Figure 1: Per-capita gross domestic product at current prices in 2007, 2008 and 2009 (in EUR)

Figure 2: GDP at current prices, development 2000-2009 (2000=100)

Having demonstrated resilience during the global financial crisis, Africa’s emerging market countries have good prospects for 2011, according to the IMF (International Monetary Fund).

Foreign direct investment, particularly from Africa’s new trading partners in Asia, is expected to strengthen and demand for African bonds is set to increase.

The IMF says such diversification of financing sources for much-needed public investment would be welcome, but would also require a coherent macroeconomic policy and foreign exchange regime to cope with capital flow surges, especially if they have historically been prone to debt problems.

More private capital ahead

The IMF says advanced-industrial-country policy measures, albeit needed to shore up their own growth prospects, have led to historically low yields and, in some cases, significant increases in public debt. These trends, coupled with strong growth prospects in many emerging markets, have led investors to look further afield.

Economic analysts, investors, and the media are increasingly able to single out countries in sub-Saharan Africa with good track records and prospects that inspire investor confidence, such as those globalization researcher Steven Radelet has dubbed “emerging Africa” (see Box 1).

EU27-Africa

The EU's statistics office, Eurostat, and the statistics unit of the African Union (AU) Commission have produced a set of Africa-EU economic indicators.

Eurostat/AU say that in recent years, African GDP has progressed at a faster pace than in the EU, but this has been offset by a comparatively high increase in consumer prices. Furthermore, the global economic crisis had a considerable impact on GDP and trade in goods in 2009.

Since 2004, the value of extra-EU trade in goods with Africa has risen substantially, with imports (mainly energy products) consistently higher than exports (especially machinery and transport equipment). The economic crisis abruptly ended this trend: in 2009, the value of EU-27 imports from Africa decreased by 33% and EU-27 exports to Africa fell by nearly 10%, resulting in a near trade balance.

The report says that in 2009, Libya was the foremost African exporter of goods to the EU-27, and South Africa was the main destination for EU-27 exports to Africa. The EU-27’s small trade surplus observed in the trade of services in 2007 increased to €3.7bn in 2008.

Between 2000 and 2008, nominal GDP growth in Africa as a whole increased at a faster pace than that of the European Union. In 2008, total GDP in the EU-27 stood 36 index points above its base year value (2000), while that of Africa progressed by 67 index points over the same period. Due to the global economic crisis, GDP in the EU-27 fell by 8 index points in 2009. The corresponding 2009 figure for Africa as a whole is not yet available.

The report says obviously, aggregate data mask large disparities with regard to the ‘weight’ of the individual countries. The largest contributors to Africa’s GDP are South Africa, Nigeria, Egypt, Algeria, Morocco and Libya. However, the picture changes considerably when considering GDP per capita.

GDP in Africa stood 67% higher in 2008 than it did in 2000. The average annual growth rate (AAGR) between 2000 and 2008 amounted to13.0%. The corresponding AAGR (nominal growth) for the EU-27 was 3.9%, with GDP standing 36% higher in 2008 than in 2000.

Risks

The IMF says that notwithstanding the rapid gains of the last decade, poverty, often extreme, remains pervasive in sub-Saharan Africa. In far too many places, more rapid growth has not yet translated into local employment opportunities, a better social safety net, or a higher quality of life. In addition, weak governance, limited administrative capacity, or political instability (and even outright conflict) have suppressed or reversed per-capita-GDP gains.