African countries have materially divergent economic outlooks for 2011, despite an overall lower gross domestic product (GDP) growth expectation for the continent of 3.7%, mainly as a result of political uprisings and conflicts in North Africa.

The ‘Africa Economic Outlook 2011’ report shows that countries of sub-Saharan Africa (SSA) are likely to expand by 5.5% this year, having recovered to growth of 4.9% in 2010. But the North African region, which includes war-torn Libya, as well as countries affected by recent political uprisings, such as Tunisia and Egypt, would expand at a far more modest 0.7%.

The document, officially released in South Africa on Tuesday, has been co-authored by the African Development Bank (AfDB), the OECD Development Centre, the United Nations Development Programme (UNDP) and the United Nations Economic Commission for Africa,

AfDB chief economist Prof Mthuli Ncube indicates that the return to relatively high growth levels in SSA is underpinned not merely by the strong rise in the commodity cycle, following the 2008/9 global financial crisis, but also by improving domestic demand.

Citizens earning between $2 and $20 a day have increased by an average of 3.1% a year since 1980, which is now translating into surging demand for telecoms and banking services, fuel, vehicles and appliances.

The SSA outlook has been able to accommodate the relatively paltry 3.6% growth expectation for Africa’s largest economy, South Africa, as well as an expected 7.3% contraction in Côte d'Ivoire, which is still emerging from a protracted period of post-election conflict.

Côte d'Ivoire is expected to rebound to 6% growth in 2012, which together with a possible normalisation of activity in many parts of North Africa should raise rates of GDP growth to 5.8% in 2012. GDP per capita growth, however, will continue to lag at around 3.7%.

The leading 2011 growth contributors are expected to be Ghana (12%), Ethiopia (10%), Democratic Republic of Congo (8.4%), Zimbabwe (7.8%), Mozambique (7.7%), Angola (7.3%), Liberia (7.3%), Tanzania (6.9%), Nigeria (6.9%) and Botswana (6.9%).

Various risks are highlighted to future growth, particularly youth unemployment, which contributed to the political unrest that led to the overthrow of governments in Tunisia and Egypt.

“A comprehensive approach is needed to address the problem of unemployment in general and of youth unemployment in particular,” the report avers, noting that improvements are needed both on the supply and the demand side of labour markets.

However, UNDP senior economist Nii Moi Thompson also cautions that the report focuses too narrowly on GDP growth rates and that an effort should be made to shift the focus toward the quality of growth.

Thompson believes greater emphasis should be given to recording gross national income, as well as gross national income per capita. “GDP basically tells us what is potentially available to be shared among the population, where GNI gives a much better idea of what is available to be shared,” he argues.

He noted, for instance, that much of Ghana’s income in the coming few years, as its oil industry developed, would be repatriated offshore and will, thus, not be available for sharing in a way that could reduce poverty and increase employment.

The report also notes Africa’s increasing integration into the world economy and the emergence of new partnerships, particularly with countries from Asia.

In 2009, China surpassed the US as Africa’s main trading partner, while over the last ten years, the share of Africa’s trade with emerging partners has grown from approximately 23% to 39%. Africa’s top five emerging trade partners are now China (38%), India (14%), Korea (7.2%), Brazil (7.1%), and Turkey (6.5%).

The report urges African countries to develop closer cross-border ties in dealing with both traditional and emerging partners, to boost sustainable and inclusive growth.

It notes that, while over the last decade, Africa's trade volume with its traditional partners has doubled in nominal terms, the continent’s overall trade volume has more than doubled.

However, the report also warns that African countries will need to frame their engagement with emerging partners within a home-grown strategy of national development, particularly with respect to longer-term industrial and agricultural policy.

“Where absorption capacity is low, large infrastructure investments need to be accompanied by proper budgeting of maintenance costs and consistency with the country’s development strategy,” the document states.

It adds that most African countries still need to enhance their bargaining positions with regards to their traditional and emerging partners, to ensure that these partnerships are actually mutually beneficial and African countries get their fair share of the benefits.

Policy options proposed include leveraging the rise in commodity prices to negotiate the supply of infrastructure for diversification, industrialisation and economic development, and holding traditional partners to account on their aid promises.