After more than a decade of being regarded as a lost cause, there are increasing signs that sub-Saharan Africa is making a return to the global economic and political system. In the 1990s, apart from periodic bouts of brutal violence in countries as diverse as Rwanda, Burundi, Liberia and Nigeria, Africa has vanished from world consciousness as the process of integrating the post Cold War economy took on the highest international priority.
However, a sharp change of perception has been generated by the emergence of Nelson Mandela as an inspirational leader for black Africa, and the determined attempts of some African countries, such as Uganda and Côte d'Ivoire, to turn their affairs around. Africa is increasingly being regarded by its Western counterparts as the last great untapped emerging market, at a time when other regions like Latin America and eastern Europe are already on the road to successful transition.
There is, of course, a huge amount of ground to be made before sub-Saharan Africa can be regarded as a recovering economic region. As the 1996 United Nations Human Development Report shows, the period 1980-90 was one of serious disappointment. Across sub-Saharan Africa, per capita gross national product fell by 10 per cent, and real world prices for the major exports of tea, coffee and cotton fell by 50 per cent. Capital investment plunged by 50 per cent in real per capita terms, and the region's debt to GNP ratio soared to 97 per cent, by far the highest in the world.
But the crisis was in some respect a prelude to change. Many countries sought to deal with the deepening economic problems through structural adjustment and improved governance, making western donors more willing to assist. There have been signs of some improvement in human development, with life expectancy increasing from 46 to 51 years and infant mortality improving by one-fifth during the 1980s. The region has also become more democratic. Since 1990, nearly 30 multiparty presidential elections have been held in the region, 21 of them for the first time. Opposition parties have been legalised in 31 sub-Saharan countries.
In parallel with these political reforms have come the first stirrings of economic change. In the former French colonies, which have been part of the CFA franc currency zone for five decades, a dramatic 50 per cent devaluation in 1994 has turned out to be an engine of reform and change. In southern Africa the arrival of democracy in the Republic of South Africa has opened the way to greater trade and commercial integration between the republic and its neighbours, as well as more access to foreign assistance and greater foreign investment.
In the CFA franc currency zone the devaluation is making a significant impact for the dozen or so countries affected. In 1994, the year of devaluation, growth across the region was measured at 1.4 per cent with momentum building into 1995. In most of the countries concerned output responded more swiftly than had been expected, with consumption shifting to locally produced goods, improving the trade position.
One of the strongest rebounds was seen in the export orientated agro-industrial sectors, notably textiles, particularly in enterprises which have been privatised. Tourism has also picked up, particularly in Senegal. The most consistent improvements, across all sectors of the economy, have been seen in Benin, Côte d'Ivoire and Senegal. A May 1996 International Monetary Fund study noted that businesses in all sectors are adapting to the new circumstances and searching for new markets, financing and suppliers, all of which makes them more promising locations for commercial activity.
At June's G7 summit in Lyons, western heads of government went further than ever in moving to lift the debt burden on the sub-Saharan African countries which are pressing ahead with economic reforms, notably the CFA franc zone, Kenya and Uganda. African countries pursuing economic reform will be entitled to a cut of 80 per cent of their debts, both multilateral and bilateral, over six years.
This move could transform their economic circumstances. In Uganda, for instance, five times more is spent on debt repayments than on health, according to Christian Aid. In Mozambique, which emerged from a bruising civil war in 1992, debt grew from $111 million to $970 million between 1985 and 1993, with the result that funds designed to alleviate poverty and assist development have been diverted to interest and capital repayments. If accompanied by the proper structural reforms, debt relief should offer the chance for strong recovery.
Optimism that Africa can pull itself out of reverse and become a viable economic region permeates the IMF's most recent economic forecasts. The IMF predicts that growth in Africa will improve from 3.2 per cent in 1995 to 5.3 per cent in 1996, spurred on by macro-economic and structural changes. The biggest downside risk is posed by a slide in commodity prices. Still, the IMF expects the Ugandan economy to grow by 6.5 per cent this year despite weaker coffee prices, and it predicts growth in Kenya which has now been restored as an aid recipient following political and economic reforms.
Across the CFA franc zone, growth is seen at 4.5 per cent this year, the best for a decade. However, Nigeria remains a deep disappointment as a result of continuing political difficulties and the economy is still viewed as a basket case, despite oil and gas wealth.
The IMF argues that with continued liberalisation of trade and financial markets and reform of financial policies the region's prospects look good beyond 1996, even if there is a further drift in commodity prices.
Alex Brummer
Source: Airline Business
