Economies of Sub-Saharan Africa to Grow Steadily, IMF Says
Sunday, October 21, 2007
The economies of sub-Saharan Africa, home to some of the most extreme and pervasive poverty in the world, will grow at a healthy pace next year, International Monetary Fund economists said yesterday.
The news came at the annual meetings of the IMF and World Bank this weekend, where leaders of the latter group are trying to raise money to fight poverty on the continent -- and grappling with the difficulty of trying to help some of the world's poorest people, many of whom live in countries with considerably corrupt governance.
The fund's projections have African nations growing more slowly than emerging East Asia, but on the right track; its economists expect 6 percent growth in total output forecast this year and nearly 7 percent growth in 2008. Inflation has been contained across most of Africa, excluding Zimbabwe (where there has been hyperinflation recently), according to the fund's annual regional economic outlook, released yesterday.
"African economic policies are far better than in the past," Abdoulaye Bio-Tchan¿, African development director of the IMF, said of the improvement. "Deficits are going down, inflation is going down, and as I suggested, the growth rate is picking up based on those strong policies."
Robert B. Zoellick, president of the World Bank, is trying to raise nearly $40 billion over the coming months for a fund that will pay for development projects for the world's 81 poorest nations, most of them in Africa. But raising the money is likely to be challenging. Many nations are facing tight budgets and wish to control their aid activities themselves rather than turn money over to the World Bank as an intermediary.
Developing countries such as China and India are home to hundreds of millions of very poor individuals, but those countries can handily raise money for development projects through private capital. The countries that don't have access to private capital markets and thus most need help from an organization like the World Bank tend to have unstable or corrupt governments.
But donors are wary of funding projects in which big chunks of the money may get siphoned off. Zoellick's predecessor, Paul D. Wolfowitz, made fighting corruption his top priority, and an outside commission chaired by former Federal Reserve chairman Paul A. Volcker recommended an overhaul of the World Bank's fraud-fighting unit in a report last month.
Zoellick said last week that the bank's role must go beyond financing roads, dams and other infrastructure. "Many people think that our role is just the traditional World Bank of the '60s, of project finance," he said. "Our real role is helping to create the markets, the intermediation, the institutions, so these things go on long beyond us."
There is little that the World Bank can do for regimes that are corrupt at the very top, said Raymond Fisman, a Columbia University economist who studies corruption. "If the top guy in the country isn't buying into it, there's not much hope," he said. "But if there is genuine interest in reform, the World Bank can play a very good role in figuring out how best to implement anti-corruption reform."
Nigeria offers an example of the challenge. A major oil exporter, the nation has been enriched in recent years by high energy prices. The IMF said yesterday that it expects the Nigerian economy to grow 8 percent next year.
But it also has a legacy of being one of the most corrupt nations in the world, under a succession of military leaders. (It now is controlled by civilians). Even if the IMF growth projection is correct, its gross domestic product per person would be only $1,136, and about 35 percent of its population lived in extreme poverty in 2004.
Transparency International, a nonprofit organization, ranks Nigeria the 32nd most corrupt nation out of 180, with officials routinely requiring bribes in exchange for routine public services. Speaking to reporters yesterday, Nigerian Finance Minister Shamsuddeen Usman said that the nation has made steady progress eradicating corruption. For example, he said, he and other leaders are now publicly disclosing their assets, a check against bribes and the siphoning of oil wealth.
"I think the issue of corruption is becoming less and less," Usman said. Then, slightly misstating the nation's corruption ranking from Transparency International, he said, "Our last rating was that we were the 38th most corrupt nation. That is still 37 steps better than when we were ranked the most corrupt."