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Africa slows in 2013, but better times ahead

Tuesday, December 31, 2013 - 02:40

Dec 31 - With an economic growth of five percent in 2013 Africa's economy didn't do as well as expected. David Pollard looks the reasons why and what measures governments are taking to change the continent's fortunes in 2014.

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It's a growth rate Europe can only dream of. But at 5 per cent, Africa didn't do quite as well as expected in 2013. The continent's leading economy, South Africa, was at its weakest since 2009 - slowing to around two per cent amid labour disputes - forcing investors to rethink. Economist David Shapiro. SOUNDBITE (English) DAVID SHAPIRO, ECONOMIST SAYING: "We are a kind of economy that can't grow at those numbers. We need much higher growth. Some of our problems are on the export side, on the mining side, you know that we have got labour issues there. So put all these together, foreigners are beginning to stand back and re-look.." Some issues cut across national boundaries. Like oil. South Sudan - currently riven by factional fighting - was hit by a pipeline row with neighbouring Sudan that brought exports to a halt. Nigeria - Africa's biggest oil producer - suffered a four-year low in output because of oil theft. And both saw their local currencies sold in huge quantities in favour of the US greenback in what economists dub the 'dollarisation' of their economies. And then there's China, the continent's major trading partner. Struggling with its own slowdown, growth heading for its weakest in two decades. Bad news for Africa, says Aly Khan Satchu, an economic analyst in Nairobi. SOUNDBITE (English) ALY KHAN SATCHU, ECONOMIC ANALYST SAYING: "It is going to hit Africa quite hard, in particular those countries which have got a very deep trade relationship with China. And they are not difficult to spot - they're like Angola, Zambia with the copper and a number of others." On the flip side, some see China's slowdown as an opportunity for Africa to wean itself off Chinese demand for its raw materials and find its own feet. And in doing that, for countries like Ethiopia to encourage a stronger, more vibrant private sector. Growth there has been propelled by huge spending on public infrastructure projects. World Bank economist, Lars Moller, thinks it might be time for a change. SOUNDBITE (English) LARS CHRISTIAN MOLLER, LEAD ECONOMIST, WORLD BANK SAYING: "If you facilitate public investment and you give credit to public investment projects, that obviously is great for public investment but that credit can then not be unlent to other, for instance, private investment projects. And that's an area where a deliberate choice is being made and what we are saying is, maybe there are some really good private investment projects out there that could deserve to get that credit." Growth in 2014 is expected to perk up to around 5.3 per cent in sub-Saharan Africa. And with the global economy showing signs of recovery, economists are confident of good prospects further ahead.

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Africa slows in 2013, but better times ahead

Tuesday, December 31, 2013 - 02:40