MDGs still under threat despite economic growth

A study conducted by the Organisation for Economic Co- operation and Development (OECD) recently indicated that the continent as a whole was expected to post growth of around 5.8 percent this year, before figures tapered down to around 5.5 percent in 2007. It said the continent’s economic expansion would be inspired by the strong performance of African oil producing nations, which have benefited from “windfall” payments caused by high international oil prices. The think-tank, however, warned that the gains would “need to be managed carefully” with a significant amount of the funds to be used for investment in transport and other infrastructure as well as in human resource development in order to ensure sustained economic growth after the current commodity boom was over. “Overall, the outlook for much of Africa continues to be more favourable than it has been for many years. Continued global expansion means sustained demand and higher prices for African oil and other industrial raw materials. “An increase in official development aid and improving macroeconomic stability have also contributed to Africa’s positive economic outlook. “In addition, growth has been boosted by increased oil production in Southern and Central Africa,” the OECD said. The surging oil prices have boosted economic prospects for the continent as a whole, which posted lukewarm overall growth figures of around 4.9 percent last year. However, the OECD report noted that despite the positive fortunes of oil and commodity producers, African countries that were net oil importers continued to experience hard times. The huge import costs of oil have adversely affected non-producing countries, which have been forced to dig deeper into their pockets to procure the commodity. The result has been a crippling effect on industrial manufacturing and agricultural production capacities of non-oil producing nations, which have experienced relatively slow growth. A number of African countries have also passed on the fuel importation burden to their populations, which has seen a soaring cost of living in a number of countries, including Zimbabwe, Botswana and Zambia. But in other countries, “price controls and subsidies have shielded consumers from the full effects of the oil price increases, and these policies may prove to be unsustainable”, the OECD observed pointedly. Apart from burgeoning import costs, the OECD also said “conflicts and natural disasters in countries such as the Sudan, Zimbabwe, Ethiopia and Nigeria” had stunted overall economic growth. It also said several countries in the continent were “still riddled by corruption which is hindering private sector development”. The OECD said that although development aid was expected to increase during the year, it was unlikely that this would be high enough to “allow countries to achieve the Millennium Development Goals by 2015”. Under the UN’s Millennium Development Goals programme, a number of countries have pledged to try to eliminate extreme poverty and hunger, achieve universal primary education, and reduce disease mortality in the world by 2015. At the G8 summit in Gleneagles, Scotland, in July last year, leading industrialised countries pledged to double aid to Africa in the hope of encouraging the continent to meet the set targets. But despite recent economic growth and rising aid assistance, projections by the World Bank show that Africa is not on target to meet the objectives. The OECD’s African Economic Outlook for this year also included a focus on transport infrastructure, which detailed that African roads, railways, airports, ports, and air space are poorly planned and badly managed. “The resulting unsound infrastructure and unsafe transport services, combined with high user costs, leave many poor people stranded,” it said.

June 2006
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