AfDB bullish about Africa's growth

Johannesburg - The African Development Bank (AfDB) is bullish about Africa's growth outlook, the organisation's chief economist Professor Mthuli Ncube said on Tuesday.

He was speaking at the launch of the African Economic Outlook 2010 report in Johannesburg.

The AfDB expects Africa to grow by 4.5% this year and by 5.2% in 2011. It has increased loans to African countries most affected by the 2008 recession.

"The outlook for Africa is generally positive. Africa's showing a V-shaped recovery," said Ncube. He added that while the AfDB was bullish about Africa's growth, it was also aware of the risks.

"Commodity-driven growth might bring further specialisation and growth volatility. Exit strategies might be politically difficult," he said.

Diversification of products in African countries was identified as crucial. Countries such as Botswana, which is heavily reliant on diamond exports, were severely affected during the recession when global demand was at its weakest. Ncube suggested that Nigeria could teach other African countries a few things about diversification.

"People think Nigeria is only reliant on oil. There's been a quiet surge in agriculture in terms of contribution to gross domestic product in Nigeria. It's a great diversification," Ncube said.

The report referred to East Africa as "the real engine of growth on the continent" and "the fastest growing region in Africa".  

"Africa is on the move. There are so many opportunities," said Standard Bank CEO Jacko Maree, who attended the launch.

Exchange rates

Ncube also called on governments to encourage the flexibility of exchange rates.

"Exchange rate movements in Africa should be flexible. You do need a flexible exchange rate to respond to economic shocks. Flexibility in the exchange rate is the way to go," Ncube said.

Asked whether he thinks there should be a single currency in Africa, Ncube responded: "One currency for Africa? I don't know when that will happen, but I would say let's start with currency compatibility first."