Dar es Salaam — Members of the East African Community (EAC) are among the fastest growing economies in sub-Saharan Africa, and more broadly in the developing world, in recent years, the International Monetary Fund (IMF) said on Wednesday.
However, the region still lags behind the successful economies in terms of export growth and savings mobilisation.
“Three countries in the EAC (Rwanda, Tanzania, and Uganda) were among the fastest growing economies in the world during 2005 to 2009,” the IMF said in its Regional Economic Outlook launched in Dar es Salaam.
In the rankings of the top-twenty fastest-growing countries in 2005-2009, Uganda ranks the sixth, Rwanda the ninth and Tanzania ranks at sixteenth.
“With annual per capita growth averaging close to 4 per cent over the past 6 years, the EAC comes close to qualifying for a “growth acceleration” episode as defined in the economic literature,” the report reads in part.
Rwanda and Tanzania have expanded rapidly since the early 2000s (7.7 per cent per year in Rwanda and 6.8 per cent in Tanzania). Angola emerged the best performer with an average real GDP of 14.7 per cent during the same period.
From a list top-twenty countries, Uganda ranks sixth,…
It said part of the recent high growth is “catching up” after years of very poor growth–in the last part of the 20th century the region suffered periods of severe civil strife and bouts of economic instability. Since then, the region has demonstrated commitment to strong policies.
According to the report, since 2005, these countries have been among the fastest growing economies in the world, with annual average GDP growth rates of close to 8 per cent–similar to other sub-Saharan African high performers like Mozambique.
With strong output growth, per capita incomes in the region are catching up. Average real per capita GDP in the EAC reached $412 in 2009–close to the average of $420 for sub-Saharan Africa (excluding South Africa and Nigeria)–although wide variations remain within the region, from $487 in Kenya to $115 in Burundi.
However, the region’s high population growth (close to 3 per cent per year over the last two decades, compared with the sub-Saharan Africa’s average of 2.6 per cent) has constrained poverty reduction. Also, per capita incomes remain low.
Medium-term prospects are favorable for translating recent gains into sustained high growth for the region. The recent growth path, however, will not be enough to achieve middle-income status and substantial poverty reduction by the end of the decade–the ambition of most countries in the region.
The causes are largely of a structural nature (limited physical and financial infrastructure, high financing and regulatory costs) as exchange rates have been broadly in line with fundamentals.
There is scope for active policies to unlock potential in these areas. Deeper regional integration, particularly in trade and investment (both public and private), could help raise productivity and reduce costs, facilitating higher exports.
The IMF reiterated its forecast of 5.5 per cent GDP growth for the region this year and 5.9 per cent in 2012, with low-income countries that make up the bulk of the continent recovering the fastest.
“Sub-Saharan Africa’s recovery from the crisis-induced slowdown is well underway, with growth in most countries now back fairly close to the high levels of the mid 2000s,” read part of the report.
But it warned rising food and fuel prices were about to test the region’s resilience of the past few years once again.
Growth forecasts varied, with the poorest countries recovering the fastest — such as Ethiopia, forecast to grow 8.5 per cent this year — and middle-income countries lagging behind. South Africa is expected to grow just 3.5 per cent.