Sub-Saharan set for faster growth on commodities: World Bank
WASHINGTON (Reuters) - Sub-Saharan African economies will experience faster growth this year as still high commodity prices and investments in mining offset the drag from weak exports to Europe, the World Bank said on Wednesday. In its twice-yearly analysis of the issues shaping Africa's economic prospects, the World Bank estimated growth in sub-Sahara Africa rising 5.2 percent this year, which will be an acceleration from the 4.9 percent expansion logged in 2011.
That would take growth in the regional economy just above the pre-crisis average of 5 percent. The estimate is a touch below the International Monetary Fund's forecast for 5.4 percent growth this year. "African economies continue to show resilience and some of the fastest-growing economies in the world are now in Africa," said Obiageli Ezekwesili, the World Bank's vice president for Africa.
"The urgent agenda remains sustaining the macroeconomic reforms while accelerating the structural reforms that will deliver the right quality of growth that creates jobs and raises incomes on the continent." However, the Bank noted that the regional economy was vulnerable to commodity price declines, given the cooling in Chinese growth. Commodities account for 70 percent of sub-Saharan Africa's exports. But the region has become a magnate for capital inflows as the debt crisis in Europe forces investors to find other places for their money.
According to the Bank, capital flows to sub-Saharan Africa rose by $8 billion in 2011 to $48.2 billion. Foreign direct investment, which accounts for about 77 percent of all capital flows to the region, contributed to about 83 percent of the increase. "Recent foreign direct investment to the region has been spurred by increased global competition for natural resources, higher commodity prices, robust economic growth and a fast rising middle class," the Bank said. "The region is increasingly being recognized as an investment destination, including from private equity investors."
However, it is not good news all round, with food insecurity on the rise. Grain production in the Sahel is at least 25 percent below the 2010/11 season, with Chad and Mauritania recording declines of about 20 percent. The Bank said there were concerns that the food crisis could spread to Senegal, Cameroon and northern parts of Nigeria. "Production shortages are intensified by high international prices," the Bank said. "West Africa is particularly vulnerable to higher cereal prices as the region is highly dependent on rice imports for consumption."
In West Africa, yet another poor rainy reason was predicted and prices food prices in Ethiopia and Uganda have remained elevated. In southern Africa, prospects are better, the Bank said.