Africa must step up the tempo - report
28 May 2013, 09:28
Nairobi - Africa has favourable medium-term economic prospects although growth rates haven't recovered to pre-crisis levels, according to a report released on Monday that also fingered rising inequality and abusive practices by multinationals.
"With projected growth of 4.8% in 2013 and 5.3% in 2014, Africa's growth performance would continue to remain below average growth ... preceding the 2009 global recession," the report co-authored by the OECD found.
The continent needs 7% growth to reduce poverty, while its population increases by 2% a year, according to the 2013 African Economic Outlook.
Africa grew by 6.6% last year, mostly thanks to oil-giant Libya's economic recovery from a slump during the unrest that toppled Moamer Kadhafi in 2011.
But poverty isn't falling fast enough, according to the report, which was produced in collaboration with the African Development Bank (AfDB), Economic Commission for Africa (ECA) and UN Development Programme (UNDP).
"The pace of poverty reduction in most countries is falling short of the Millennium Development Goals (MDG) targets," the report found.
Despite the progress the report also marked "increased income inequalities and in some countries deteriorating levels of health and education".
It encouraged countries to diversify their economies on the back of growth.
"Now is the time to step up the tempo," the authors said.
"More equitable human development requires that African countries accelerate their economic transformation, so they can become more competitive and create more gainful jobs."
Financial flows from outside the continent reached a record level of $186.3bn (€144bn) in 2012.
Remittances from families living abroad were the largest component at $60.4bn, ahead of foreign aid at $56.1bn.
Most foreign investment went to South Africa, oil-rich Angola and upcoming natural gas-power Mozambique.
Services, especially in telecommunications and finance, as well as insurance, were major growth sectors.
Though 60% of Africans work in agriculture, the report recommends the continent develop manufacturing to absorb an ever-growing low-skilled workforce.
The report also emphasised the importance of tax reform, especially fairer tax agreements with multinational companies.
"Most African economies have large informal sectors that escape taxes," it noted.
"Excessive granting of tax preferences, inefficient taxation of extractive industries and the inability to fight transfer pricing abuses by multinational enterprises add to the obstacles," the report concluded.