ABIDJAN (Cote d'Ivoire): The 2010 edition of the African Economic Outlook (AEO) was launched recently at the Annual Meetings of the Boards of Governors of the African Development Bank Group. The entire report, including country notes and the full statistical annex, is available for free at www.africaneconomicoutlook.org. The 2010 AEO includes a special study on Public Resource Mobilisation - or taxation - one means for African governments to become less dependent on aid in the long run, to the benefit of recipients and donors.
The AEO finds that the global crisis brought a period of relatively high economic growth in Africa to a sudden end: Africa's GDP growth was slashed from an average of about 6% in 2006-2008 to 2.5% in 2009. Given the pace of population growth this means that growth of per capita GDP came to a near standstill. Average growth is expected to rebound to 4.5% in 2010 and 5.2% in 2011, although the recession will leave its mark.
The good news is that the continent has proved resilient to the crisis. The bad news is that, despite rebounding growth next year, the downturn could make it more difficult for some African countries to meet the Millennium Development Goal of halving the number of people living in poverty by 2015.
An uneven recovery across the continent. Southern Africa, which was hardest hit in 2009, will recover more slowly than other regions with an average growth of almost 4% in 2010/2011. East Africa, which best weathered the global crisis, is projected to again achieve the highest growth with more than 6% on average in 2010/2011. North and West Africa should both grow at around 5% and Central Africa at 4% during the same period.
An uneven recovery across sectors. Sectors such as mining and manufacturing were particularly exposed to the fall of commodity prices and global trade in goods and services. Other sectors, notably non-tourism services and agriculture, were more resilient and mitigated the effects of the downturn. In fact, in most African countries the agricultural sector benefited from good harvests due to favourable weather, although in some countries, bad harvests exacerbated the effect of the global crisis.
Policies that cushioned the impact of the crisis. Africa proved to be more resilient to the global crisis than some observers had feared thanks to prudent macro policies prior to the downturn that resulted in improved economic fundamentals in many African countries. This, together with sustained aid flows, earlier debt relief and loans by the International Monetary Fund, the World Bank and the African Development Bank provided space for adopting counter-cyclical policies, which cushioned the impact of the crisis.
Taxation as an independent resource for economic development. There are very large differences in the tax raising performance of individual countries. Annual taxes per capita ranged in 2008 from between USD 20 to 40 in Burundi, Guinea-Bissau, Congo Dem. Rep., Sierra Leone and Ethiopia, to USD 4 866 in Equatorial Guinea, and USD 11 725 in Libya. Strategies towards more effective, efficient, and fair taxation in Africa typically lie with broadening the existing tax base. Policy options include cracking down on fraud and evasion, removing tax preferences, particularly for large corporations and traders, dealing with abuses of transfer pricing techniques by multinationals and taxing extractive industries more fairly and more transparently.
The 2010 AEO findings will be debated by African ministers and CEOs of companies investing in the region at the 10th annual International Economic Forum on Africa on 11 June at the French Ministry of Economy, Industry and Employment.
About the AEO: The 2010 AEO covers economic, social and political development in 50 of the continent's 53 countries. It is published jointly by the African Development Bank (AfDB), the OECD Development Centre and the United Nations Economic Commission for Africa (UNECA), with financial support from the European Commission and the Committee of African, Caribbean and Pacific Group of States (ACP).
