Shanghai, 12 May 2007 - Africa will continue to enjoy economic growth well above its long-term trend in 2007 and 2008 on the back of global demand for the continent's oil and minerals, the African Development Bank said on Sunday.

The lender forecast average gross domestic product growth for Africa of 5.9% this year and 5.7% in 2008.

Estimated growth last year was 5.5%, the fourth straight year of above-trend expansion, the report said.

Among serious obstacles to development in individual countries, the bank listed the humanitarian crisis in the Darfur region of Sudan; Zimbabwe's economic collapse; political crises and conflicts in Ethiopia, Ivory Coast and Somalia; and security problems in Nigeria's oil-producing delta region.

"Nonetheless, the outlook for much of Africa continues to be highly favourable," said the report, released ahead of the bank's annual meeting in Shanghai.

As well as global demand for African oil and commodities - with China in the forefront - a significant increase in debt relief has also boosted growth, the report said.

"The continuation of sound macroeconomic policies in most of the countries in the continent has also increased business confidence, leading to a pick-up in private investment generally," it added.

'Great concern'

Africa's oil exporters are growing much faster than its non-oil producers. The bank expects Angola, for instance, to grow 27% this year.

High oil prices pose tough policy challenges all round, the bank said. Oil producers must spend their windfall gains wisely on long-term development needs, while oil importers need to contain inflation rates that in some cases are now in double digits, it added.

Official development assistance (ODA) to Africa in 2005, as a percentage of donor countries' GDP, reached its highest level since 1992.

But bank officials are worried that about 70% of the inflation-adjusted increase reflected debt write-offs, especially for Nigeria and Iraq, as well as humanitarian aid.

With debt relief to many African countries now almost complete, other forms of aid will have to rise by around 8%-10% a year - faster than almost all other forms of public expenditures - if donors are to meet their pledge of doubling ODA to Africa between 2004 and 2010, the report said.

"This is something that Africa views with very great concern, especially sub-Saharan Africa," Barfour Osei, a senior economist with the development bank, said at the launch of the report.

Source: www.fin24.co.za

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