Amid global economic turmoil, Eastern Africa continues to record growth

A report released on 13th February by the Sub-Region Office for Eastern Africa (SRO-EA) of Economic Commission for Africa (ECA) revealed that the Eastern Africa region grew in 2011 at 6.6 percent, and is forecast to grow at 6.8 percent in 2012.

The report entitled, ‘Tracking Progress on Macroeconomic and Social Developments in the Eastern Africa Region 2011” was presented during the SRO-EA 16th meeting of Intergovernmental Committee of Experts in Dar es Salaam. It shows that in terms of GDP growth a number of regional economies have been among the best performing economies in the world over the last 4 years of global economic turmoil, with Ethiopia, Rwanda, Tanzania and Uganda at the head of the pack.

 Andrew Mold, Head of the Macroeconomic and Social cluster at SRO-EA, who presented the report, cautioned that policymakers needed to keep an eye on a number of macroeconomic imbalances which could undermine growth, particularly inflationary pressures, “During the second half of 2011, these pressures have been strong in a number of countries in the region, especially in Ethiopia, South Sudan, and Uganda,” he said.

For his part, Antonio Pedro, the SRO-EA Director said “as long as this stronger growth performance is sustained, more than half the countries in the region will have reached middle-income status by 2030.”

“Though there are many challenges still confronting the region, particularly food security and climate change, the region enjoys much more room for maneuver than it did in the 1980s and 1990s,” he reiterated.

On social development, the report states that across the region there has been an impressive improvement over the last decade in a whole range of indicators, such as maternal health or infant mortality. However, fertility rates in countries such as Somalia, Uganda and DRC remain exceedingly high (above six children per woman).

The report argues that unless a more concerted effort is made regarding family planning, there is little chance that the region could benefit from the kind of ‘demographic dividend’ that has propelled growth in China and, more recently, India. In China and India, the demographic dividend is the result of a declining fertility rate, leading to a decrease in the ratio of dependents to workers in an economy.

The report tracks social spending in the region, and finds that half the governments in the region are spending more than 20% of their budgets on the education sector. Countries reaching this target include Comoros, Djibouti, Ethiopia, Kenya, Rwanda and Tanzania, Madagascar and Uganda. However, in health, spending tends to lag behind, with only 4 countries (DRC, Djibouti, Rwanda and Tanzania) reaching the 15 percent target agreed at an AU Summit in Abuja in 2002.

Regarding cash transfer programmes, the report notes that these have proliferated across the region in recent years. The largest, the Ethiopia’s Productive Safety Net Programme (PSNP), started in 2005 with between 5 and 6 million Ethiopians comprised public works programmes for the actively productive population, as well as conditional transfers for the very poor who cannot participate in other forms of productive work.

“It is time to consider up-scaling some of these initiatives into a more comprehensive and ambitious social protection agenda,” argued Mold. In this regard, he highlighted minimum wage legislation as an instrument that deserves greater attention from policymakers. The instrument currently shows a great deal of variability within the region.

“At a time of fast economic growth in the region,” argued Mold, “it is important that the fruits of economic growth are more evenly shared.”

Source: CSR Africa.Net – 16 Feb 2012