Africa’s oil states will lead growth, says OECD

LONDON (Bloomberg) – Africa’s economic growth will accelerate to 5.8% this year from 5% last year, led by oil-producing states such as Nigeria and Angola, according to the Organization for Economic Cooperation and Development (OECD). “The outlook for much of Africa continues to be more favorable than it has been for many years,” the OECD said in an e-mail.

“Continued global expansion means sustained demand and higher prices for African oil and raw materials.”

SA, Africa’s largest economy, will probably grow about 4.8%, after expanding 4.9% last year.

Oil-producing countries in Africa would expand 6.9%, compared with economic growth of 4.9% in non-oil producing states, the organization said yesterday.

Economic growth in southern Africa, which reached about 5% last year, might rise to 6% this year as Angola’s economy expanded 26.4% — up from 15.6% last year — as new oil fields started production.

The report is based on an analysis of 30 countries on the continent representing 86% of Africa’s population and 90% of output.

Economic growth would reach 5.5% next year, it said.

Africa’s economy is being supported by surging growth in Asia, particularly China and India, which has pushed prices for materials such as copper, zinc, silver and platinum to record highs and gold to its highest in 26 years.

The OECD estimated oil prices would decline to $56 a barrel this year and to $52 next year.

Growth in north Africa was expected to accelerate to 6.3% this year, from an estimated 4.8%, driven by expansion of 26.9% in Mauritania and 13,4% in Sudan, mainly due to increases in oil and gas production, the OECD said.

Morocco would grow 5.3% as its agricultural industry recovered from a drought. Economic growth in Algeria, Egypt, Libya, and Tunisia would remain little changed.

In West Africa, growth was expected to average 5.3% this year from 4.4% last year, the OECD said. Benin, Burkina Faso, Guinea-Bissau, Mali, Niger, Senegal and Togo would continue “to be negatively affected by the continued political turmoil” in Côte d’Ivoire.

Nigeria’s economic growth will probably expand 5.6%, compared with 4.4% last year, as long as oil production in the world’s eighth-largest oil producer was not affected by militant attacks, the OECD said.

The inflation rate across the African states surveyed may slow to 7.3% this year and 6.5% next year from 7.9% last year.

“For most countries the forecasts assume that the monetary authorities will be successful in resisting the recent increase in inflationary pressure. Conflicts and natural disasters in countries such as the Sudan, Zimbabwe, Ethiopia and Nigeria continue to dampen overall economic growth,” the OECD said.

China was now making major inroads in places, the OECD report said, citing a deal whereby Angola got a 17-year loan of $2bn from Chinese state lender Eximbank at low interest rates on condition that it use it to buy goods from China.

Chinese firms, whose offers often undercut South African and European rivals by up to 50%, accounted for one third of the work contracted out on a major road-building project in Mozambique, the OECD said