national income of $1,190 shifted it from the low-income to the lower-middle-income category. It was among four African countries to move up the ratings ladder, joining Zambia and Mauritania, which also climbed from low- to lower-middle-income status, and Tunisia, which moved from the lower-middle to the upper-middle-income category.

World Bank analysts predict that Ghana's economy will grow at a blistering 13.4 per cent in 2011 — the highest in sub-Saharan Africa and among the fastest in the world. Oil will account for only about 2.5 per cent of Ghana's gross domestic product (GDP) this year, with much of the growth coming from farming and services, which accounted for over 80 per cent of GDP last year.

As a result of that broad-based growth, says the Bank, Ghana is one of only a handful of African countries on track to reach the key Millennium Development Goal of halving extreme poverty by 2015. The West African country has also made impressive strides towards other MDG targets: reducing the child mortality rate from 106 per thousand in 2000 to 69 last year and increasing the combined graduation rate for primary and secondary schooling from 70 per cent to 83 per cent over the past decade.

More should be done to distribute the benefits of growth evenly, the Bank cautions, noting that poverty has actually increased in the northern part of the country in recent years. And, with oil revenues set to rise in the coming years, the Bank is urging the government to put in place stronger regulatory and policy safeguards so that Ghana can manage that income well and also not become excessively reliant on oil at the expense of other economic sectors. But with inflation down, foreign direct investment flooding in and a debt-to-income ratio of less than 3 per cent, Ghana seems likely to stay in the ranks of the world's leading economic performers. 

In East and West, funding to boost African regional integration

On 14 July the African Development Bank (ADB) announced that it would provide $40 million to upgrade the Rift Valley Railway, an important East African rail corridor that connects the port city of Mombasa, Kenya, with Uganda's capital, Kampala. The railway loan is part of a five-year $246 million upgrade to the line, which will receive new locomotives and freight cars, signalling equipment and track work along the 100-year-old line. Currently, railways move just 8 per cent of the region's freight, while 92 per cent travels by road. The resulting inefficiencies and delays have imposed heavy transport costs on shippers, raised prices for consumers and damaged the competitive position of East African exporters. The overhaul is expected to more than double the railroad's carrying capacity to 3.3 million tonnes per year by 2015 and cut shipping costs by 30 per cent.

The following day the ADB announced that it will provide €60 million to expand a shipping container terminal in Lomé, Togo. The goal is to increase Lomé's container capacity by more than sixfold, from 221,000 containers per year to 1.5 million. The port boasts one of the few deep-water harbours in the region. In addition to Togolese freight, it handles cargo for Togo's landlocked neighbours, Mali, Niger and Burkina Faso, as well as northern Nigeria.

Port authorities have reached agreement with the Mediterranean Shipping Company, the world's second largest shipping firm, to channel most of its West and Central African shipments through the expanded Lomé facility. The expansion is also expected to promote greater regional economic integration, create jobs and reduce shipping costs and delays.

Economic Growth
Nigeria primed for prosperity

Nigeria Stock Exchange in LagosNigeria Stock Exchange in Lagos.
Photograph: Flickr / S. Remeika

With one of the faster growing economies in the world today, Nigeria is projected to overtake South Africa as Africa's largest economy by 2025, according to a report by a US bank, Morgan Stanley. That prediction is also in line with the World Bank's assessment, which recently noted that the country is ready to "build a prosperous economy … and reduce poverty." Last year the West African giant's economy grew by a very robust 8.4 per cent.

Vibrant retail trade, increasing oil production and a current account surplus are key factors driving the Nigerian economy forward, emphasizes Morgan Stanley. Although oil and gas exports account for 90 per cent of Nigeria's exports, the World Bank notes that the country is expanding its revenue from other sectors as well. Between 2003 and 2009 the non-oil economy grew by an average of 9 per cent per year. "Growth continued to be broad-based … driven by strong performance of the agricultural, trade, telecommunications and manufacturing sectors."

The newly appointed finance minister, Ngozi Okonjo-Iweala, is however alarmed at recurrent expenditure, which is almost 74 per cent of the budget, leaving little for capital. Ms. Okonjo-Iweala, who was a World Bank managing director until her ministerial appointment in July, wants more investments in employment-generating sectors. It is estimated that some 50 million youths are unemployed in Nigeria.

Insufficient power supply is another major concern. Nigeria currently generates 3,500 megawatts of electricity at best, although it needs 104,000 megawatts, according to former presidential spokesman Olusegun Adeniyi.

Morgan Stanley acknowledges that Nigerian institutions "do not have a good track record." The Economic and Financial Crimes Commission, an anti-corruption agency, recovered $9 billion from corrupt public officials between 2005 and 2010, reports Vanguard, a Nigerian newspaper. President Goodluck Jonathan has promised to fight corruption more energetically, as a key element of building a more prosperous economy.

Africa needs more manufacturing, argues the UN

The average growth of African economies has been up in recent years and investor interest is booming. Yet the continent's manufacturing sector continues to lag, according to the UN Industrial Development Organization and the UN Conference on Trade and Development. "The share of African manufacturing in gross domestic product (GDP) rose from a low of 6.3 per cent in 1970 to a peak of 15.3 per cent in 1990," notes their Economic Development in Africa Report 2011. "Since then, there has been a significant decline in the contribution of manufacturing to GDP."

The continent now accounts for only about 1 per cent of global manufacturing. Most of Africa's manufacturing firms are small or micro-enterprises. Although bigger firms are present, mostly in the raw material and extractive sectors, they offer only limited job opportunities. So far, says the report, "The labour-intensive manufacturing sectors (e.g. textiles, apparel and leather products) play a rather limited role in African manufacturing today, both in terms of domestic manufacturing production as well as export." In fact, it adds, "The share of labour-intensive manufacturing activities in manufacturing value-added (MVA) fell from 23 per cent in 2000 to 20 per cent in 2008."

Such mediocre performance is bad news for Africa's long-term prospects, the report says. It argues that recent research shows that building a strong industrial sector — with manufacturing at its core — is vital for economic development. "The manufacturing sector is the component of industry that presents greater opportunities for sustained growth, employment and poverty reduction in Africa," the report affirms.

African countries remain committed to promoting industrial development. What they now need, argues the report, is a "practical, well-designed approach to industrialization." That should entail preserving and developing Africa's agriculture, a "major source of revenue, employment and foreign exchange earnings."


José Graziano da SilvaPhotograph: UN Photo / Paulo Filgueiras

José Graziano da Silva of Brazil has been elected the new director-general of the UN Food and Agriculture Organization (FAO). Since 2006, he has served as FAO assistant director-general and regional representative for Latin America and the Caribbean. He succeeds Jacques Diouf of Senegal.

Margaret VogtPhotograph: UN Photo / Evan Schneider

The UN Secretary-General has appointed Margaret Vogt of Nigeria as his special representative and head of the UN Integrated Peacebuilding Office in the Central African Republic (BINUCA). At the time of her appointment, Ms. Vogt served as deputy director of the Africa I Division in the UN Department of Political Affairs. She previously served the UN in Somalia, was director of the Africa Programme of the International Peace Academy and taught at the Nigerian Institute of International Affairs.

Christine LagardePhotograph: UN Photo / Eskinder Debebe

The Executive Board of the International Monetary Fund (IMF) selected Christine Lagarde of France to serve as the Fund's managing director for a five-year term starting on 5 July 2011. Ms. Lagarde, who succeeds Mr. Dominique Strauss-Kahn, is the first woman named to the top IMF post since the institution's inception in 1944. She had served as France's minister of finance since June 2007, and prior to that was minister for foreign trade.

Sahle-Work ZewdePhotograph: UN Photo / Eskinder Debebe

Sahle-Work Zewde of Ethiopia has been named by the Secretary-General as director-general of the UN Office at Nairobi (UNON), at the level of under-secretary-general. At the time of her appointment she headed the UN Integrated Peacebuilding Office in the Central African Republic.

Koji Sekimizu of Japan has been elected as the secretary-general of the International Maritime Organization (IMO). Mr. Sekimizu, who has been with the IMO Secretariat since 1989, was previously the director of its Maritime Safety Division.

Hilde JohnsonPhotograph: UN Photo / Evan Schneider

The UN Secretary-General has appointed Hilde Johnson of Norway as his special representative and head of the UN Mission in the Republic of South Sudan (UNMISS). Previously, as the deputy executive director of the UN Children's Fund (UNICEF), she led the agency's humanitarian operations, crisis response and post-crisis transition programmes. From 1993 to 2005, Ms. Johnson was a member of Norway's parliament and a cabinet minister for seven years.

Abou MoussaPhotograph: UN Photo / Evan Schneider

Abou Moussa of Chad has been appointed as special representative and head of the UN Regional Office for Central Africa (UNOCA), based in Libreville, Gabon. UNOCA was established on 1 January 2011. At the time of his appointment, Mr. Moussa served as the UN's principal deputy special representative in Côte d'Ivoire. He previously worked in various postings with the office of the UN High Commissioner for Refugees (UNHCR).

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