Report charts the way for reform

2013-05-12 14:00

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Africa Progress Panel details how African economies can become effective

This week’s World Economic ­Forum (WEF) on Africa was full of enthusiasm, warnings and advice on the themes of natural resources, integration and reform.

Former UN secretary-general Kofi Annan championed a new report by the Africa Progress Panel, which he now chairs, recommending a global transparency agreement to stop Africa being cheated of its mineral wealth.

It would essentially follow on the US Dodd-Frank Act and a similar European agreement reached last month that requires oil and mining companies from these countries to declare any payments to foreign governments.

China, India and Russia have to be part of any agreement trying to ensure transparency in Africa, according to the panel.

The panel’s report is set to be marketed at the imminent G8 meeting next month and will have to be taken up by the G20, the club including the world’s emerging economies.

“If the next decade looks like the last decade, Africa will unquestionably emerge with impressive gains in gross domestic product,” the panel said in the report, released on Friday at the forum, which took place in Cape Town.

“What matters for African people is the rate at which new resource wealth reduces poverty and expands opportunity. Governments across the region have paid insufficient attention to this.”

The 10-member panel includes former International Monetary Fund managing director Michel Camdessus, former Nigerian president Olusegun Obasanjo and musician Bob Geldof.

While the size of sub-Saharan Africa’s economy has more than tripled since 2000 to about $1.33?trillion last year, more than half its 1 billion people live on less than $1.25 a day, World Bank data shows.

In many countries, “natural resource revenues are widening the gap between rich and poor”, Annan said in the report’s foreword.

“National strategies have to set out how the extractive sector fits with plans for poverty reduction, inclusive growth and social transformation.”

The panel painted a mixed report of development across the continent. Tanzania, Mozambique and Ghana have made large strides in reducing poverty, yet poverty has increased marginally in Nigeria and Zambia even as their economies expand, according to the report. In Cameroon and Mali, increased growth had no discernible effect on poverty.

Oil producers Angola and ­Equatorial Guinea were among the nations criticised for failing to ensure their populations benefited from their oil wealth.

The US’ top delegate to the WEF, deputy secretary of state for trade Robert Hormats, stressed the overwhelming importance of

continental integration this week.

In a lecture at the Gordon Institute of Business Science before attending the WEF, he held up Africa’s “thick borders” as its major impediment.

It takes an inordinate amount of time to move goods across the national borders of the continent, on average 35 days to export and 44 days to import, he said.

Energy will “be a growing part of Africa’s exports”, but the continent is not “purely a commodities play”, he added.

The US’ flagship trade agreement in Africa remains the African Growth and Opportunity Agreement (Agoa), which is renewed every five years and gives certain African countries duty-free access to the US market for some ­products.

By and large, this is to save the US tariffs on oil and gas imports, but almost 15% of Agoa exports are non-oil by now, Hormats said.

Agoa covers, for instance, cars made in South Africa. “Some people question if we should give SA Agoa when it is a middle-income country and one of the (members of the Brazil-Russia-India-China grouping) Brics,” said Hormats.

- Dewald van Rensburg, Francois Williams and Bloomberg

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