As Global Demand for Oil, Gas &
Minerals Picks up Momentum…
Africa Strikes Sustained
Economic Growth Path

In recent years, underpinned by continued world economic growth and sustained demand for gas and oil, as also that for other products of the extractive industries such as minerals and metals, Africa has witnessed significant and sustained rise in economic activity. This, in turn, has benefited a number of resource-rich African economies in providing a boost to their economic activities and growth.
Considerable progress has been achieved through improved macro-economic management, market-based reforms and continued structural progress in many African countries. This has resulted from the strong commitments of many African governments to prudent fiscal, monetary and exchange rate policies.
According to the International Monetary Fund (World Economic Outlook, April 2007), real GDP growth for the region was sustained at a robust 5.6 percent in 2005, the highest in almost a decade, before decreasing marginally to 5.5 percent in 2006. Underlying the pickup in growth has been the strength of the global economy, including higher oil and commodity exports, improved macroeconomic stability, and the ending of several protracted armed conflicts. Real GDP growth of the African region is projected to accelerate to 6.2 percent in 2007, before slowing to 5.8 percent in 2008 (Table 1).

Country specific developments have also boosted overall developments in the region. These positive developments include new production facilities in Angola and Equatorial Guinea, large increases in oil production in Chad, non-oil GDP in Nigeria has grown by an average of 8.0 percent over the past three years, and recovery in agricultural output in Ethiopia, and Rwanda. Further, structural reforms have also contributed to the resilience of the region, reflecting thereby in moderate inflation rate in many countries in the region (Table 1). After a strong expansion in 2006, growth in oil-importing countries is projected to ease this year, driven largely by developments in South Africa, where a tighter monetary policy is expected to slow domestic demand. The decline in oil prices will underpin an improvement in the terms of trade in some countries, although for others the benefit will be offset by the drop in metals prices.
In the Sub-Saharan region, combined real GDP growth stood at 5.7 percent during 2006, which is projected to rise to 6.8 percent in 2007 before falling to 6.1 percent in 2008, boosted by sustained growth in commodity-rich countries. Inflation rate has also moderated in the region, although inflation in Congo DR, Ethiopia and Zimbabwe remains an area of concern. Countries, which have registered strong growth, include Angola, Sudan, Ethiopia, Morocco, Ghana, Kenya, Tanzania, Uganda, Nigeria and Tunisia. In the Maghreb region, economic activity has accelerated represented by a growth rate of 4.5 percent in 2006, as compared with 4.0 percent in 2005. This growth was due to acceleration in the expansion of hydrocarbons production in Algeria. The outlook for the Maghreb region remains positive notwithstanding an expected slowdown in output growth during 2007.

Regional Trading Accords
Since the early 1990s, many countries in Africa have made significant progress in opening up their economies to external competition through trade and exchange rate liberalisation, often in the context of IMF and World Bank supported programmes. At the same time, with creation or expansion of a number of important regional trading arrangements in other parts of the world, there has been a revival of interest among policy makers in Africa in regional integration, resulting in the establishment or renewal of such arrangements in Africa.

Major Trading Accords in Africa include:
Common Market for Eastern and Southern Africa (COMESA) - Angola, Burundi, Comoros, Democratic Republic of Congo, Djibouti, Arab Republic of Egypt, Eritrea, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Tanzania, Zambia & Zimbabwe;
Southern African Development Community (SADC)- Angola, Botswana, Democratic Republic of Congo, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia & Zimbabwe;
Southern African Customs Union (SACU)- Botswana, Lesotho, Namibia, South Africa & Swaziland;
West African Economic and Monetary Union (UEMOA)- Benin, Burkina Faso, Cote d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal & Togo;
Economic Community of West African States (ECOWAS)- Benin, Burkina Faso, Cape Verde, Cote d'Ivoire, the Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone & Togo;
Central African Customs and Economic Union (UDEAC)- Cameroon, the Central African Republic, Chad, the Republic of Congo, Equatorial Guinea & Gabon;
Economic Community of Central African States (ECCAS)- Angola, Burundi, Cameroon, the Central African Republic, Democratic Republic of Congo, the Republic of Congo, Equatorial Guinea, Gabon, Rwanda and Sao Tome & Principe;
East African Community (EAC)- Kenya, Tanzania, and Uganda; Cross Border Initiative Burundi, Comoros, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Swaziland, Tanzania, Uganda, Zambia & Zimbabwe;
Economic and Monetary Community of central Africa (CEMAC)- Cameroon, the Central African Republic, Chad, the Republic of Congo, Equatorial Guinea, Gabon, and Sao Tome & Principe;
Economic Community of the Countries of the Great Lakes (CEPGL)- Burundi, the Democratic Republic of Congo & Rwanda;
Indian Ocean Commission- Comoros, Madagascar, Mauritius, Reunion & Seychelles;
Mano River Union (MRU)- Guinea, Liberia & Sierra Leone.
These trading arrangements are envisaged to foster trade and investment relations amongst member countries by removal tariffs and other impediments to intra-regional trade flows. In some cases, the arrangement also aims at fostering common economic and monetary union amongst member states, as also a common currency. The success of these arrangements in fostering intra-regional trade has been diverse, with COMESA, ECOWAS and SADC being the more successful ones (Table 2).
As can be seen from the table above, SADC, ECOWAS, COMESA, Cross Border Initiative and UEMOA have been the most successful in terms of enhancing trade within the member countries. In the case of SADC, intra-bloc exports have risen by four-fold, from US$ 1.6 billion in 1990 to as high as US$ 6.4 billion in 2005, accounting for 7.7 percent of the total blocs exports. In the case of ECOWAS, intra-exports have risen from US$ 1.6 billion in 1990 to more than US$ 5.7 billion in 2005, accounting for 9.5 percent of the bloc's total exports in 2005.
COMESA's intra-bloc exports have also risen from US$ 963 million in 1990 to as high as US$ 3.3 billion in 2005, accounting for 5.9 percent of the bloc's total exports. In the case of Cross Border Initiative, intra-regional exports have increased almost three-fold from US$ 613 million in 1990 to more than US$ 1.9 billion in 2005 accounting for 14 percent of the bloc's total exports during the same year. In UEMOA, intra-bloc exports rose from US$ 621 million in 1990 to US$ 1.4 billion in 2005, accounting for 13.4 percent of the bloc's total exports.