Africa Development Banks Says Continent Grows by 4.5%

An aerial view shows the central business district in Nigeria's commercial capital of Lagos, April 7, 2009. REUTERS/Akintunde Akinleye
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Africa Grows By 4.5%

The African Development Bank (AfDB) is bullish about Africa's growth outlook, the organization’s Chief Economist, Professor Mthuli Ncube said on Tuesday.

He was speaking at the launch of the African Economic Outlook 2010 report in Johannesburg. The AfDB expects Africa to grow by 4.5 percent and 5.2 per cent in 2010 and 2011 respectively.

It has increased loans to African countries that were severely affected by the 2008 recession. “The outlook for Africa is generally positive. Africa is showing a V-shaped recovery,” said Ncube. He added that though the AfDB was bullish about Africa's growth, it was also aware of the risks.

“Commodity-driven growth might bring further specialization and growth volatility. Exit strategies might be politically difficult,” he said.
Diversification of products in African countries was identified as crucial. Botswana, which is heavily reliant on diamond exports, was severely affected during the recession when global demand was at its weakest.

Mr. Ncube suggested that Nigeria could teach other African countries a few things about diversification. “People think Nigeria is only reliant on oil. There has been a quiet surge in agriculture in terms of contribution to Gross Domestic Product (GDP) in Nigeria. It's a great diversification,” Ncube said.

The report described East Africa as “the real engine of growth on the continent and the fastest growing region in Africa.” “Africa is on the move. There are so many opportunities,” said Standard Bank, Chief Executive Officer (CEO) Jacko Maree who attended the launch.

Mr. Ncube also called on governments to encourage the flexibility of exchange rates. “Exchange rate movements in Africa should be flexible. You do need a flexible exchange rate to respond to economic shocks. Flexibility in the exchange rate is the way to go,” he said.

Asked whether there should be a single currency in Africa, Mr. Ncube stated, “One currency for Africa! I don't know when that will happen, but I would say let's start with currency compatibility first.”

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Published: 2010-07-07 15:49:09