Despite a global economic slowdown, growth in African economies has been relatively resilient. Since the mid-1990s, economic growth in sub-Saharan Africa has averaged well above 3 per cent a year, compared with some one per cent in the first half of the 1990s. But the gains remain fragile. According to the IMF estimates, maintaining even this relatively good performance still not suffice to halve poverty by 2015, as envisaged in the United Nations Millennium declaration.

The New Partnership for Africa’s Development (NEPAD) itself aims at raising growth to 7 per cent a year. This is an ambitious goal. But the Fund is of the opinion that Africa has the potential to achieve it if an effort is made on all sides to create the domestic conditions for growth through sound national policies and to ensure that the international environment is supportive of Africa’s integration with the global economy.

There is ample evidence that countries with prudent macroeconomic policies attain higher growth rates. One can observe this in Benin, Botswana, Burkina Faso, Cameroon, The Gambia, Mali, Mauritius, Mozambique, Tanzania, Uganda and others. In most of these cases, the strong performance has been within the context of the IMF-supported programmes. Good economic performance has also sustained substantial progress on debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative.

In the 23 African countries that have reached their decision points, debt service has been halved from about 30 per cent of government revenue in 1998 to 15 per cent in 2002, while social spending now amounts to four times as much as debt-service outlays. But in parts of Africa, continued civil strife has taken a heavy full on development. In the Great Lakes region, in Liberia, and also in cote d’Ivoire armed conflict has caused significant human losses, and its economic impact has stretched well beyond the countries immediately affected. No effort from international financial institutions can compensate for these economic, social, and humanitarian setbacks.

Sustained economic growth and poverty alleviation in Africa require that all development partners work together to meet their commitments. While the IMF sees much progress in recent years in the efforts to strengthen governance, build sound institutions, and fight corruption, further ambitious work is needed. The IMF research reveals that growth would be around 2 percentage points higher in sub-Saharan African countries if the quality of their institutions were improved to the average of other regions. Macroeconomic stability is a prerequisite for sustained growth. There is a lot governments can do to improve the investment climate. Improvements are needed in public administration, in legal and judicial systems, and, more generally, in the enforcement of the rule of law.

The government also plays an important direct investment role as well, especially in providing the necessary infrastructure for private investment and development. In this vein, Nepad, in cooperation with the World Bank and the other regional development banks, will stimulate needed infrastructure investments.

There are also considerable unexploited opportunities in Africa to promote growth through regional cooperation. Creating larger and more integrated markets, facilitating cross-border investment, and allowing the free movement of people and exchange of ideas carry economic as well as political benefits. The developed countries should live up to their pledges and their long-standing target of 0.7 per cent of the GNP for development assistance. This assistance should be given, as far as possible, on grant terms. Current aid flows are not only insufficient, they are also unpredictable and often uncoordinated among donors.