by Wang Fengfeng, Liu Li    

    NAIROBI, Dec. 27 (Xinhuanet) -- With the world economy making positive headway in the year 2004, the poorest continent, Africa, also sees developments, showing signs of recovery. But experts are cautious to say whether the lukewarm growth can kindle its economy that's long been marginalized.     

¡¡¡¡GROWTH DURING THE PAST YEAR

    "The growth we've seen in the overall African economy is mainlyboosted by over a dozen countries," Dr. S. M. Nyandemo, a development economist with the University of Nairobi, said in a recent interview with Xinhua, pointing out most African countries still have no sound ways to catch up with the world.

    The world economy grew 4.1 percent in 2004, while sub-Saharan Africa registered an above-average 4.5 percent in the same year, according to International Monetary Fund (IMF) projections.

    According to IMF Africa Department chief Abdoulaye Bio-Tchane, the enormous growth in the past year was mainly accounted for by higher oil prices and new production in oil producing countries.

    However, non-oil producing countries in Africa enjoyed higher growth during the past year because of improved macro-economic and structural policies, lowered trade barriers and the gradually showing benefits of privatization, Bio-Tchane said last month in Harare, the capital of Zimbabwe.

    Some of the non-oil producing countries in Africa made remarkable changes during the past 10 years.

    "Fifteen countries in Africa, including Uganda, Ethiopia and Burkina Faso, have averaged growth of over 5 percent per year since the mid-1990s," Gobind Nankani, the World Bank's vice president for Africa, said in a lecture this month in Kenyan capital Nairobi.

    Bio-Tchane agreed with Nankani, saying Burkina Faso, Ghana, Mali, Mozambique, Tanzania and Uganda had recently orchestrated remarkable turnarounds in their economic performance, largely by implementing appropriate macro-economic and structural policies.

    He also highlighted the success story of Botswana and Mauritius for what he said was the strength and quality of their institutions and political processes, helping them to achieve long-run balanced growth.     

    WHAT BUGS THE ECONOMY

    But Nyandemo wasn't as positive as the IMF official, who said Africa could achieve a more than 5.5 percent growth in the next year.

    "Africa needs home-grown solutions and solve its crisis in leadership," Nyandemo warned, saying planning without implementation is a major ill of African policies, which makes them having no impact on the whole economy.

    "Millions still depend on food aid in Ethiopia," he said, pointing out there are 15 million displaced people and 4.5 million refugees on the continent, a huge waste of labor and an enormous burden for their host regions and countries.

    Refugees are just a by-product of chaos and conflicts. The Darfur crisis in western Sudan has created over one million refugees and displaced during the past two years.

    New signs of instability in the Great Lakes region, which includes refugees massacred and Congolese army pitted against former rebels, have made the region ever more explosive, as Rwanda,Uganda and the Democratic Republic of the Congo all boosting troops to the borders, and the flood of refugees ensued.

    By the end of the year, the traditionally volatile West Africa saw warplanes of Cote d'Ivoire attacking the French peacekeepers' position separating government forces in the south and rebels in the north.

    The world's top cocoa grower's airforce was then destroyed in French retaliation, throwing the country into chaos and anti-French sentiments, and later political deadlock between the government and the rebels. Cocoa export was virtually halted.

    The scourge of HIV/AIDS was another concern. With the world's most affected people living in Africa, productive labor forces were wiped out and billions that could be used to maintain roads and send kids to school were eaten up by the medical bills.

    Except conflicts and AIDS, more problems are there for Africa to hurdle. "The fact is Africa remains a high-cost, high-risk place to do business," the World Bank's Nankani said.

    He mentioned legal and regulatory hurdles, poorly maintained roads and costly, unreliable energy sources as forces pushing investments and jobs to other parts of the world.

    According to the World Bank's Doing Business 2005 study, seven out of the ten most difficult countries to start a business are inAfrica. It takes 153 days to start a business in Maputo but only two days in Toronto. It takes 368 US dollars of official fees to start a business in France, but 1,025 in comparable cost in Niger,the study said.

    "Without a good climate, who's gonna come and invest?" Nyandemo asked.     

    WHAT TO DO AND WHAT PROSPECTS ARE OUT THERE

    Although challenges may hinder the pace of African development,2003's foreign direct investment in Africa reached 14.4 billion dollars, over a quarter increase from 2002, and the figure is expected to rise in 2004.

    The investments were mainly absorbed by Africa's oil industry. But Africa needs more investment that can create more jobs and generate more income.

    "Africa should attract more investment to service sector," said Nyandemo. He said service sector can generate "fast money," especially in tourism, transportation and communication. In turn, the investment can also benefit the ordinary people.

    But for investment to come, African countries must first build investment confidence, put in place legal framework that guarantee the security of investment and a sound financial sector, Nyandemo said.

    He mentioned Uganda's policies and legal framework as important reasons for it to attract investment, and also South Africa's transparency in policy making and banking system, which were rated by the World Economic Forum as the world's 16th best and 41st soundest.

    He also said infrastructure needs to be upgraded to facilitate the making and movement of goods and materials, and thus boost the growth of the private sector.

    But to create Africa's own purchasing power, the most important task remains in the agriculture sector. Nankani said in his lecture that 70 percent of Africans live in rural areas.

    "An export push in the farm sector, and in processed agriculture-based products, could have a significant effect on thelives of millions of poor Africans," he said, citing Kenya's successful flower and horticulture export.

    "If we can modernize agriculture with science and modern methods of farming, farmers can earn more money. This can mean serious purchasing power, and hence the development of other sectors," Nyandemo explains the importance of agriculture.

    The London-based Economist Intelligence Unit, a leading think tank, said in its annual forecast released this month, the global economy is to slow down in 2005, with Africa seeing both the fasted growing and the worst hit.

    It said Equatorial Guinea and Liberia will be the biggest winners, growing at 19.4 and 15 percent, but the economies of Zimbabwe and Cote d'Ivoire were forecast to shrink by 3.1 and 1.2 percent each.

    If these forecasts turn out to be true, Africa is likely to seeyet another year of mixed developments.

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