American Renaissance

Report: Dismal African Economy ‘Disaster’

Terry Leonard, AP, kentucky.com, Jun. 2

JOHANNESBURG, South Africa — A report released Wednesday by the World Economic Forum called Africa’s stagnating growth the worst economic tragedy of the 20th century.

The report said in 1970 Africa accounted for one in 10 of the world’s poor, but by 2000 nearly half the world’s poor were African. Economic growth has been so dismal that most sub-Saharan countries are worse off than they were at independence.

The report, written by Elsa V. Artadi of Harvard University and Xavier Sala-i-Martin of Columbia University, said Africa’s demise is linked to military conflicts, corruption, absence of the rule of law, undisciplined fiscal policies, poor infrastructure and low investment.

“There should be no doubt that the worst economic disaster of the 20th century is the dismal growth performance of the African continent,” they wrote.

Per capita income in sub-Saharan Africa is $200 lower now than in 1974, they said. That is a decline of 11 percent over 25 years when the rest of the world averaged an increase of 2 percent a year.

“This evolution is extremely worrisome, if we consider that Africa was already extremely poor in 1974,” the authors said.

The report was part of a package surrounding the Forum’s Growth Competitiveness Index for Africa, released Wednesday in Maputo, Mozambique, where the organization is holding its annual African Economic Summit.

At least seven African heads of state and more than 20 ministers and business leaders from the continent are attending the summit that will focus on ways to accelerate the pace of development in Africa.

President Joaquim Chissano of Mozambique opened the summit Wednesday, telling the 750 delegates that they need to help find ways to meet the economic challenges facing Africa.

“These challenges include unemployment, poverty, good governance, peace and stability, and sound economic management,” said Chissano.

The president pointed to Mozambique as an example of what can be achieved. He said the country has been hailed for the last 12 years as a postwar rehabilitation success and has reduced absolute poverty from 69.4 percent of the population in 1997 to 51.1 percent last year.

However, Mozambique remains one of the poorest and most indebted countries in the world. It ranks 20th out of 25 on the Forum’s Growth Competitiveness Index for Africa.

The index measures a country’s potential to achieve sustained economic growth.

Botswana ranked first of the 25 African countries surveyed, but it measured 36th out of 102 countries measured worldwide. Chad ranked last on the African list and 101st globally.

The Forum, in its summary, said the long awaited renaissance of the African economy has not taken place. Mauritius and Botswana seem to be the only countries that have experienced high, sustained per capita income growth, it said.

It cited the once relatively prosperous Zimbabwe, which ranked 22 in Africa and 97 worldwide, as an example of what goes wrong, saying it had the worst economic environment in Africa.

“Zimbabwe has seriously backtracked in the areas of individual freedom and human rights, with the efficiency and the stability of its economy suffering greatly from self-inflicted and misguided policies,” it said.

Part of the problem, the Forum said, is that Africa cannot attract enough investment.

It noted that return on investment in Africa is about a third lower than the rest of the world. It is also a very high risk because of political instability, price volatility, uncertain economic environments and the tendency of governments to engage in sweeping policy reversals.