Average economic growth of 5.1% in Africa in 2004 was widely heralded as a breakthrough for the continent. The 5% barrier is regarded as the line above which real improvements in the standard of living can be made in developing countries, given that the population of many states is still growing by 2-3% a year. Growth in 2005 was almost as high at 4.9% and even higher growth is predicted for the following years, so could Africa finally be entering a period of sustained growth and development?
The economic figures for 2005 were published by a joint report by the African Development Bank (AfDB) and the Organisation for Economic Cooperation and Development (OECD).
The African Economic Outlook (AEO) report estimated that the 4.9% growth in continental GDP resulted in an average 3% rise in per capita incomes as a result of average population growth of 1.9%. It also revealed that the 5.1% growth figure for 2004 has now been upgraded to 5.3%. The OECD predicts even higher average growth in Africa of 5.8% and 5.5% for 2006 and 2007 respectively, so continental growth is certainly higher now than during the 1980s and 1990s.
The report stated: "Two thirds of the 30 countries surveyed in the Africa Economic Outlook report showed a net growth in investment that was by far the best in seven years. If the good weather of 2005 holds up, along with world commodity prices, the improvement could continue into 2006 and 2007. But if oil prices stay high, the threat to the continent's oil importing countries should not be underestimated."
At this stage, there does not seem to be any likelihood of a repeat of the Asian economic miracle. During the 1980s and 1990s, many Asian countries routinely registered GDP growth of about 10% a year, which can revolutionise living standards and investment prospects if sustained for a decade or more. It is widely quoted that Nigeria and Malaysia enjoyed the same income per head of population at independence but their very different histories are borne out by the massive difference in income today. Even taking into account the recent oil boom, Nigerian GDP per head stands at $390 a year, whereas the Southeast Asian country now records $4,650 per head.
Africa as a whole is a long way from such levels of growth, although some countries, such as Equatorial Guinea because of its oil boom and Mozambique because of its low starting point and strong economic policy, have recorded double digit growth in recent...