UNIVERSITY OF PENNSYLVANIA - AFRICAN STUDIES CENTER
I. THE AFRICAN ECONOMY IN 1994 - AN OVERVIEW
A. A modest recovery in regional output
In 1994, the gross domestic product (GDP) of the African region grew by 2.4 per cent, compared to
only 0.9 per cent in 1993 and -0.3 per cent in 1992. Despite the modest increase in growth in 1994,
which was the fastest annual rate during 1990-1994, the African economy has continued to fall behind
those of other developing regions, and GDP growth is yet to keep pace with population growth. FIG.
Income per head in Africa was on the decline in 1994, falling by 1 per cent, the same rate as in the
1980s. That means that economic performance in the region continues to lose ground in the 1990s, in
both absolute and relative terms: GDP increased at an average annual rate of nearly 1.4 per cent over
the period 1990-1994, and income per head fell at 1.6 per cent. The proportion of the population in
Africa living under conditions of poverty has increased at an even faster rate, both in the rural
areas, where the economy continued to decline, and in the cities, where there has been a lack of
dynamism in fostering growth and job creation in the industrial and service sectors. Africa's share
of aggregate world output has continued to shrink while, at the same time, its population growth rate
stands at roughly twice that of the world.
The picture painted above is in respect of the whole region, including South Africa. If indeed South
Africa is excluded and considered separately in terms of growth performance, as it should in view of
the relatively huge size of its economy and its structurally more advanced stage of industrialization
and technological development, the resulting picture for the rest of the continent becomes slightly
less favourable. For developing Africa (Africa region without South Africa), GDP growth for 1994 was
of the order of 2.3 per cent - admittedly, more than double the 1993 rate, but still a lacklustre
performance Table I.1
Despite the acceleration in the GDP in 1994, albeit from a low trough, many of the factors that have
accounted for weak economic performance of Africa over the years were at work, though to differing
extent and with varying intensities in individual countries and groups of countries. The weather
conditions were generally more favourable in most parts of the region in 1994 than in 1993, resulting
in above-average harvests; still, a number of countries were confronted by food shortages at times
during the year. According to data from the Food and Agriculture Organization of the United Nations
(FAO), agricultural production rose by 2.1 per cent in Africa in 1994 compared to 3.7 per cent in
1993. The corresponding growth rates for developing Africa over the same period were 2.6 per cent in
1993 and 1.8 per cent in 1994.
A failed rainy season in the third quarter of 1993 and the first quarter of 1994 precipitated food
deficits in the first half of the year over the wide area spread over some ten countries mainly in the
Central, Eastern and Southern African subregions. In the most affected countries, increased amount of
food imports and food aid were required. It was only with the improved prospects for the mid-1994
main rainy season, for example, that some good harvests were recorded in some areas in the Horn of
The trend in industrial crops production in 1994 showed that output in that subsector was also far
from buoyant; the price recovery in 1993 and 1994 was yet to have much salutary effect on production
levels and on new plantings that had suffered from several consecutive years of falling prices and
declining real farm incomes.
The decline in output of mining products, including fuel, since 1992, continued in 1994, due
primarily to the crisis situation in some producing countries such as Zaire, and also, to some extent,
to the lack of new investment except in gold mines. In terms of value added, however, there was a
marginal improvement in 1994, due largely to the sharp increase in some prices, with GDP growth in the
sector rising by 1 per cent, compared to a decline of 0.3 per cent in 1993. In South Africa, the
region's major producer, output fell by 5.5 per cent in 1994.
Oil production in the Africa remained in 1994 at its 1993 level, due to a variety of factors, ranging
from OPEC quotas to capacity constraints and, in the case of Angola, civil war. Prices of minerals
and metal ores increased sharply in 1994, but of oil fell on average, losing some 7 per cent in the
case of Brent crude. Oil prices rallied in the second quarter of the year as a result of a paralysing
strike of workers in the Nigerian oil industry, but that movement was rapidly halted by increased
supplies from the Commonwealth of Independent States (CIS) and the North Sea.
Against the beneficial impact of export price increases in 1994 must be set the macroeconomic
consequences and the terms of trade losses which the African countries have experienced particularly
between 1991 and 1993. Many of them have limited currency convertibility and are obliged to use the
dollar as the principal reserve currency. The export revenues are generally dollar-denominated while
their import purchases are normally denominated in international currencies against some of which the
dollar consistently depreciated during the year.
Political instability, which so much affected the economy in 1992-1993, subsided in some African
countries in 1994. But while no new conflict situations emerged on the continent, the chronic
flashpoints continued in many cases to give cause for concern not only in Africa, but also on the part
of the world community of nations.
The peaceful constitutional transition from apartheid to a new democratic and non-racial South
Africa, kindled domestic and international confidence in that country's future. A number of other
countries also made the transition from long-established one-party rule to multi-party democratic
governance under remarkably peaceful conditions, although in some, the democratization process and
policies have resulted in heightened ethnic tensions.
12. However, the civil war intensified in Angola, inflicting considerable damage to the economy and
causing the displacement of half the rural population. Furthermore, the conflict in Rwanda which, in
1993, had only simmered with a negotiated power-sharing solution in sight, suddenly erupted in April
1994 into a horrible genocidal war for which neither Africa nor the international community was
adequately prepared. Nearby, Burundi teetered on the brink, while elsewhere on the continent
political tension and labour unrest persisted in a few countries, impacting negatively on the
development process. The stalemate in Somalia continued. Inevitably, those situations repressed
somewhat Africa's economic growth rate in 1994, and to the extent that they have served to reinforce
the misconception that all African countries without exception are "conflict-
prone" and "unstable", they quite likely served to discourage investment inflows to
Africa, thereby reducing economic growth prospects over the medium term.
13. For the region as a whole, the growth in domestic demand was rather sluggish at 2.7 per cent,
reflecting the slow growth of consumption and the declining trend of investment. Public consumption
has been constrained for a number of years, mainly because of the budgetary restraint policies in
place in most countries from the late 1980s onwards. In 1993, however, public consumption in
developing Africa increased rather strongly, by 4.7 per cent, but that has turned out to be ephemeral,
since the 1994 figure of 1.8 per cent would seem to suggest a return to the 1985-1990 trend, when
public consumption barely rose by an average of only 1.7 per cent. Aggregate private consumption rose
by only 1 per cent a year in developing Africa during 1980-1990, by 1.5 per cent in 1993 and by 1.1
per cent only in 1994. Growth fixed investment has been on a downward trend in developing Africa
since 1980, at the least, dropping in 1993 by 2.5 percentage points to a level 21 per cent below the
1980 figure of total investment volume. The gross investment ratio, which was at a high of 30 per
cent in 1980, dropped to 21 per cent in 1990 and has remained at 20 per cent ever since. However,
available data for 1994 indicate some noticeable rise in the investment volume.
14. Economic regression has now lasted far too long in the African region without real recovery or
accelerated upturn for it to be explained only in terms of political instability, ethnic conflicts,
the unfavourable international economic environment or fluctuations in weather-constrained
agricultural output. The vagaries of weather have undoubtedly been associated with the failure of the
agricultural sector in Africa. The number of countries seriously affected in each year by drought has
progressively risen: from 12 in 1974 to 27 in 1979 and 35 in 1984. But the problems of African
agriculture neither begin nor end with nature; stagnant agricultural sectors and declining
productivity in food production have all too often persisted even in countries enjoying a regular
rainfall pattern. Also, recession or quasi-recession in the industrialized economies, particularly
the countries of Europe that have the strongest links with Africa, have tended to reduce prospects for
the traditional exports of the region, notably beverages, agricultural raw materials and minerals.
But then, there have been periods of significant improvements in the global economic situation, the
latest of which began in 1994, led by robust growth in the United States of America, United Kingdom
and Australia; with output from the economies of the Organization for Economic Cooperation and
Development (OECD) countries, as a whole, estimated to have grown by 2.6 per cent. Inevitably, the
question must be asked as to why the Asian economies that have more or less faced similar conditions,
including the unfavourable global economic environment, managed to perform much better than the
African economies and to register impressive growth rates, i.e., an average GDP growth of nearly 6 per
cent for South and East Asian countries, during 1985-1993, and more than 10 per cent for China since
15. The fact is that most of the African countries have yet to take even the first faltering steps in
the transition towards a modern industrial and technological society. They have remained essentially
the fragmented mini-States they were when they achieved political independence, increasingly
incapacitated and unable to sustain even a modicum of modern institutions and consistent government
policies, not to talk of the lack of an overall enabling environment for development. Many African
countries are yet to overcome the narrow confines of inherited colonial economic structures, based on
the monocultural system of groundnuts/coffee/cocoa/cotton cultivation, or to achieve even the
semblance of a green revolution in main subregional food staples. Obviously, a major explanation for
the disappointing economic performance in the African region lies in the constraints of low
productivity, inefficient management and poorly devised and implemented government policies, as well
as the failure to diversify the narrow production and export base. It follows that the persistent
economic deterioration in Africa is never going to be arrested much less resolved or restored to the
path of self-sustaining growth and development until a sweeping overhaul and transformation of the
following specific structures takes place: (a) dualism and internal socio-economic disarticulation at
almost all levels of production and economic activities; (b) weak and undiversified production base;
(c) extreme dependence on external factor inputs and markets; (d) fragmented domestic factor and
product markets; (e) low level of human resources development; and (f) weak endogenous human,
physical, institutional and technological capacities.
B. Divergent growth of output in subregions and countries
16. There were significant divergencies in performance at the country level and in subregional
economic groupings in Africa during 1994 (table I.2). Among the subregions, Central Africa remained
mired in economic decline, recording consistently negative growth rates five years in a row. The
other subregions exhibited positive growth rates which were, with the exception of West Africa, above
the regional average.
17. In North Africa, buoyant economic activity resulted in output growth of 4.0 per cent, following
only 1.1 per cent in 1993. That was due in part to the strong economic recovery in Morocco, which was
badly affected by drought in 1993. Recent official information indicates that its GDP may have grown
by 10.5 per cent. That country seems to have made some progress with economic reform, and is now
recording a significant inflow of foreign investments, despite some serious difficulties concerning
inflation, budget deficits and obstacles confronting exports to the European markets. Moreover, it
has again been affected by drought towards the end of 1994, which, in spite of its robust agricultural
growth and cereal output, will necessitate some food imports in 1995. In Algeria, the political
crisis has compounded an already difficult situation: since the fall of oil prices in 1986, Algeria's
economy has been constrained by a very high debt service and high import requirements of industry.
GDP declined in 1993 in conditions of high inflation and rising unemployment. The same inflationary
tendencies have accelerated in 1994, coupled with budget deficits that have deepened to around 9.2 per
cent of GDP. In the Libyan Arab Jamahiriya, United Nations sanctions have had a damaging impact on
the economy which has reportedly contracted substantially in 1994. Oil production, the main source of
government revenue, has remained stable in 1994 after a sharp drop in 1993. In Egypt, growth was
modest in 1994, despite the successes of the reform programme in turning around the economy.
18. In the West African subregion, growth has stalled in 1994, dropping to 2.1 per cent from the 4.0
per cent recorded in 1993. That was mainly due to the slowing down of growth in Nigeria, where the
economy is estimated to have grown by only 2.1 per cent in 1994, compared to 7.2 per cent in 1993.
The country has been hurt by the drop in oil production to 97.3 million tons, 4.7 per cent less than
in 1993, and by political uncertainties. The active and wide-ranging liberalization policies pursued
in recent years were replaced in 1994 with the reimposition of exchange and other controls, with the
rate of exchange of the naira well below the market rate. Although there were substantial reductions
in petrol subsidies in 1994, petrol subsidies are still a source of considerable budget deficits.
19. The West African members of the African Financial Community (CFA) have undergone a large
devaluation of the CFA franc in January 1994, the first in more than 50 years. Some countries have
reported improvements in the trade account and fiscal balance. But growth in the CFA countries in
1994, though encouraging, remained only modest. Overall output in the countries concerned increased
by only 2.8 per cent compared to 8 per cent in 1993. In Côte d'Ivoire, the largest CFA economy
in West Africa, output decline has apparently stopped, but growth was minimal (0.8 per cent) in 1994.
20. Economic results for the Central African subregion continue to reflect the free fall of the
Zairian economy and the lacklustre performance in the rest, including the devastated economies of
Rwanda and Burundi. Subregional output fell by 5.4 per cent in 1994, following declines in the
preceding three years of 1.2 per cent in 1991, 5.4 per cent in 1992 and 5.0 per cent in 1993. As for
Zaire, the mining industry had been damaged during the riots of 1991-1992, and production of copper
has now fallen to around 50,000 tons compared to an annual capacity of 500,000 tons. Communications
inside the country are now precarious, and internal trade has shrunk drastically. Hyperinflation has
practically destroyed the currency.
21. The three oil exporters of the subregion, Cameroon, the Congo and Gabon, have not recorded good
results either. Cameroon has been affected by poor performance of agriculture and industry, and a
steady decline of oil production. The rapid fall in GDP since 1991 moderated in 1994, though a
decline of 1.5 per cent was still recorded. In the Congo, the political factors in 1994, and
continuing budgetary problems seriously constraining the economy. Despite the increase of oil
production to nearly 10 million tons in 1994, GDP contracted by 3.6 per cent. In Gabon, despite the
initial benefits of the increase in oil production, following the coming on stream of the Rabi Kounga
field, oil revenues have since levelled off and the country has had to face a difficult debt-
servicing problem. Following a fall of GDP in 1992-1993, only modest growth has been recorded in 1994
(1.6 per cent).
22. Since the beginning of the decade, economic activity has on average been disappointing in the
Eastern and Southern African subregion, stretching from the Horn of Africa to the southern part of the
continent. In 1992, the countries of Southern Africa suffered their worst drought on record. In
1994, economic growth is set at 1.4 per cent in the subregion as a result of drought conditions in the
Horn of Africa, the constraints of rehabilitation and reconstruction in Mozambique, and renewed
drought in Malawi.
23. In Kenya, one of the larger economies in the area, there has been some recovery in 1994. The
financial situation has considerably improved, under strict budgetary management. GDP increased by
2.5 per cent in 1994, and prospects for 1995 are good. In Uganda, the economy continued to grow,
posting a high rate of 7.2 per cent in 1994. Agriculture has recovered from the 1992 drought, and
export volumes have risen sharply, in response to high prices for coffee, the country's major export.
In Malawi, however, the food and agricultural sector was adversely affected by drought in 1993 and
early 1994. As a result, GDP has fallen by nearly 10 per cent, although some measure of recovery is
expected in 1995.
24. In Zambia, economic results remained disappointing in 1994, despite the implementation of a wide-
ranging reform programme. GDP growth in 1994 was only 1 per cent, after five consecutive years of
decline. The key mining sector is contracting, partly because of a long-term decline in copper
reserves, but plans are underway to privatize the ZCMM mining corporation as a way of improving the
situation. In Zimbabwe, recovery from the 1992 drought is now complete and the economy has grown by
about 6 per cent in 1994. Agriculture is expanding at around 6-7 per cent a year, while output in the
mining sector is up considerably as well.
25. A few countries of the subregion registered sustained growth in GDP over the past decade. In
Botswana, for example, a high rate of growth has been achieved in the past few years as the result of
a judicious management of the revenues from diamond, while in Mauritius, rapid industrialisation has
been spurred by the exploitation of the country's skilled manpower and the system of industrial free
zones. Both countries have more or less continued to make economic progress in 1994. In Botswana,
however, there has been a significant slow down, because of the fall in demand for diamonds and lower
prices in the international markets. Growth declined in 1993 for the first time, and in 1994 the rate
was only 2.5 per cent. Mauritius has also encountered considerable problems recently regarding
exports, particularly of sewn goods, which were subject to protectionist barriers, but it now appears
those problems have largely been overcome, as the country has striven to diversify its exports base by
introducing new activities. In 1994 alone, export volumes grew substantially - by a large 16.9 per
cent - and GDP by 6.8 per cent.
26. As for South Africa, the most advanced economy in the subregion and in the African region as a
whole, the economy had stagnated since the mid-1980s, despite its high level of industrialization.
This was due to the constraints created by the apartheid system which prevented the country from fully
mobilizing its human resources, and had hampered its effective participation in the international
economy due to sanctions. It had been hoped that the economy would recover quickly with the end of
apartheid. However, recent figures indicate an annual GDP growth rate of only 2.1 per cent in 1994
compared with the -0.9 per cent in 1990-1993. But there can be little doubt about the country's
improving economic and business climate and the immense potential for rapid growth.
27. In the group of African least developed countries (LDCs), economic performance has again been
poor in 1994. Output declined by 1.2 per cent, following declines in 1992-1993. More than two-thirds
of all African countries are now LDCs. Among them, the Sahel countries form a homogeneous group, by
virtue of their geographical position and an economic structure dominated by livestock and cereal
cultivation. In 1994, with the return of good weather to West Africa, agriculture recovered in most
Sahelian countries and, in the aggregate, GDP grew by 2.6 per cent after a decline of 0.7 per cent in
1993. For the nine countries which constitute the Permanent Inter-State Committee on Drought Control
in the Sahel (CILSS) - namely Burkina Faso, Cape Verde, Chad, the Gambia, Guinea-Bissau, Mali,
Mauritania, the Niger and Senegal, the results in 1994 may be even better, as the agricultural crops,
including food items, is a record one; cereal production was estimated at 9.9 million tons.
28. Table I.3 provides a frequency distribution of the countries in the African region according to
output growth rates. Twelve countries experienced negative growth in 1994 compared to 18 in the
previous year, while eight countries are expected to exceed 6 per cent in 1994 compared to 9 per cent
in 1993, which explains in part the slight improvement of economic performance at the regional level.
The six countries with the most impressive GDP growth rates in 1994 are: Morocco (10.5 per cent),
Namibia (8.7 per cent), Ghana (8.0 per cent), Uganda (7.2 per cent), Mauritius (6.8 per cent) and
Zimbabwe (6.0 per cent). About a fifth of the African countries had GDP growth rates in the range of
3 to 6 per cent in 1993 and 1994.
C. Economic policy developments in 1994
29. In response to continued macroeconomic imbalances and instability, the overwhelming majority of
African countries continued to implement reforms in 1994 focusing on fiscal austerity and restrictive
monetary policies, and the liberalization of foreign exchange and interest rates. The reform measures
were aimed specifically at liberalizing factor and product markets, removing distortions, empowering
the private sector, and making the public sector more efficient, in spite of the enormous short-term
costs and the social consequences of such measures. The main focus was the creation of a stable
macroeconomic environment for growth. However, most countries were yet to make the necessary
transition from overwhelming preoccupation with adjustment and stabilization to the long-term concerns
with sustainable development and structural transformation. In the case of South Africa, there seems
to be a consensus at maintaining a free market economy in the post-apartheid era, although fundamental
questions about the distribution of wealth, jobs and income between the black majority and the
previously dominant white population have loomed large and will inevitably have to be addressed. For
the present, the Government appears to have decided on a delicate balancing act, between short-term
measures to improve the lot of the majority population and long-term measures to attract foreign and
domestic investment for the future growth of the economy.
30. There were strong inflationary pressures in a number of African countries in 1993-1994. The most
prominent case was Zaire, where there was a virtual breakdown of the financial system, and excessive
budgetary deficits brought inflation to on imprecedented level of over 8,500 per cent in 1994. In
war-ravaged Angola, inflation also reached extremely high levels estimated at over 1,000 per cent in
December 1994. The franc zone countries which were previously characterised by very low inflation are
now experiencing considerable price rises as a result of the 50 per cent devaluation of the CFA franc.
However, with the maintenance of tight monetary policies in those countries, involving deficit
financing limits of 20 per cent of previous budget tax receipts and the curtailment of salary
increases, inflation has been brought below the rate of devaluation in most cases. But there has been
some less favourable experience nonetheless, such as in the Congo, where inflation is reported at a
high 60 per cent in 1994. But alongside these negative trends, significant reductions have taken
place in the rate of inflation in 1994 in Egypt, Uganda and Ghana which, as a result of greater fiscal
and monetary discipline, managed to bring about a sharp reduction in budget deficits.
31. Fiscal reforms were undertaken in many African countries in 1994, aimed at enhancing public
revenues and restraining public spending, with the objective of reducing the fiscal deficit in
proportion of GDP. A two-pronged approach towards enhancing public revenues was generally adopted:
(a) through institutional reforms, e.g., strengthening revenue agencies in order to increase the
collection rate; and (b) through the broadening of the tax base by increasing the scope of indirect
taxation, e.g., by introducing value-added tax and user charges on some public services. At the same
time, several governments took steps to streamline public spending by reducing the public sector
payroll, by cutting or eliminating subsidies, and by holding down the growth rate of public
consumption. This also involved public sector restructuring and expenditure rationalization in some
countries, as well as public enterprise reforms. Already compressed, recurrent expenditures were
already heavily compressed, and further compression often proved socially and politically untenable.
In such cases, it was the capital expenditure that bore, for the most part, the brunt of fiscal
austerity and budgetary pruning despite the high developmental cost of a steep reduction in an already
low capital budget.
32. In spite of the concerted government efforts at budgetary reforms, the fiscal gap continued to
widen in several countries in 1994, due to the social and political limits to expenditure reduction,
and the uncertainties and policy constraints of an unstable fiscal environment. In Malawi, for
example, the prolonged and severe drought has drastically reduced agricultural tax revenues while
necessitating increased expenditures on imports to fill the massive food shortfall. In Morocco, on
the other hand, which had a better than average harvest in 1994, the Government had to buy surplus
grains from the farmers at guaranteed floor prices. In countries making the transition from conflict
to peace, for example Mozambique, the enormous cost of demobilization consumed some of the savings
from reduced military spending. Also, many countries are yet to close the loopholes which distort the
fairness of taxation or have efficient revenue collection systems put in place to minimize tax evasion
and avoidance. Consequently, fiscal deficits in the region are expected to average about 6 per cent
of GDP in 1994, up from about 5 per cent last year. However, in order to contain monetary expansion,
some African countries have financed the bulk of their fiscal deficits by issuing treasury securities
rather than directly resorting to borrowing from their central banks.
33. In addition to efforts to check excessive money supply growth in different African countries,
monetary and financial reforms were in 1994 in the direction of freeing interest rates, restructuring
financial institutions and introducing a measure of deregulation in the operations of the financial
sector while strengthening the prudential supervisory role of the central bank over other financial
In a few countries, the institutional, legal and operational framework of domestic capital markets
was revamped and strengthened with a view to generating greater confidence in the financial
intermediation process among the investing public. The aim clearly was to establish the basis for the
development of a sound financial sector for effective mobilization of domestic savings and improved
allocation of investment through more efficient intermediation. Some countries, for example, Ethiopia
and Morocco, have geared up for expanding the scope of private participation in the financial sector,
either through whole or partial privatization of State-owned financial institutions, or by allowing
the establishment of privately owned financial institutions. In Ethiopia, the first private banks and
insurance companies since 1974 were established wholly on private initiative, following the
promulgation of a comprehensive new law governing the registration of financial enterprises.
A number of countries have embarked upon currency reforms. The devaluation of the CFA franc in
January 1994 was the most notable case of exchange rate adjustment in Africa during the year. This
was, first, because of the number of countries that were involved -- 14 countries in two regions, West
and Central Africa, plus the Comoros; and, second, because of the scale of devaluation. While the
overall impact of the devaluation is yet to be gauged, the associated financial measures would appear
to have brought about more discipline and encouragement of the use of domestic inputs. Exports have
revived in some countries, due largely to the incentives provided by the rise in domestic prices of
export crops as a result of the devaluation. The higher prices, it would also seem, have reduced the
incidence of smuggling of export crops from the zone. As already pointed out, however, devaluation
triggered a jump in domestic prices during the year, putting at risk significant elements of social
welfare and employment creation.
The foregoing review should not give the impression that the only development on the African currency
scene in 1994 was devaluation and depreciation. In some countries where reforms have already reached
an advanced stage, notably in Uganda and Kenya, in fact, currencies appreciated against a weaker US
dollar. But, more importantly, that reflected increased supply of foreign exchange from export
revenues, a modest increase in remittances, budgetary assistance from donors in support of agreed
reform programmes, and restrictions on central bank finance of government budgetary deficits.
Privatization is another area targeted by economic reforms. Here, progress is thwarted by the
paucity of domestic savings within African countries, scarcity of aggressive entrepreneurship and lack
or underdevelopment of stock markets. There is understandable reluctance on the part of African
countries to dispose of public enterprises entirely to foreign investors often at give-away prices.
Thus, countries are searching for an approach that would ensure that nationals retain significant
equity in privatised assets, for example, through joint ventures with foreign investors. To the
extent possible, they would also like to have a wide dispersal of shareholding in major privatized
enterprises. Thus, before the Government of Ghana floated its remaining shares in the Ashanti
Godfields Company on the London Stock Exchange early in 1994, it reserved almost 2 per cent of the
shares for the workers. In Ethiopia, the Government chose to break up the assets of the State-owned
transport corporation into three shareholding companies to be wholly transferred to the workers in the
form of a loan equal to the value of the transferred assets. In that way, privatisation, if properly
conceived, could be used to promote growth with equity, rather than widening economic disparities and
increasing the concentration of economic power. Progress was made also in other areas of reform;
notably, market and tax reforms geared towards the improvement of the investment climate for domestic
and foreign investors.
In the area of African economic integration and cooperation, the most significant event in 1994 was
the coming into effect of the Abuja Treaty for the establishment of the African Economic Community
(AEC). The first stage of the Treaty, which covers the first five years of its operation, aims to
strengthen existing subregional economic communities. It is also expected that the protocols to be
drawn up under the Treaty will contribute to the harmonization of sectoral policies at the subregional
level, as a stepping stone to policy harmonization at the continental level. In the meantime,
significant changes were underway in several subregional organizations during the last year, although
not all of these can be perceived as direct responses to the Abuja initiative.
In West Africa, while ECOWAS has been seized with the problem of rationalizing the intergovernmental
organizations in the West African subregion, the West African Monetary Union (UMOA) and the
"Communauté économique de l'Afrique de l'Ouest" (CEAO) were converted into the
West African Economic and Monetary Union (UEMOA) in January 1994. Similarly, CILSS completed its
restructuring programme in order to alleviate its financial constraints and make the organization more
efficient. The organization now operates a long-term development programme through three-year plans
approved by both the member States and donors.
Efforts at rationalizing and harmonizing the subregion's numerous intergovernmental organizations
(IGOs), numbering about 40 in all, continued in 1994. A report on the subject, commissioned by
ECOWAS, was discussed in Accra in September 1994 and is to be discussed further in 1995, before
recommendations are presented to the Council of Ministers. It will be recalled that the ECOWAS
Council of Ministers had agreed in 1990, after several past attempts, on a ten-year timetable for the
harmonization and rationalization of the West African IGOs. Some of the major recommendations are:
the merger of the West African Health Community (WAHC) and the Organization for the Campaign against
Major Diseases (OCCGE), and of the West African Clearing House into the West African Monetary Agency;
and, the harmonization of the activities of the UEMOA and the Mano River Union (MRU). It was
envisaged that by the year 2005, all the IGOs would have been rationalized or transformed into
specialized agencies of the ECOWAS.
In North Africa, there are ongoing political efforts to integrate more countries into the Arab
Maghreb Union (AMU). This is encouraged by the presence of large markets in neighbouring countries,
such as Egypt with a population of over 55 million and the Sudan with an abundance of agricultural raw
materials. Egypt had already applied for the status of an observer.
In Central Africa, the Heads of State of the "Union douanière et économique de
l'Afrique Centrale" (UDEAC) has formulated a new treaty for the creation of the
"Communauté économique et monétaire de l'Afrique Centrale" (CEMAC).
CEMAC would include the "Union économique de l'Afrique Centrale" (UEAC) and the
"Union monétaire en Afrique Centrale" (UMAC) as part of which the "Banque
centrale d'Afrique Centrale" (BCAC) will be administered. The aim of the new Treaty is to attain
a transition from a Customs Union under the UDEAC to an Economic and Monetary Union. Meanwhile, the
existence of the Economic Community of Central African States (ECCAS) continued to be threatened,
mainly as a result of the non-payment of membership contributions.
Finally, in Eastern and Southern Africa, 1994 ushered in fundamental changes in the subregions' two
main economic groupings: the Common Market for Eastern and Southern Africa (COMESA) and the Southern
African Development Community (SADC). The COMESA took over from the Preferential Trading Area (PTA),
which had been in existence since 1978. The parallel existence of SADC and COMESA has been a thorny
issue in 1994. South Africa, which joined the SADC during the year, and Botswana are not members of
the COMESA, while Namibia has not yet ratified the COMESA Treaty. Nevertheless, efforts at the
harmonization and rationalization of the two organizations are continuing, even after the rejection of
an earlier decision to merge the two.
In spite of the above developments, regional economic cooperation and integration
in Africa continue to be beset by numerous problems, in particular inadequate
transport and communication networks, weak production systems with virtually no
inter-sectoral and inter-country links, tariff and non-tariff obstacles to intra-regional
trade; and lack of convergence of national economic policies. Policies and programmes
to address these problems have been proposed in the Lagos Plan of Action and the
Final Act of Lagos, as well as in the African Alternative Framework for Structural
Adjustment Programmes for Socio-Economic Recovery and Transformation (AAF-SAP).
More recently they have found expression in various subregional efforts and in
the Abuja Treaty itself. What is urgently required is implementation. As part
of the efforts for promoting effective economic integration in Africa, there has
recently been increased discussion on how to bring into consonance economic integration
strategies and structural adjustment policies and programmes.