May 22, 2008
Economy to weather high food prices, energy deficit
Uganda, Tanzania to do better as Kenya tumbles over post-election violence

By Edward Ojulu

East African countries are projected to withstand the current high food prices and the persistent energy deficit to post an impressive economic growth of about 7.3% in 2008—above the continental average of 6%.

The 2008 African Economic Outlook published by the Organisation for Economic Co-operation and Development (OECD) and the African Development Bank (AfDB), however said that Kenya’s economic growth would slowdown due to the negative impact of the December 2007 post election violence.

The violence caused by a disputed presidential election has hurt agriculture and the tourism sector—the country’s two main source of employment and revenue.
Tanzania and Uganda as well as regional neighbours Ethiopia and Sudan, the regions fastest growing economies are projected to maintain the momentum or even post higher growth rates.

“Sudan, Tanzania and Uganda, which were the fastest growing countries in the sub-region in 2007, are projected to maintain or increase their high growth rates in 2008 and 2009,” the report states.

The Ministry of Finance Planning and Economic has projected Uganda’s economic growth at 7%.
Good macroeconomic policies in most African countries that have seen an increase in investor confidence is credited for the continent’s bright economic outlook . “…Multilateral Debt Relief Initiative have created more room for increased public investment in many countries,” the report states.

Dr Louis Kasekende, the AfDB Chief Economist has however warned that African countries need to achieve and sustain economic growth rate of about 8% if the number of Africans living in abject poverty is to reduce.

“Yet, the continent still needs to accelerate and sustain growth to the rate of 7 to 8 per cent to be able to achieve the Millennium Development Goal (MDG) of halving the proportion of people living in extreme poverty by 2015,” Kasekende is quoted saying.

North Africa

North Africa comes second with real GDP growth expected to strengthen from 5.3% in 2007 to 6.2% for both 2008 and 2009. High prices for oil and gas, and strong growth in tourism will be the major driving factor, the report said.
Egypt, Libya, and Tunisia, are the star performers, although “moderate expansion” will be expected in Algeria, Mauritania and Morocco.

Southern Africa

According to the same report, average economic growth for Southern African countries is projected to decline to 5.2% in 2008 down from 7% of the previous year.
The regions economic growth outlook appears to have been affected by the electricity shortage that has hit South Africa, the region’s largest economy.

“While Botswana is expected to grow slightly above 4.0 per cent and Malawi by about 5.0 per cent in 2008 and 2009, the projections for South Africa indicate that GDP growth will slow to 4.0 per cent in both years due to insufficient electricity production growth,” the report said.
Angola’s growth will also slow down to 11.5% in 2008 from 19.8% due to low oil production, the report said.

West Africa

West Africa will grow by 5.6% this year, recovering from 3.5% of the previous year boosted by high oil prices in Nigeria—the regions most populous nation and economic power house; while increased agricultural production in countries such as Ghana will power growth.