4 Oct 2012

WORLD BANK / AFRICA PULSE

Despite Global Slowdown, African Economies Growing Strongly ― World Bank Urges Countries to Spend Their New Oil, Gas, and Mineral Wealth Wisely. WORLD BANK

Posted at: October 4, 2012 9:51 am

Duration: 02:42

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STORY: WORLD BANK / AFRICA PULSE
TRT: 2.42
SOURCE: WORLD BANK
RESTRICTIONS: NONE
LANGUAGE: ENGLISH / NATS

DATELINE: 4 OCTOBER 2012, WASHINGTON DC / FILE

SHOTLIST:

FILE - 16 MARCH 2011, KIGALI, RWANDA

1. Wide shot, aerial view of city

FILE – AUGUST 10 2012, NAIROBI, KENYA

2. Wide shot, people on the street

FILE - 16 MARCH 2011, KIGALI, RWANDA

3. Close up, fruit seller on his cellphone
4. Wide shot, busy street scene

FILE – FEBRUARY 11 2012, ADDIS ABABA, ETHIOPIA

5. Wide shot, vendors in Merkato with their wares

FILE – 11 JANUARY 2012, Maputo, Mozambique,

6. Various shots, shipping and port sequence

4 OCTOBER 2012, WASHINGTON DC

7. SOUNDBITE (English) Shanta Devarajan, World Bank Africa Region Chief Economist:
"We see that the prospects for African economies in October 2012 are relatively good, especially considering the amount of uncertainty there is in the global economy. Despite slowdown there is in Europe, and very anemic growth there is in the United States, African economies are projects to grow at about 4.7 percent this year, rising to maybe about 5 percent next year."

FILE – 31 JULY 2012, NAIROBI, KENYA

8. Wide shot, cars on busy street

FILE – AUGUST 08 2012, MALINDI TOWN, KENYA

9. Wide shot, street scene

4 OCTOBER 2012, WASHINGTON DC

10. SOUNDBITE (English) Shanta Devarajan, World Bank Africa Region Chief Economist: 
"Six of the fastest growing economies in the world today are in sub-Saharan Africa. And if you take out South Africa, the rest of the region is the fastest growing region in the world if you leave out China."

FILE – 25 JANUARY 2012, ADDIS ABABA, ETHIOPIA

11. Wide shot, exterior African Union Building  
12. Med shot, People gathered ahead of an African Union meeting

4 OCTOBER 2012, WASHINGTON DC
   
13. SOUNDBITE (English) Shanta Devarajan, World Bank Africa Region Chief Economist: 
"The reason for the growth has been the policy reform – some of the difficult policy reform, that African policy makers have untaken over the last 15 years particularly in the areas of macro-economic policy."

FILE – 31 JULY 2012, KAGALI, RWANDA

14. WIDE SHOT, petroleum trucks passing through

4 OCTOBER 2012, WASHINGTON DC

15. SOUNDBITE (English) Shanta Devarajan, World Bank Africa Region Chief Economist: 
"The large number of new mineral discoveries, particularly in East Africa, the oil and gas, are a huge opportunity for these countries, these poor countries, to launch a period of sustained economic growth and development for their people. the problem is that mineral rents unlike other types of revenue go directly from the oil company or the mining company for the mineral company to the government, without passing through the hands of the citizens. As a result, citizens actually don't know how much oil money there is, and secondly, even if they do, they have less of an incentive to scrutinize how governments spend it. So for the new oil producers it is absolutely imperative that they maintain full transparency and accountability of those oil revenues.

FILE – RECENT, WORLD BANK HEADQUARTERS, WASHINGTON DC

16. Wide shot, exterior World Bank Headquarters

STORYLINE:

Sub-Saharan Africa is expected to grow at 4.8 percent in 2012, broadly unchanged from the 4.9 percent growth rate in 2011 and largely on track despite setbacks in the global economy, according to the World Bank's new Africa's Pulse, a twice-yearly analysis of the issues shaping Africa's economic prospects.

Excluding South Africa, the continent's largest economy, growth in Sub-Saharan Africa is forecast to rise to 6 percent. African exports rebounded notably in the first quarter of 2012, growing at an annualized pace of 32 percent, up from the -11 percent pace recorded in the last quarter of 2011.

African countries have not been immune to the recent bout of market volatility stemming from the Euro Area crisis, as well as the growth slowdown that is occurring in some of the largest developing economies, in particular China, which remains an important market for Africa's mineral exporters.

However, consistently high commodity prices and strong export growth in those countries which have made mineral discoveries in recent years, have fuelled economic activity and are expected to underpin Africa's economic growth for the rest of 2012.

"A third of African countries will  grow at or above 6 percent with some of the fastest growing ones buoyed by new mineral exports such as iron ore in Sierra Leone and uranium and oil in Niger, and by factors such as the return to peace in Cote d'Ivoire, as well as strong growth in countries such as Ethiopia," said World Bank Vice-President for Africa, Makhtar Diop. "An important indicator of how Africa is on the move is that investor interest in the region remains strong, with $31 billion in foreign direct investment flows expected this year, despite difficult global conditions."

With the global economy still in fragile condition, Africa's Pulse warns that Africa's strong growth rates could yet be vulnerable to deteriorating market conditions in the Euro-zone. In addition, recent spikes in food and grain prices are a cause for concern. An unprecedented hot and dry summer in the United States, Russia and Eastern Europe led to reduced yields on both maize and wheat production worldwide. Africa's Sahel region is already suffering from higher food prices, high rates of malnutrition and recurring crisis and insecurity.

Furthermore, swarms of desert locusts and the ongoing conflict in The Sahel also undermine the region's food security. Countries like Mali and Niger are already suffering from locust invasions with a possibility that the swarm could move to neighboring countries such as Mauritania and Chad. This would aggravate the ability of families to find enough to eat in a region already grappling with drought and conflict.

New mineral wealth on the rise

According to the latest Africa's Pulse, new discoveries of oil, gas, and other minerals in African countries will generate a wave of significant mineral wealth in the region, and that the economic importance of natural resources is likely to continue in the medium term in several established oil and mineral producers, thanks to the sizeable stock of resource wealth and the prospects of continued, high commodity prices.

The region's established oil producers represent less than 10 percent of the share of global reserves as well as annual production. Nigeria, the largest regional producer, can keep supplying at 2011 levels for another 41 years, while Angola, the second largest producer in the region, has about 21 years remaining at current production levels before its known reserves are depleted.

Given the size of these reserves, it is likely that the dependence on oil resources in these countries is likely to continue in the near to medium term. Production in new mineral countries such as Ghana, Mozambique, Sierra Leone and Uganda could last for a substantial number of years as well.

African countries share in global reserves and annual production of some minerals is sizeable. In 2010, Guinea alone represented over 8 percent of total world bauxite production; Zambia and the Democratic Republic Congo have a combined share of 6.7 percent of the total world copper production; and Ghana and Mali together account for 5.8 percent of the total world gold production.

"Resource-rich African countries have to make the conscious choice to invest in better health, education, and jobs, and less poverty for their people because it will not happen automatically when countries strike it rich," says Shantayanan Devarajan, the World Bank's Chief Economist for Africa, and lead author of Africa's Pulse. "Gabon, for example, with a per-capita income of $10,000 has one of the lowest child immunization rates in Africa."

Is Africa becoming 'a middle-income' continent?

In its wide-ranging analysis of new developments in Africa, the new report notes that after ten years of high growth, an increasing number of countries are moving into 'middle- income' status, defined by the World Bank as those countries achieving more than $1,000 per capita income.

Of Africa's 48 countries, 22 states with a combined population of 400 million people have officially achieved middle-income status; while another 10 countries representing another 200 million people today would reach middle-income status by 2025 if current growth trends continue or with some modest growth and stabilization in countries such as Comoros and Zimbabwe.

Another seven countries which are home to 70 million people could reach this milestone if they created economic growth of seven percent growth over the coming years. For example, Sierra Leone could grow at this rate because of its recent expansion in mining. Ten African countries, which are 'fragile' and conflict- affected states, and with a combined population of 230 million people, have almost no chance to reach middle-income status by 2025.

Africa increasingly urbanized

Africa's Pulse also notes that with rapid population growth Africa is urbanizing rapidly, with deep implications for social and economic opportunities. No country has ever reached high income with low urbanization. Today, 41 percent of Africans live in cities, with an additional one percent every two years. By 2033, Africa – like the rest of the world – will be a majority urban continent. Urbanization and development go together.

Poverty rates on the continent have been falling faster than one percentage point a year and for the first time, between 2005 and 2008, the absolute number of people living on $1.25 a day fell. Child mortality has also been declining.