Business

Africa's economy 'seeing fastest growth'

  • 11 July 2013
  • From the section Business
A customer tries a fashion accessory displayed for sale at Temple Muse in Lagos
Middle income countries now account for nearly half of African states

Africa's economy is growing faster than any other continent, according to the African Development Bank (AfDB).

A new report from the AfDB said one-third of Africa's countries have GDP growth rates of more than 6%.

The costs of starting a business have fallen by more than two-thirds over the past seven years, while delays for starting a business have been halved.

The continent's middle class is growing rapidly - around 350 million Africans now earn between $2 and $20 a day.

The share of the population living below the poverty line in Africa has fallen from 51% in 2005 to 39% in 2012.

Africa's collective gross domestic product (GDP) per capita reached $953 last year, while the number of middle income countries on the continent rose to 26, out of a total of 54.

The AfDB's Annual Development Effectiveness Report said the growth was largely driven by the private sector, thanks to improved economic governance and a better business climate on the continent.

"This progress has brought increased levels of trade and investment, with the annual rate of foreign investment increasing fivefold since 2000. For the future, improvements in such areas as access to finance and quality of infrastructure should help improve Africa's global competitiveness," the report said.

Infrastructure

The AfDB points to the increase in regional economic co-operation and intra-African trade as being the drivers of growth in the future.

However, the AfDB said inadequate infrastructure development remained a "major constraint" to the continent's economic growth.

"Africa currently invests just 4% of its collective GDP in infrastructure, compared with China's 14%," the bank's report said.

"While sustainable infrastructure entails significant up-front investments, it will prove cost-effective in the longer term."

Despite the improving picture overall, the AfDB cautioned that substantial differences in incomes remained.

"The challenge will be to address continuing inequality so that all Africans, including those living in isolated rural communities, deprived neighbourhoods, and fragile states are able to benefit from this economic growth," it said.

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