Africa Economy to be Boosted by Oil Output

By Eddyson Lugangwa Posted 08 November 2006 @ 10:33 am EET     Print     Reprint     E-Mail     Comments

Nairobi (IBTimes.com) - Sub-Saharan Africa's economy is set to receive a boost following estimates of a sharp increase in the growth of output from oil-exporting countries. Releasing a report on the region's economic outlook for 2006 in Pretoria on Monday, the International Monetary Fund's (IMF) Director for Africa Department, Abdoulaye Bio-Tchane said the average growth for Sub-Saharan Africa (SSA) was estimated to accelerate to 5.9 percent in 2007.

This was attributed mainly to rising petroleum output in a few oil-producing countries.

"Output growth in oil-exporting countries is forecast to increase sharply, from 5.6 percent to 10.1 percent, as new oil fields come on-stream in Angola and Equatorial Guinea," Mr Bio-Tchane said.

He said growth was projected to more than double to 31 percent in Angola and to over 9 percent in Equatorial Guinea. The report said in other oil-producing African countries, growth is expected to accelerate to between 2.5 percent and 4.5 percent.

In oil-importing countries, the report painted a promising picture, with economies projected to grow at 4.6 percent, led by the Democratic Republic of Congo, Mozambique and Tanzania - all growing by at least 7 percent. Growth in South Africa is expected to converge towards the potential growth rate of 4 percent, said the report.

The report said economic activity in oil-importing countries was supported by steady investment of almost 20 percent of the Growth Domestic Product (GDP).

"Output growth below two percent is projected in only four SSA countries: Lesotho, Seychelles, Swaziland and Zimbabwe," said the report.

For the entire region, excluding Zimbabwe, inflation is projected to decline to about 6 percent.

"In Zimbabwe, if current policies are maintained, inflation can be expected to accelerate to above 4, 000 percent," said the report.

Mr Bio-Tchane said while the situation was "bad" in Zimbabwe, the current state of affairs could be reversed by the country's authorities.

"We all agree that the situation is bad in Zimbabwe. This is bad news because it's affecting everybody but the good news is that this can be reversed by the authorities," he said.

Asked how the fund was assisting the country, he explained that the IMF board had discussed the situation adding that "we are advising them on what steps could be taken."

Mr Bio-Tchane emphasised that the main tools of turning the situation around were in the hands of that country's government.

Among oil-exporting countries, inflation is expected to fall significantly especially in Angola and Nigeria, "which are applying tighter monetary and fiscal policies."

The IMF report said average inflation in South Africa is projected at almost 5.7 percent, "somewhat higher than in 2006."