© Arne Hoel

The past decade has witnessed growing diversity in income levels and growth across Africa. Sixteen countries grew by more than 4.5 percent a year over this period, and several of them (including Ghana, Mozambique, Senegal, Tanzania, and Uganda) also diversified their economies and exports. The fastest-growing group of non-oil-producing African countries, which together represent 36 percent of the population in Africa, grew at an average rate of 5.5 percent. In contrast, the 13 slowest-growing countries, which represent 20 percent of the region’s population, saw average growth of only 1.3 percent. Growth for the region as a whole reached an estimated 5.3 percent in 2006.

Solid growth has helped to improve human development outcomes, especially in primary education. Gross primary school enrollment rates in the region rose from 72 percent in 1991 to 96 percent in 2004. Health outcomes are more varied, but they, too, are improving in many countries, and progress in preventing and treating malaria and HIV/AIDS has accelerated.

Despite these positive signs, Africa is not growing rapidly enough to substantially reduce income poverty. The World Bank is well positioned to mobilize private and public development finance to increase annual growth to 7 percent, the minimum necessary to have a significant impact on poverty reduction.

WORLD BANK ASSISTANCE

The Bank is the largest provider of development assistance to Africa, with a record $5.8 billion in credits, grants, and guarantees in fiscal 2007. In total, the Bank approved 93 projects, up more than 20 percent from fiscal 2006. It also continued its nonlending activities, completing 194 analytic and advisory services. Sixteen African countries benefited from the Multilateral Debt Relief Initiative in fiscal 2007, and another 17 will become eligible when they reach their completion points under the Heavily Indebted Poor Countries (HIPC) Initiative (see Debt Relief).

Over the past two years, the Bank’s strategy for assisting Africa has been implemented under the Africa Action Plan. The plan—based on accelerating shared growth, building capable states, sharpening the focus on results, and strengthening the development partnership—has already had positive impacts. For example, in fiscal 2007, Ghana and Tanzania were ranked among the top 10 countries reforming the climate for doing business; with Bank Group support, Madagascar moved up eight places in the global rankings for ease of starting a business. Such successes result primarily from strengthened commitment by African countries to reforms, as well as from strengthened collaboration among IDA, IFC, and MIGA in private sector development, infrastructure, and skills development.

Nearly 40 percent of Africa’s population lives in landlocked countries, many of which are also resource rich. The continent is also highly segmented geographically, and it has the highest density of countries of any developing region. Regional projects are therefore needed to close the infrastructure gap. The West Africa gas pipeline and the Eastern Africa Submarine Cable System—both of which are public-private partnerships supported by the Bank Group—are landmarks in regional approaches to relieving infrastructure bottlenecks. The Multi-Country AIDS Project for Africa, another Bank-supported regional program, operates in 31 African countries. It has reached 173 million people with prevention messages and has helped prevent mother-to-child transmission of HIV/AIDS among 1.5 million women.

The Africa Catalytic Growth Fund(ACGF), which the World Bank established in March 2006, provides rapid, targeted support to countries with credible programs for accelerating growth, reducing poverty, and attaining the Millennium Development Goals (MDGs). The fund is highly selective, focusing on a few countries at a time in which an infusion of capital can augment the impact of IDA assistance to produce results. The Trust Fund Agreement for the ACGF was signed in August 2006. Three projects were selected to begin in fiscal 2007. Each project falls within one of three work areas supported by ACGF—high-performing countries, transformation countries, and regional integration— and each addresses a hard-to-reach MDG—water supply and sanitation in Mozambique, child mortality in Sierra Leone, and HIV/AIDS prevention and treatment in the Horn of Africa.

OUTLOOK FOR AFRICA

African policies and institutional arrangements have improved substantially over the past decade, particularly in macroeconomic management and trade policy, according to the World Bank’s Country Policy and Institutional Assessment ratings. Africa now needs to sustain such gains by continuing to improve the policy environment, in particular by ensuring macroeconomic stability and improved market efficiency. Doing so will require greater openness to trade as well as the formation of strong market institutions. Removing behind-the-border constraints and establishing a procompetitive domestic business environment would enhance international competitiveness and strengthen domestic capacity to respond to the changing demands of the global economy.

African countries continue to benefit from increased aid effectiveness, in keeping with the March 2005 Paris Declaration. The declaration calls on all development partners to ensure that aid is coordinated among donors, that donor agencies harmonize their requirements to minimize transaction costs, and that aid matches the country’s development needs. Countries have taken the lead in developing baselines and action plans for implementing the declaration with development partners.

Africa has shown that it can sustain shared economic growth. In supporting African governments and people, the World Bank continues to play a pivotal role in advocating the need to increase aid flows to Africa and for African goods to have better access to world markets. The Bank will increase the leverage of IDA by using the Bank Group’s analytic skills and operational and country knowledge to identify areas in which an infusion of sequenced and predictable financing can help support results-oriented national programs. (See www.worldbank.org/afr.)

Africa Fast Facts

The Africa Action Plan

World Bank Lending to Borrowers in Africa by Theme and Sector

Africa: Share of Total Lending by Theme and Sector