African countries continued to register robust growth rates in 2014. The high rates of growth of the African economies, though supported to some extent by high commodity prices, were also due to continued improvement in the investment climate, prudent macroeconomic policies and also sustained flow of foreign direct investments.
While the investment climate remains relatively poor, Africa was the most improved region actually recorded the largest number of regulatory reforms (75 of 230 worldwide) to improve business environments in 2014 (Doing Business 2015, World Bank).
Progress in the diversifica- tion of economies was positive, and innovation based on mobile phone technologies (money transfers, health, agricultural information and insurance, etc.) were impor- tant in contributing to growth. Although the price of oil dropped substantially, the overall impact of this drop did not impact growth rates significantly—though this may not be the case in 2015 for oil- dependent economies.
Despite high rates of growth, the benefits of this growth were concentrated on the wealthy. The growth was not inclusive, especial- ly when it came to lowering overall unemployment and youth un- employment rates specifically (an issue discussed in Foresight Africa 2014).
Furthermore, although there were positive developments in economic diversification, the most important sector—agriculture—did not experience the transformation necessary for increased produc- tivity.
Thus, economic growth in 2014 had the effect of exacerbating inequality and increased unem- ployment. Of note also is that five African countries—Nigeria, Kenya, Zambia, Uganda and Tanzania—rebased their GDPs, revealing that their economies are 89 percent, 25 per- cent, 25 percent, 13 percent and 32 percent larger (respectively) than previously estimated.
Read also: PZ Cussons post N4.57 billion profit despite adverse economic conditions
In fact, with this rebasing, Nigeria became the largest economy on the continent. Deepening Trade and Invest- ment with the United States and Other Global Powers During the year, Africa contin- ued to deepen trade and invest- ment relationships with major global players—though the benefits vary.
In 2014, the United States signed a Trade and Investment Framework Agreement (TIFA) with the Economic Community of West African States (ECOWAS). This TIFA will provide a mecha- nism for expanding trade (valued at $23.3 billion in 2013) and invest-ment between the United States and the 15 ECOWAS member states.
The European Union entered into new reciprocal trade arrange- ments with African countries—the Economic Partnership Agree- ments (EPA)—that provide African countries with duty-free access to European markets. While this development has potential to truly benefit these countries, there are real concerns that the EPAs could detract from intra-African trade and integration, and, in turn, as- sociate with large losses to African countries. Sub-Saharan Africa also made significant headway in trade and investment with emerging mar- kets, especially with China.
In May 2014, Chinese Premier Li Keqiang spent eight days on the continent, visiting Ethiopia, Nigeria, Angola and Kenya with the primary ob- jective of bolstering economic ties with the continent. The trip resulted in numerous trade, en- ergy, investment and development agreements and ended on a high note in Nairobi, where Li signed a deal with Kenyan President Uhuru Kenyatta and other East African leaders to construct a $3.6 billion, 380-mile railway line linking Nai-robi to the important Kenyan port of Mombasa.
This link will be a part of a regional railway system that will eventually extend through Rwanda, Uganda, Burundi and South Sudan. The U.S.-Africa Leaders Summit Among the notable events im- pacting Africa’s development in 2014 was the U.S.-Africa Leaders Summit that was convened in August by President Obama.
The 2014 summit has the potential to herald a new era of U.S.-Africa relations where Africa occupies a more prominent position in U.S. foreign policy. In fact, the focus of the summit was not the traditional donor-recipient relationship but one based on mutualism.
Thus, in addition to tangible investment commitments, the summit had the effect of redefining the U.S.-Africa relationship. The summit brought together 45 African heads of state as well as business executives and civil soci- ety leaders. In addition to direct dis- cussions between President Obama and African leaders, the summit also featured a business forum to promote ties between African and American executives, as well as a youth forum.
Overall, the summit was significant not only because it was the first such summit where an American president met with African leaders, but also because concrete commitments were made to advance Africa’s development and also increase U.S.-Africa com- mercial ties.
Specifically, over $14 billion in new deals between U.S. companies and African govern- ments (in the renewable energy, aviation, banking and construction sectors) were announced at the U.S.-Africa Business Forum. Regional Integration In 2014, the various regional economic communities (RECs) continued to make progress in the
advancement of regional integra- tion.
Though the pace of prog- ress varied across the RECs, there was a general positive progress in removing barriers to trade in goods and services and also in the movement of people. Negotiations on the COMESA-EAC-SADC Tri- partite Free Trade Area (FTA) are ongoing, and the FTA is expected to be launched at the 3rd Tripartite Summit of Heads of State and Gov- ernment in Cairo, which has been postponed from mid-December 2014 to February 2015. In addition, member states focused increas- ingly on regional infrastructure to advance the regional integration agenda.
In the East African Com- munity for example, there were heightened discussions on mon- etary integration. Thus, although the pace of integration could be higher, the trajectory was positive in 2014. Source: Brookings Institution
