African Crisis Responses Initiatives

African Growth and Opportunity

Assistance and Debt Relief

Children's Initiatives

Commission for East African Cooperation

Conflict Prevention and Resolution

Economic Overview


Entebbe Summit for Peace and Prosperity: Joint Declaration of Principles



Human Rights

Initiatives with Ghana

Organization of African Unity

Trade and Investment



A major economic transformation has taken place in Sub-Saharan Africa in the past decade. Thirty-five out of 48 countries in the region are undertaking reform programs aimed at stabilizing their economies, liberalizing exchange rates, freeing the productive energies of the private sector and opening up to trade and investment. A number of countries are achieving impressive results. However, economic transformation in Africa remains fragile.

Most African countries enjoyed favorable terms of trade and adequate growth in the years following independence from colonial rule. However, much of Africa encountered economic difficulties by the end of the 1970s and crises of serious proportions by the early 1980s. The combination of poor economic management and external shocks such as drought, the oil crisis and the collapse of international prices for key export commodities of many African nations caused an overall decline in per capita income, such that the 1980s is considered a difficult decade for Africa.

In the mid-1980s many African countries undertook programs of economic reform with guidance from the International Monetary Fund and the World Bank, but reform efforts had ineffective results. A number of strong reformers recently have registered more impressive results, reflecting the growing consensus among African leaders, bilateral donors and multilateral institutions on the measures required to stimulate sustainable economic growth and development.

Economic reform is paying off in the form of revived growth. After years of stagnation and declining per capita income, economic growth has outstripped population growth since 1995. Real GDP growth averaged 3.4 percent in 1995, 5.6 percent in 1996, and is estimated at 4.5 percent for 1997. This compares with average population growth of 2.4 percent. Growth in Africa is increasingly widespread, and 31 Sub-Saharan countries registered positive per capita income growth in 1996. Inflation has dropped to moderate levels in most countries.

Nevertheless, Africa continues to face challenging economic problems. Almost half of the region's population falls below a basic standard of poverty, living on less than $1 a day. The World Bank estimates that sustained growth of at least 8 percent or 9 percent annually is needed to make significant progress in reducing poverty.

Sub-Saharan Africa carries the heaviest debt burden -- relative to debt service capacity -- of any region in the developing world. The stock of external debt owed by the Sub-Saharan countries -- $235 billion at year-end 1996 -- is small relative to the level of global capital flows to developing countries, but it represents nearly three times the region's annual exports of goods and services. Debt service payments absorb resources that might otherwise be available for spending on health and education.

Many African countries retain economic policies with a bias against exports and the private sector, although this is changing. Africa lags the rest of the developing world in liberalizing tariff and investment regimes. In addition, high transportation and communication costs contribute to keep Africa's share of global trade and investment flows at a low level. Accelerating Africa's integration with the global economy will help bring sustained growth and improved living standards to Africa's people.

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