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Wednesday, May 18, 2005

BBC NEWS | Business | African growth at eight-year high

BBC NEWS | Business | African growth at eight-year high African growth at eight-year high
African economies grew more than 5% in 2004, their highest growth in eight years, spurred by high commodity prices, a report has said.

The African Economic Outlook, produced by the OECD Development Centre and the African Development Bank, praised "steadily prudent economic policies".

But it pointed out that Africa was still vulnerable to regional conflicts.

And it called for more debt relief, action against corruption and support for small businesses.

Oil boost

Growth in the region benefited from new oilfields coming on stream in Angola, Chad and Equatorial Guinea.

Central Africa saw a 14.4% rise in growth in 2004 due to the expansion of its oil production capacity.

East Africa grew by 6.8%, while West Africa grew by just half that amount, 3.4%.

Greater political stability in some countries and a significant rise in official development aid to Africa helped foster growth.

African agricultural production also took a turn for the better after the ending of the drought of 2003, which hit Ethiopia, Malawi and Rwanda.

However, the OECD and the African Development Bank expect average African growth to be a little slower next year as no new oil fields will be coming on stream in Central Africa.

The report also highlighted the humanitarian crisis in the Darfur region in Sudan, economic collapse in Zimbabwe and conflicts in Ivory Coast and parts of the Democratic Republic of Congo as factors constraining growth.

Missing middle

The report highlighted what it calls the "missing middle", the shortage of small and medium-sized businesses (SMEs).

Outside of North Africa, Mauritius and South Africa, successful businesses tend to be either very small, such as cooked food sellers, hairdressers and tailors, or very large, such as oil companies or multinationals.

Lack of access to affordable bank loans and credit is the biggest obstacle to the development of African SMEs, the report found.

Leasing, franchising and credit-guarantee schemes can all help small businesses avail of credit, it said.

Too much regulation is also a problem, the report found

While it takes just two weeks to set up a business in Morocco, it can take five months in Angola.

Other obstacles to setting up SMEs include political unrest and the lack of such basic services as electricity and water.

The report was launched in Abuja, Nigeria, at the African Development Bank meeting.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/4558213.stm

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