Africa's resources still best bet for its growth

Videos
Photos

By He Wenping (China Daily)
Updated: 2008-07-15 07:38

The African Union (AU) convened its 11th summit on June 30 and July 1 in Egypt. The top-level meeting attracted intense media attention around the world because it was held as the world economic growth was slowing down, the international prices of energy resources and food were soaring and the situation in Zimbabwe was getting tense.

At the latest AU summit heads of member states focused their discussion on the main theme of "Realizing the Millennium Goal of Water and Health" and challenges posed by worldwide food price hikes as well as how Africa should deal with the current food crisis.

They also discussed the gap between Africa and the United Nations' Millennium Goals on safe drinking water supply and basic environmental hygiene in addition to ways to end the grave political crisis in Zimbabwe triggered by the presidential election.

The first issue taken up at the AU summit is the huge challenges posed by a worldwide food crisis and soaring energy resource price. As it is widely known that the mounting demand for food around the world, short supply of food caused by natural disasters and bio-fuel development and profiteering activities on the international market have driven up food prices across the globe in recent months, seriously impacting many African countries that depended heavily on food imports. Apart from the prices of sugar, wheat flour and edible oil, which African nations import in large quantities, have also risen sharply.

The rising prices of food and energy resources are putting many African countries not only at the growing risk of ballooning inflation but also the danger of severe social turmoil caused by widespread famine.

Despite the fact that Africa has enough arable land and water resources for self-sufficiency in food production, decades of investment shortages on the governments' part have prevented the continent from fully applying its enormous potential in agricultural development.

Compared to Asian nations' average commitment of 14 percent of GDP to agriculture, African countries spend only 5 percent on average of their GDP every year on the industry. It has thus remained the only continent on Earth where per capita food production was falling in the past 40 years.

According to one estimate, the Sub-Sahara region of Africa will be 25 million tons short in food supply in 2015 while the population threatened by hunger will increase to 205 million.

In the area of drinking water and environmental hygiene, the improvement still lags far behind the growth of population in Africa despite increased efforts by governments concerned.

Statistics show that, between 1990 and 2006, the number of people without adequate drinking water supply grew from 280 million to 340 million, while that of those lacking basic hygiene increased from 430 million to 583 million. Some African nations lose up to 5 percent of their GDP value to water- and hygiene-related problems a year, far more than the economic aid they receive in proportion to their gross domestic product.

Zimbabwe has been under international media spotlight since its presidential and parliamentary elections took place in March. Because neither President Robert Mugabe nor opposition party leader Morgan Tsvangirai won more than half of the votes in the first round, a runoff had to be held according to the Constitution. Mugabe proceeded with the second round of voting alone as scheduled after Tsvangirai pulled out for security reasons and quickly announced victory and was sworn in for another term in office.

Regarding the legitimacy of this election foreign backers of the Zimbabwean opposition led by the US and Britain naturally debunked President Mugabe's win as "illegal", with Washington not only tabling a draft resolution at the UN Security Council to demand an arms embargo against the African nation and travel restrictions on its government officials but also hoping the latest AU summit would fire a similar warning shot at Mugabe.

AU member-states have been divided, too, over how to respond to the Zimbabwean crisis. Kenya and some other countries thought AU should send a clear and harsh signal, some heads of state even called on AU to launch military intervention, while South Africa and a few other countries believed sanctions would not achieve any positive result and called for further diplomatic efforts to bring the two rival Zimbabwean parties to the negotiating table for reconciliation.

After two days of bargaining and discussions the African Union said in its final agreement that it supports the establishment of a unified government in Zimbabwe and continued regional efforts to mediate with the country's political rivals.

According to the text of the AU resolution, the organization urged President Mugabe and Movement for Democratic Change leader Tsvangirai to honor their promises to hold talks aimed at fostering national stability and unity of the Zimbabwean people. The AU resolution can be seen as a result that keeps the two stands mentioned above in balance and shows the regional group hopes Zimbabwe would be inspired by the formula with which Kenya formed its coalition government and work toward restoring stability and reviving the economy.

Though faced with huge challenges Africa has a lot of opportunities, potential and hope for development. African nations have made remarkable progress in perfecting macro-economic management, fine-tuning economic operation mechanism, improving the internal and external environment for economic development and strengthening regional economic cooperation, as the continent's economic development has been running in rehabilitative growth mode since the 1990s.

The African economy has not only maintained an average annual growth rate of 6 percent but also kept the inflation rate under two digits. To date, despite such new challenges as a food crisis and rising energy price, authoritative rating institutions both in and outside the continent such as the International Monetary Fund, UN Economic Commission for Africa and African Development Bank have yet to downgrade their predictions of Africa's economic growth in 2008 and 2009 and remain optimistic about their assessment that the continent is still capable of achieving a growth rate of around 6 percent.

The latest AU summit put forth some proposals for dealing with interim and long-term food problems, including increasing investment in agricultural production, strengthening the monitoring and control of speculation in agricultural trade and establishing grain reserves in African countries. Member-states at the summit unanimously pledged they would introduce new measures aimed at increasing capital injection into farming, improving the efficiency of water use and beefing up regional economic integration.

Difficult market circulation and low-level economic integration have been a major bottleneck hampering Africa's grain production. The UN Food and Agriculture Organization suggests in its latest report that, in order to alleviate the food crisis threatening the African continent, it is necessary to activate a special agenda beside the process of African economic integration that will allow a few strategic commodities, including food, to be traded freely in Africa ahead of other regions.

This is really a refreshing idea, which would not only help solve the continent's food shortage but also greatly boost the regional economic integration if it gets implemented.

Africa's opportunity for further development can also be found in the unprecedented attention from the international community in recent years. The 53 nations on the continent not only have a wealth of natural and human resources, especially certain rare mineral resources that are much sought-after in the world, but also constitute half of the Non-aligned Movement and nearly one-third of the UN membership. They are a force that simply cannot be overlooked when it comes to completing an international agenda.

Since the China-Africa Cooperation Forum was launched in mid-2000, the fast development of the Sino-Afro relationship has played a positive role in raising Africa's international status and the bilateral trade has helped the continent's economic growth increase by 20 percent. The eight measures introduced at the China-Africa Summit in 2006 have proved a significant boost to the faster development of African economy and efforts to realize the UN Millennium Goals.

Also, at the inaugural India-Africa Summit held in New Delhi in April and the fourth Japan-Africa summit in Japan the following month, India and Japan both promised to step up aid for Africa. And the World Bank has made plans to almost double the amount of agricultural loans earmarked for Africa to $800 million. All these efforts have improved the external environment for Africa's development.

We have reason to believe that the African economy can still stand up to all kinds of challenges head on and maintain the momentum of development as long as its development potential is brought into full play and the favorable international factors remain in force.

The author is a researcher with Institute of West Asian and African Studies of Chinese Academy of Social Sciences

(China Daily 07/15/2008 page9)