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February 17, 2012

EA Economy To Grow At 6.8pc This Year – Report

A recent report has shown that the East African region economy grew in 2011 at 6.6 per cent and is forecast to grow at 6.8 per cent this year.
The report was released by the Sub-Region Office for Eastern Africa (SRO-EA) of Economic Commission for Africa (ECA).
The report entitled “Tracking Progress on Macroeconomic and Social Developments in the Eastern Africa Region 2011” was presented this week at an intergovernmental committee of experts meeting in Dar es Salaam.
It shows that in terms of the Gross Domestic Product (GDP) growth a number of regional economies have been among the best performing economies in the world over the last four years of global economic turmoil with Ethiopia, Rwanda, Tanzania and Uganda excelling in the economic growth.
Andrew Mold, head of the Macroeconomic and Social cluster at SRO-EA, who presented the report, cautioned that policymakers needed to keep an eye on a number of macroeconomic imbalances, which could undermine growth, particularly inflationary pressures.
“During the second half of 2011, these pressures have been strong in a number of countries in the region, especially in Ethiopia, South Sudan and Uganda,” he said.
For his part, Antonio Pedro, the SRO-EA Director, said as long as this stronger growth performance was sustained, more than half the countries in the region would have reached middle-income status by 2030.
“Though there are many challenges still confronting the region, particularly food security and climate change, the region enjoys much more room for manoeuvre than it did in the 1980s and 1990s,” he reiterated.
On social development, the report states that across the region there has been an impressive improvement over the last decade in a whole range of indicators, such as maternal health or infant mortality. However, fertility rates in countries such as Somalia, Uganda and the DRC remain exceedingly high (above six children per woman).
The report argues that unless a more concerted effort is made regarding family planning, there is little chance that the region could benefit from the kind of ‘demographic dividend’ that has propelled growth in China and, more recently, India. In China and India, the demographic dividend is the result of a declining fertility rate, leading to a decrease in the ratio of dependents to workers in an economy.
The report tracks social spending in the region and finds that half the governments in the region are spending over 20 per cent of their budgets on the education sector.
Countries reaching this target include Comoros, Djibouti, Ethiopia, Kenya, Rwanda and Tanzania, Madagascar and Uganda. However, in health, spending tends to lag behind with only four countries (the DRC, Djibouti, Rwanda and Tanzania) reaching the 15 per cent target agreed at an AU Summit in Abuja in 2002.
Regarding cash transfer programmes, the report notes that these have proliferated across the region in recent years. The largest, the Ethiopia’s Productive Safety Net Programme (PSNP), started in 2005 with between 5 and 6 million Ethiopians comprised public works programmes for the actively productive population, as well as conditional transfers for the very poor, who cannot participate in other forms of productive work.
“It is time to consider up-scaling some of these initiatives into a more comprehensive and ambitious social protection agenda,” argued Mold. In this regard, he highlighted minimum wage legislation as an instrument that deserves greater attention from policymakers. The instrument currently shows a great deal of variability within the region.
“At a time of fast economic growth in the region,” said Mold, “it is important that the fruits of economic growth are more evenly shared.”

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