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UNITED NATIONS
Distr.
GENERAL
E/1996/47
13 May 1996
ORIGINAL: ENGLISH
Economic and Social Council
Substantive session of 1996
New York, 24 June-26 July 1996
Item 7 of the provisional agenda*
* E/1996/100.
REGIONAL COOPERATION IN THE ECONOMIC, SOCIAL AND RELATED FIELDS
Summary of the survey of economic and social conditions in Africa, 1995
CONTENTS
Paragraphs Page
I.OVERVIEW ............................................ 1 - 9 2
II.SECTORAL PERFORMANCES ............................... 10 - 12 5
III.THE EXTERNAL SECTOR ................................. 13 - 16 9
IV.THE SOCIAL SECTOR ................................... 17 - 20 10
V.MAIN POLICY DEVELOPMENTS IN 1995 .................... 21 - 25 12
VI.TRENDS AND PROSPECTS FOR 1996 ....................... 26 - 32 13
I. OVERVIEW
1. In 1995, Africa experienced, for the second consecutive year,
modest economic growth. The gross domestic product (GDP) of the
region increased by 2.3 per cent, compared with a revised figure of
2.1 per cent for 1994 (table 1). Despite this modest recovery, GDP
growth is yet to keep pace with population growth, as a consequence of
which per capita income declined by 0.6 per cent in 1995.
=========================================================================
Table 1
African economic indicators, 1990-1995
(Percentage change)
----------------------------------------------------------------------
1990 1991 1992 1993 1994 1995
----------------------------------------------------------------------
GDP growth - Africa 0.7 3.0 -0.5 0.7 2.1 2.3
Agriculture production
(FAO index 1979-1981 =100)
127.9 133.9 130.9 135.7 138.6 ..
Oil production
(millions of tons) 321.4 336.4 343.4 339.2 338.2 ..
Mining production
index (1990 = 100) 1.0 -4.0 -8.0 -7.0 .. ..
Consumer price index
(1990 = 100) 16.6 31.5 44.9 37.2 60.6 43.4
Oil prices, Brent crude
($ per barrel) 24.0 20.0 19.3 17.0 15.8 17.1
Export prices index
(1990 = 100) 12.4 -9.4 -0.2 -5.2 5.3 6.8
Import prices index
(1990 = 100) 4.5 -0.1 3.4 -0.8 4.1 5.2
Terms of trade index
(1990 = 100) 7.5 -9.3 -3.4 -4.5 1.2 1.5
Exports ($ billion) 99.2 95.0 92.9 87.3 87.9 97.9
Imports ($ billion) 91.6 90.1 93.6 92.7 94.6 108.9
Current account
($ billion) -0.1 -1.7 -5.4 -8.5 -0.5 -2.1
----------------------------------------------------------------------
Source: ECA secretariat.
=========================================================================
2. There were wide differences in performance among group and
individual countries, however. The West, Eastern and Southern African
subregions registered growth rates in excess of the regional average
in 1995, owing to the improved performance in their agricultural and
mining sectors. In West Africa, GDP grew by 4.1 per cent in 1995,
compared to an increase of only 1.0 per cent in 1994, while in Eastern
and Southern Africa it grew, respectively, by 4.8 per cent and
2.9 per cent, as against 4.2 per cent and 2.6 per cent in 1994. GDP
growth has been limited to a mere 1.1 per cent in Central Africa on
account of continuing poor economic performance in the Congo,
Cameroon, Burundi, Rwanda and Zaire. As a group, the least developed
countries experienced a market improvement, the first since 1992.
Real GDP growth rate for the 33 African least developed countries
stood at 2.4 per cent in 1995, against -1.6 per cent, in 1994 (table
2). At the country level, only three countries experienced negative
growth rates in 1995 compared to 14 in the previous year, while eight
countries exceeded 6 per cent growth in 1995, compared to only two in
1994. With regard to sectoral performances, the growth in regional
GDP was derived from the good performance of manufacturing and a
modest rebound in the mining sectors.
3.Despite the recovery of the past two years, many of the factors
responsible for a weak economic performance in Africa over the years are
still at work, as are the development problems and challenges facing the
continent. But the prospects of the continent emerging from them are
now better than ever.
4.There was a lull in monetary expansion in most African countries in
1995 due in part to reduced recourse to credit, finance deficits and the
rise in interest rates, but the excessive liquidity associated with high
levels of monetary expansion in previous years was strong enough in
some cases to fuel inflation in 1995. In Zaire where deficit financing
through money creation was the main determinant of hyperinflation in
recent years, money supply contracted greatly in 1995 and, together with
rationalization of public finances, succeeded in bringing down the rate
of inflation from 9,797 per cent in 1994 to 370.3 per cent in 1995. In
Ghana, on the other hand, there was a budget surplus of 52.6 billion
cedis, or 1.1 per cent of GDP, in 1995 and further modulations in money
supply, but average inflation more than doubled, from 34.2 per cent in
1994 to 70.8 per cent in 1995, due to inadequate levels of food supply,
especially during the first quarter of the year, and adverse price
effects resulting from the introduction of the value-added tax (VAT) in
March 1995. Foreign direct investment (FDI) in Africa, in general, and
in the sub-Saharan countries, in particular, is very unstable. After a
slight increase in 1994, FDI flows to sub-Saharan African countries
declined by almost 27 per cent in 1995, from US $2.9 billion in 1994 to
$2.2 billion. Only a few middle-income countries recorded encouraging
volumes of inflows over the past two years.
5.Trade performance improved in 1995. Provisional estimates by the
Economic Commission for Africa (ECA) show that export earnings increased
by 11.1 per cent, compared to 4.9 per cent in 1994. The increase in
export earnings can be attributed to a modest increase in oil prices,
which fluctuated between $16.4 and $19.2 per barrel in 1995, and the
sustained recovery in mineral and metal prices. However, many African
producers, it would seem, were unable to take full advantage of the
rising export prices for oil, metals and minerals in 1995 due to
supply difficulties and structural constraints, political instability
and lack of adequate investment in the sectors.
6.Policy reforms have made some impact in terms of economic stabilization,
but most African countries have yet to acquire sufficient volume of
external resource inflows to stimulate and significantly accelerate
their economic growth. Net flows of official development assistance
(ODA) to Africa declined from $25 billion in 1992 to $23.5 billion in
1994, due to both the growing demand for aid from countries in
transition, the reorientation of donor countries' aid policies and the
fiscal constraints in donor countries. A very limited number of
countries in Africa attracted resources from the international private
capital markets. Tunisia and South Africa appear to have fared better
than other African countries because of their high level of credit
ratings. They also appear to offer the most attractive environment
for foreign private investment.
===========================================================================
Table 2. Output share and growth rate,
by subregion and economic grouping
------------------------------------------------------------------------
GDP percentage
Per capita GDP, regional share
1994 (1990 $US) 1994
------------------------------------------------------------------------
Central Africa 438 8.7
East Africa 190 6.4
North Africa 1 249 40.8
Southern Africa 1 371 27.4
West Africa 362 16.8
Sub-Saharan Africa 513 61.4
Sub-Saharan Africa without
Nigeria and South Africa 363 30.8
Sahel zone 368 5.9
Oil exporters 882 46.4
Non-oil exporters 538 53.6
LDCs 229 16.0
Non-LDCs 1 020 84.0
Franc zone 574 10.7
Mineral exporters 1 034 30.4
Beverage exporters 260 10.0
All Africa 657 100.0
------------------------------------------------------------------------
------------------------------------------------------------------------
Growth rate at 1990 prices (percentage)
------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 a/ 1990-
1994
------------------------------------------------------------------------
Central Africa 0.1 -1.0 -2.4 -5.9 -2.5 -1.1 -3.0
East Africa 2.8 1.1 -1.3 2.5 4.2 4.8 1.6
North Africa 2.6 3.5 0.5 1.1 2.9 1.0 2.0
Southern Africa 0.2 -0.1 -2.3 1.7 2.6 2.9 0.4
West Africa -3.4 10.8 1.2 1.4 1.0 4.1 3.5
Sub-Saharan Africa -0.6 3.0 -1.0 0.3 1.5 3.0 0.9
Sub-Saharan Africa
without Nigeria
and South Africa -2.8 6.2 -1.4 -0.2 -0.3 3.0 1.0
Sahel zone 0.7 6.7 3.2 -1.3 1.9 1.9 2.6
Oil exporters 2.9 2.9 0.1 0.6 1.6 2.3 1.3
Non-oil exporters -1.1 3.1 -1.1 0.8 2.5 2.3 1.3
LDCs 1.1 1.8 -0.0 -2.4 -1.6 2.4 -0.6
Non-LDCs 0.6 3.3 -0.7 1.3 2.8 2.3 1.7
Franc zone -0.7 0.6 -1.9 -0.3 1.5 3.6 -0.0
Mineral exporters 0.4 -0.9 -1.7 -1.0 1.5 2.8 -0.5
Beverage exporters -9.4 13.2 -0.5 1.4 1.8 5.5 3.9
All Africa 0.7 3.0 -0.5 0.7 2.1 2.3 1.3
---------------------------------------------------------------------------
Source: ECA secretariat.
a/ Estimated.
LDCs = least developed countries.
=========================================================================
7. The external debt and debt-servicing obligations of Africa continued
to pose a major threat to economic recovery in 1995, in the sense that
the debt overhang is still having a negative impact on availability of
resources. A number of middle-income African countries rescheduled their
commercial debt through the London Club, while Nigeria succeeded in debt
conversion. Morocco, Ethiopia, Chad, Comoros, and Co^te d'Ivoire were
granted various cancellations from bilateral creditors.
8. The food situation in some parts of Africa remained a serious source
of concern and anxiety in 1995, despite good overall harvests. The
region as a whole experienced a food deficit of 19.6 million metric tons
in cereals in 1995, while incidence of drought in the third quarter of
1994 and the first quarter of 1995 precipitated famine conditions,
affecting some 10 countries in the Northern, Eastern and Southern
subregions. For a number of other countries - notably Angola, Burundi,
Liberia, Rwanda, Sierra Leone and Somalia - the decline in food
production was simply a consequence of civil strife, population
displacements and insecurity, since agriculture is reduced largely to
subsistence activities.
9. Civil conflicts and political stalemates in governance have
continued to disrupt and paralyse production (especially in Burundi,
Liberia, Rwanda, Somalia, the Sudan, Zaire and Sierra Leone), with
important repercussions on the availability of even the most basic of
social services. Endemic instability in countries with huge population
movements and displacement has often spilled over into neighbouring
countries, disrupting production and economic activities in general, and
further paralysing an already overburdened physical infrastructure,
notwithstanding considerable humanitarian efforts at rehabilitation,
repatriation and resettlement of refugees. High unemployment also
remained a major social problem in 1995. A particularly disturbing
feature of the unemployment situation is the growing number of street
children and young persons (15-24 years old) among the unemployed.
II. SECTORAL PERFORMANCES
10. Growth of output in agriculture - the mainstay of the economy -
was lacklustre. The growth rate of value-added in agriculture
decelerated from 4.2 per cent in 1994 to 1.5 per cent in 1995. Such a
deceleration was much more pronounced in North, Eastern and Southern
Africa, with agricultural growth estimated at -0.7 per cent in 1995, as
against 6.1 per cent in 1994 in North Africa, and 1.1 per cent and 3.0
per cent in Eastern and Southern Africa, respectively. West Africa
performed much better, with value-added in agriculture growing by 4.2
per cent in 1995, although this represented a deceleration from the
5.8 per cent achieved in 1994. There was an overall improvement in
Central Africa's agricultural growth performance, from -1.9 per cent in
1994 to 0.9 per cent in 1995. However, rice production in Africa
increased in 1995 from 14.2 million tons in 1994 to 14.9 million tons.
Also, the production of roots and tubers, which constitute some 20 per
cent of the total food supply in the region, increased by 2.6 million
tons or 1.7 per cent: from 154.7 million tons in 1994 to 157.3 million
tons in 1995. Livestock production was, however, on the decline in 43
African countries due to the policy of rebuilding cow herds in many
drought-affected countries since 1992-1993. The production of pulses, a
key part of the diet in many areas around the region, has not shown any
significant rise since 1990, remaining roughly between 6.5 million tons
and 7.0 million tons, while fruits and vegetable production has increased
by less than 2 per cent annually.
11. The manufacturing sector recorded a positive growth rate of 4.2 per
cent in value-added in 1995, mainly as a result of better input supplies
and improvements in the importation of raw materials for agro-allied
industries (see table 3). It performed poorly in Northern Africa in 1995,
especially in Algeria and the Sudan, where negative growth rates prevailed
in manufacturing value-added (MVA) due in part to internal political
difficulties and shortages of foreign exchange for the importation of
basic industrial inputs. The growth performance of the sector in West
Africa was adversely affected by the unsettled situation of Nigeria
where problems of a battered infrastructure, collapsing consumer demand,
inflation and internal political difficulties arising from a stalled
transition programme have forced manufacturers to cut output and jobs
sharply. On average, in the Southern Africa subregion the manufacturing
sector continued to perform better than those in other subregions,
recording MVA growth rates of 6.9 per cent in 1995, compared with 2.6
per cent in 1994. In South Africa, the largest economy of the subregion,
the manufacturing sector recorded its highest growth since 1990, with the
motor industry, which includes the manufacture of parts and accessories,
being among the fastest growing industries. During the first half of
1995, the manufacturing production index rose by a seasonally adjusted
and annualized 12.8 per cent, in comparison to the preceding six months.
Capacity utilization in manufacturing also increased steadily in the
country, from a low of around 77 per cent in 1992 to a high of
approximately 83 per cent in the first quarter of 1995. Another country
in the subregion, Namibia, performed relatively better in 1995 than in
1994, with an MVA growth rate of 13.5 per cent, as against 4.1 per cent
in 1994. But manufacturing production declined in Zimbabwe due to high
input costs, weak domestic demand, loss of competitiveness in textile
export markets and cash-flow problems of manufacturing firms.
12. In the mining sector, there was an increase of 2.7 per cent in
value-added in 1995, as against -3.7 per cent in 1994 and -0.7 per cent
in 1993. As a result of the extensive reforms in the mining sector in
recent years, exploration and mining investment have increased in several
countries, particularly in precious metals and minerals, including gold,
diamonds and other gem stones. But the improved performance in
production volumes in 1995 was attributable mostly to oil production, as
output figures for major non-fuel minerals during the first three
quarters of the year suggest that their total annual production may have
increased only modestly, if at all. Output of crude oil increased by
4.4 per cent in 1995, in comparison with a virtual stagnation in
production in 1994, largely because of higher production figures in
non-OPEC African countries such as Angola, Egypt and Libyan Arab
Jamahiriya.
=========================================================================
Table 3. Indicators of manufacturing sector performance, by subregion
and economic groupings, 1992-1995
------------------------------------------------------------------------
Share of MVA in regional MVA
Subregions and (percentage)
economic groupings -----------------------------------------------
1992 1993 1994 1995 a/
------------------------------------------------------------------------
Total Africa 100.0 100.0 100.0 100.0
North Africa 39.1 40.1 40.9 41.9
Central Africa 6.4 5.8 5.2 4.9
East Africa 4.0 4.2 4.4 4.5
Southern Africa 41.3 40.5 40.4 39.8
West Africa 9.2 9.4 9.2 9.0
Sub-Saharan Africa 61.7 60.9 60.2 59.2
LDCs 10.4 10.5 10.1 9.9
------------------------------------------------------------------------
------------------------------------------------------------------------
Share of MVA in GDP
Subregions and (percentage)
economic groupings ---------------------------------------------
1992 1993 1994 1995 a/
------------------------------------------------------------------------
Total Africa 15.2 15.1 15.4 15.7
North Africa 15.0 15.2 15.7 15.7
Central Africa 9.0 8.7 8.8 8.6
East Africa 10.9 11.1 11.4 11.5
Southern Africa 23.6 23.1 23.2 24.1
West Africa 8.1 7.8 7.7 8.2
Sub-Saharan Africa 15.0 14.8 14.9 15.4
LDCs 9.4 9.3 9.6 9.7
------------------------------------------------------------------------
------------------------------------------------------------------------
MVA growth rates
Subregions and (percentage at 1990 prices)
economic groupings -------------------------------------------------
1992 1993 1994 1995 a/
------------------------------------------------------------------------
Total Africa -1.0 -0.1 4.1 4.2
North Africa 1.5 1.9 6.6 0.9
Central Africa -10.0 -9.8 -1.4 -0.4
East Africa 2.8 4.7 6.1 3.9
Southern Africa -2.8 -0.5 2.6 6.9
West Africa 1.5 -2.4 1.9 9.8
Sub-Saharan Africa -2.3 -1.1 2.4 6.4
LDCs 0.1 -4.3 2.1 3.4
-------------------------------------------------------------------------
Source: ECA secretariat.
a/ Estimated.
LDCs = least developed countries.
MVA = manufacturing value-added.
=========================================================================
III. THE EXTERNAL SECTOR
13. Africa has failed to take advantage of the dramatic growth in world
trade, due to its diminutive and declining share in world trade and its
continued dependence on primary commodities. The effect of the failure
to diversify and graduate to secondary and tertiary commodities has
increasingly marginalized Africa's share of world trade and trade among
developing countries. Between 1990 and 1995 Africa's share in world
trade declined by a staggering 30 per cent, from 3.1 per cent to 2.2
per cent. The loss in market share is even more spectacular relative to
trade of the developing countries, declining from 11 per cent in 1990 to
6 per cent in 1995, a loss of 45 per cent.
14. In spite of this, the value of exports in 1995 was $98 billion, an
increase of 11 per cent over the 1994 level. The growth in the export
receipt was due to an increase in volume and higher prices for some
exports. On the whole there was a 4 per cent increase in volume which,
along with 7 per cent increase in unit value, jointly contributed to the
higher foreign exchange earnings. The increase in prices did not cover
the whole range of Africa's exportable commodities. Mineral prices were
generally on the upward trend, while for other commodities the increase
was mediocre. The aggregate price index for metals were 19 per cent
higher than their 1994 levels, reflecting higher unit values for a
spectrum of products, of which copper was the star performer with a price
increase of more than 27 per cent. Beverage prices increased by less
than 1 per cent, owing to slight increases in coffee (6 per cent) and
cocoa (3 per cent) but overshadowed by the continued decline in the price
of tea, which fell by more than 10 per cent. Food prices increased by
an average of 8 per cent, reflecting tight supply conditions. Real
petroleum prices continued to experience pronounced instability in 1995
but averaged $17 per barrel, an increase of 8 per cent over the previous
year. The higher unit value, along with a 4 per cent growth in volume,
pushed up the export earnings of the oil-exporting countries by 12 per
cent in 1995, relative to 1994.
15. The commodity composition of the region's exports continue to be
dominated by primary commodities and the import of manufactured goods.
Most countries continue to rely on the same primary commodities they did
in the 1960s and 1970s. Countries heavily dependant three decades ago
on the export of coffee and cocoa continue to source their foreign
exchange earnings from these commodities in the 1990s, as do the
exporters of petroleum and minerals. The failure to transform the nature
and content of their exportable commodities has had a detrimental impact
on their foreign exchange earnings and their market share.
16. Despite the 11 per cent increase in the value of exports, the trade
balance registered a deficit of $11 billion, on account of the 15 per
cent increase in the value of imports. In a similar vein, the service
balance recorded a deficit of $8.4 billion. Net factor incomes were
among the major factors responsible for the deficit in service accounts
amounting to an outflow of $13.6 billion on a net basis, and are
indicative of the dependency of African countries on external capital.
The total of these payments pushed the current account deficit to $16.8
billion, an increase of 46 per cent over the previous year. This deficit
would have been much larger had it not been tempered by an inflow of
$16.3 billion in unrequited transfers.
=========================================================================
Table 4. Balance of payments, 1990-1995
(Billions of US$)
--------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995
--------------------------------------------------------------------------
Exports f.o.b. 99.2 95.0 92.9 87.3 87.9 97.9
Imports f.o.b. 91.6 90.1 93.6 92.7 94.6 108.9
Trade balance 7.6 4.9 -0.7 -5.4 -6.7 -11.0
Services net -11.6 -10.7 -8.7 -10.1 -7.8 -8.4
Unrequited transfers 17.6 17.7 19.5 18.8 15.9 16.3
Income net -14.6 -15.6 -13.6 -13.1 -12.8 -13.6
Current account -1.0 -3.7 -3.5 -9.8 -11.4 -16.7
Capital account,
including errors -12.0 -1.2 -3.0 -4.2 -2.6 -1.2
Overall balance -13.0 -4.9 -6.5 -14.0 -14.0 -17.9
Change in reserves
(-increase) -6.8 -9.7 -1.4 -4.8 -4.5 0.4
Net external financing 19.8 14.6 7.9 18.8 18.5 17.5
--------------------------------------------------------------------------
Source: IMF, World Economic Outlook and International Financial
Statistics (Washington, D.C.), various years; Economic Intelligence Unit;
national sources; and ECA secretariat estimates.
==========================================================================
IV. THE SOCIAL SECTOR
17. The crisis in the social sector remained severe in most African
countries in 1995, despite the modest economic recovery that is taking
place on the continent. This situation once again highlights the
critical needs for the African countries to restructure and reorient
their policies towards enhanced social development and poverty reduction.
The health sector continues to bear a disproportionate burden of the
ongoing socio-economic crisis. In many countries, the exodus of doctors,
nurses and technicians, compounded by declining or stagnating public
expenditure on health, has culminated in a virtual collapse of the health
infrastructure. The health policies of most African countries are yet to
be grounded in preventive and primary health care (PHC), and a large
proportion of public expenditure on health, sometimes as much as 60 per
cent, continues to go for curative services in a few teaching hospitals.
The district and community focus in health-care provision, which
underpins the framework of the Africa Regional Office of the World Health
Organization (WHO) for health policy development and for achieving health
for all by the year 2000, is yet to receive universal endorsement in
Africa.
18. In the education sector, the crisis has intensified. Rapid
population growth rates and severe cut-backs in public expenditure, often
in connection with debt rescheduling and economic restructuring, among
other factors, have culminated in a near collapse of the educational
infrastructure. Public expenditure on education in sub-Saharan Africa
is the lowest in the world. The most severe cuts in education have been
made in capital and recurrent expenditures for new construction, supplies,
furniture, equipment for science laboratories and for repair and
maintenance. In the light of the continuing socio-economic crisis,
rehabilitation of decaying educational institutions has become daunting
for most countries. Moreover, the public expenditure for all levels is
disproportionately skewed in favour of higher education. Nevertheless,
this has not spared the infrastructure of those institutions from
dilapidation and decay. The quality and propensity of education were
further aggravated by low pay and poor working conditions; the flight of
teachers and industrial disputes have kept classrooms and laboratories
closed for months, if not years. On the other hand, data from many
African countries indicate that at the primary level, there is
practically no funding from central Governments except for teachers'
salaries and allowances. As a result, non-formal education and literacy
programmes have not grown fast enough to compensate for the shortfalls
in the formal educational system. In addition, the surge in unit costs
is not accompanied by a marked improvement in the quality of education
as a result of devaluation and rising inflation rates. Consequently,
the contribution that education is expected to make to Africa's recovery
and socio-economic development is not yet clearly on the horizon.
19. The problem of unemployment remains critical in Africa, particularly
among educated people, including university graduates. The implications
of large numbers of unemployed educated youth and university graduates
are serious for Africa's social and political stability. The number of
refugees and displaced persons in Africa remains extremely high. About
7 million are directly categorized as refugees. This does not include
many internally displaced persons, forced to flee their homes but not
registered in camps or with any institutions, nor persons who have
privately sought asylum in other countries. The primary causes of this
phenomenal wave of human displacement are political unrest (ethnic
conflicts, civil wars), drought and famine. The latter is responsible
for large-scale displacement of persons now termed "environmental
refugees".
20. Women are increasingly becoming the hub of development and the main
income earners for a majority of households in Africa, particularly in
agriculture, where they play a key role in food production activities as
well as traditional domestic chores. Still, in many African countries,
cultural traits and taboos continue to underpin the marginalization of
women in the development process, manifested by their low rates of
participation in education and the labour force, their relatively high
unemployment rate in the formal sector, and their lack of access to
credit facilities for investment in self-employment activities. These
are some of the constraints that still inhibit gender equality in the
African region, and it is to be hoped that genuine efforts will be made
by African Governments and peoples and their development partners to
enhance the status of women and improve their participation in the
development process, within the framework of the Beijing
Declaration and the Platform for Action. 1/
======================================================================
Table 5. Some health indicators in selected African countries
----------------------------------------------------------------------
Percentage of Percentage of Percentage of
population population population with
with access to with adequate access to health
safe water, sanitation, services,
1990-1995 1990-1995 1985-1995
----------------------------------------------------------------------
Country Urban Rural Urban Rural Urban Rural
----------------------------------------------------------------------
Algeria 96 60 93 61 100 95
Egypt 97 61 80 26 100 99
Cameroon 57 43 64 36 44 39
Kenya 67 49 69 81 .. 40
Namibia 87 42 77 12 87 47
Nigeria 63 26 40 30 85 62
Niger 46 55 71 4 99 30
Mozambique 44 17 61 11 100 30
Uganda 47 32 94 52 99 42
Zaire 37 23 46 11 40 17
----------------------------------------------------------------------
----------------------------------------------------------------------
Percentage of fully immunized
1-year-old children, 1990-1994
----------------------------------------------------------------------
Country TB DPT Polio Measles
----------------------------------------------------------------------
Algeria 92 72 72 65
Egypt 95 90 91 90
Cameroon 46 31 31 31
Kenya 92 84 84 73
Namibia 100 79 79 68
Nigeria 46 41 35 41
Niger 32 20 20 19
Mozambique 78 55 55 65
Uganda 100 79 79 77
Zaire 43 29 29 33
----------------------------------------------------------------------
Source: UNICEF, The State of the World's Children, 1996 (New
York, Oxford, 1996).
======================================================================
V. MAIN POLICY DEVELOPMENTS IN 1995
21. African countries undertook major domestic reform measures in
1995, concerning fiscal, monetary and trade policy, with the objective
of reducing governmental intervention in the economy. The emphasis in
several of the reform programmes in Africa hinges on incentives for
savings and measures to stimulate investment and the empowerment of
the private sector. Indeed, financial-sector reforms in countries
such as Kenya, Nigeria, Uganda and Zambia included the strengthening
of the regulatory framework and prudential guidelines for banking and
non-banking financial institutions, calculated to safeguard public
confidence and streamline the operational viability and effectiveness
of the financial sector. Privatization and commercialization of
poorly run public enterprises was also contemplated in some countries,
although concrete achievements and outcomes fell far short of plans in
many cases.
22. Fiscal policy in the majority of African countries centred on the
persistent problem of huge budget deficits, the financing of which
contributed to inflation and inflationary expectations in the economy.
There is an increasing realization in African countries that greater
fiscal discipline is essential in controlling inflation which, in the
past, was a major factor in the stagnation of many African economies
and falling standards of living. Some Governments introduced measures
designed to improve the productivity of public expenditure and
investment through prioritization, streamlining and rationalization of
the government budget. Tax reform was a key component of the economic
stabilization and revenue-generation programmes of many Governments,
involving rationalization of the tariff structure and a lowering of
import duties and excise taxes with a view to discouraging evasion and
limiting disincentive effects; fiscal decentralization policies,
including the devolution of tax collection to lower levels of
government, and the introduction of value-added tax (VAT) and
presumptive taxation in order to broaden the tax base - e.g., in
Ghana, Nigeria and Zambia.
23. In the mining sector, the deregulation and liberalization that
began in African countries in the late 1980s continued in 1995, with
some Governments introducing new land and mineral legislation and
fiscal reforms aimed at enhancing the role of the private sector.
Particular attention was given to issues such as the degree of public-
sector participation in the development of mineral resources; the
proper balance between national and foreign private sectors, including
the role of small and medium-sized enterprises; and, the appropriate
regulatory framework for the encouragement of foreign investment.
Emphasis is increasingly placed on the integration of the mineral
sector with other production sectors and the service subsector at the
national, subregional and regional levels, and on avoiding damage to
the environment.
24. Price support policies were discontinued in a few African
countries in 1995, in favour of price and exchange rate liberalization
aimed at ensuring remunerative producer prices and productivity
incentives. The liberalization of foreign exchange rates has resulted
in significant creeping depreciation of currencies and the narrowing
of the differential between "official exchange rates" and "parallel
rates". As of mid 1995 nearly 17 African countries had adopted an
"independently floating" exchange rate regime; 7 were on a "managed
float" system; 5 on a "composite currency basket" system; and 29 were
still on a "single currency reserve system", with the largest of these
in the CFA franc zone. A number of African countries, including
Kenya, United Republic of Tanzania, Uganda and Zimbabwe, acceded to
article VII of the IMF Articles of Agreement, thereby committing
themselves to the non-reimposition of restrictions on transactions on
the current and, possibly, capital accounts.
25. For the social sector, there has been a marked and salutary
momentum towards democratic forms of governance and popular
participation. The peace agreement in Angola and the democratic
elections in Algeria, Co^te d'Ivoire and the United Republic of
Tanzania, which followed those in the Congo, where the transfer of
power to elected governments took place in conditions of relative
peace and without bloodshed, are powerful portents of a more peaceful
political milieu on the continent.
VI. TRENDS AND PROSPECTS FOR 1996
26. Overall growth prospects in Africa indicate that the region has
begun to gather momentum towards the recovery evident in the global
economy. The capacity of African societies and economies for real and
sustained growth are being increasingly realized, as most economic
policies are now focused on the creation of an enabling environment
for the private sector and efficient operation of the market economy.
27. Barring adverse weather conditions, the progress made in enhancing
political and social stability in some countries and the benefits
accruing from the impact of domestic economic-policy reforms, coupled
with favourable developments in the international economic
environment, lead to estimates of regional growth in output of 2.9 per
cent in 1996, as against 2.3 per cent in 1995. The efforts to
implement more prudent fiscal and monetary management, so as to reduce
macroeconomic imbalances, will contribute to lower inflation in
several countries and a return of investors' confidence.
28. Total agricultural production is expected to increase by more than
3 per cent in 1996. This encouraging prospect is based on good
distribution of precipitation on the continent as a whole, in
particular easing the drought conditions in North Africa,
drought-prone Southern Africa and countries in the Horn of Africa.
The manufacturing subsector is expected to register growth in 1996, on
account of the expected good performance in agriculture. Given the
changes in the operating environment and the substantial reforms that
have taken place in the mining sector in many African countries, a
considerable boost to foreign investment seems likely in the sector.
In any case, in 1996 a lot will depend on the evolution of commodity
prices and world demand.
29. Globalization and liberalization present a number of potential
challenges and opportunities to Africa. The ability of African
countries to take advantage of the emerging opportunities in world
markets depends crucially on their ability to foster the development
of internationally competitive industries which can meet exacting
standards of cost, quality, reliability and delivery schedules. The
supply capacities of African countries, which are very weak for a
variety of reasons, are likely to be the major constraints on their
ability to exploit the opportunities arising from globalization. In
particular, the private enterprise sector, which is the key agent of
development, is not well developed in most African countries, and its
growth is constrained by shortages of capital and of entrepreneurial,
managerial, technical and marketing skills. Consequently, African
countries will face intensified competition in their major export
markets in the industrialized countries.
30. A lasting solution to the vexing issue of debt needs to be sought
both by the debtors and creditors. In principle, debtor countries
should strive to increase their foreign-exchange earnings and service
their debt, but the immediate prospect does not render this option
viable. Export revenues, already inadequate, have failed to register
the level of growth that would enable African countries to effectively
address the worsening debt burden. In the short and medium term, the
onus of innovating debt reduction mechanisms rests on the creditor
nations.
31. More than any other region, Africa is heavily dependent upon
external finance to fund trade deficits, supplement governmental
budgets and finance investment. With declining ODA flows and
difficulties associated with debt servicing, African countries should
encourage non-debt-creating external resource flows. Since private
capital flows are becoming a major source of financing for developing
countries, African countries that seem to be involved in a process of
adjusting their financial structures and liberalizing their economies
are likely to attract foreign resources, both for portfolio, and more
particularly, direct investment. Creation of domestic capital
markets, as complementary measures to the process of economic
liberalization and privatization, is essential if the countries need
to broaden and improve the savings/investment process. But the most
important prerequisites for the successful mobilization of foreign and
domestic resources are confidence in the financial system and
appropriate macroeconomic policies, a well-established and clear legal
and regulatory framework, a transparent and non-distortionary taxation
system, a stable domestic financial system, and adequate
infrastructure.
32. Mobilization of domestic financial resources has become a central
issue in the current vision and strategy of African development. With
declining ODA flows and difficulties associated with debt servicing,
African Governments need to provide the necessary resources to finance
the additional expenditure by increasing the supply of investable
domestic resources, creating an environment conducive to the retention
of savings within their countries, reversing capital flight, reducing
inefficiency, and above all, by encouraging savings through
appropriate policies and the necessary institutional mechanisms.
Fiscal policy - especially tax policy - has an important role to play
in increasing governmental revenue and creating an environment
conducive to resource mobilization. Stabilization of prices and
exchange rates would ensure positive rates of return on domestic
assets, while a more aggressive drive by the formal financial
institutions through intensive branch expansion, the broadening of the
menu of saving instruments and the forging of strong linkages with the
informal financial institutions, would have a positive impact on the
volume of resources mobilized. The development of capital markets
could supplement and enhance domestic resource mobilization.
Notes
1/ Report of the Fourth World Conference on Women, Beijing,
4-15 September 1995 (A/CONF.177/20), chap. I, resolution 1, annexes I
and II.
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RRojas Research Unit/1996
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