Log in / Register
Home arrow Economics arrow Accelerated Economic Growth in West Africa
< Prev   CONTENTS   Next >

2 The West African Growth Story

We map West Africa's growth at two levels—the language and sub-regional grouping regions and the commodity grouping. The first consists of two groups— UEMOA and the rest while the second consists of three groups—Solid minerals and oil producing (consisting of three countries), agricultural exporting (comprising six countries) and aid dependent (consisting of seven countries). The full list of countries is shown in Table 1. Figures 1 and 2 respectively show the growth rate of the two sub regions as well as the commodity groups since 1980.

As can be seen from the figures, growth among West African countries has been volatile and irregular. But it has also been decidedly higher in the non-UEMOA countries. Both groups have had unstable growth, but it growth of the UEMOA group has been much lower on average than that of their counterpart in the region. Much of growth has been driven by commodity fortunes. For example, average growth, which was quite high post-independence went down in the late 1970s and remained so through the 1980s and 1990s. As has been much advertised, growth rebounded in the 2000s. The excitement of the 2000s growth is in part because it has been higher and remained relatively for longer than was the case in the 1970s. The high growth of the 1970s was largely driven by commodity boom and it is not yet clear that the present growth surge is structurally different in terms of factors driving it. Specifically, commodity prices have been up and China's influence on demand and pricing of Africa's primary exports has not only meant more opportunities and options, but also higher returns to these exports.

Interestingly, when the countries are grouped along product lines, the group with the highest growth rate comprises those supposedly dependent on official development assistance. The growth data for this group was partly influenced by Liberia's

Table 1 West Africa by commodity groups

Oil producing and solid minerals exporting

Agricultural commodities exporting

Aid dependent

Nigeria Guinea Niger


The Gambia Ghana

Guinea-Bissau Cote d'Ivoire Senegal

Benin Burkina Faso Cape Verde Liberia


Sierra Leone Togo

Source: Authors

Fig. 1 Average annual growth of W/African country groups

where post conflict rebuilding efforts translated to very high growth rates for some years in the 1990s and 2000s. This is followed by the agricultural exporting group while the group of oil and solid minerals exporting countries has the lowest average growth rates. Again, the growth has been relatively more stable and longer with less volatility for all groups in the 2000s than it was in the 1970s or 1980s.

As noted earlier, West Africa's growth story has closely followed commodity

prices. The commodity price glut of the late 1970s and early 1980s, driven by reduction in global aggregate demand for primary commodities, led to growth implosions affecting most countries in the continent. At the peak of the recession in the mid-1980s, average growth was negative. Temporal divergences in the growth rate for West African countries should necessarily be a concern for sustainability and diversification. The gyrations in growth rate between one decade and

Fig. 2 Average annual growth of W/African product groups

another clearly indicates that growth is yet to find a solid and sustainable anchor. The figures depicted so far are group averages, implying substantial smoothening of the numbers through aggregation (of countries and years). Despite this, virtually all the groups seem to have very large variations in growth rates between 1 year and the other.

So what currently drives growth among African countries? Despite the temptation to an easy conclusion, a deeper insight into the growth numbers may reveal more than meets the eye. For example, Table 1 shows a list of West African countries by size of exports (topped by Nigeria and followed immediately by three countries in the agricultural exporting group) as well as the average growth rate of these countries in the 2000s. A cursory assessment shows that the correlation between exports value and growth rate is -0.049, indicating not only a weak, but also a negative relationship. In particular, the recent resurgence of growth among the group marked as 'aid dependent' and the fact that they top the growth chart raises a number of fundamental questions on what could have been a simple answer of 'growth is driven by natural resources'. While a number of natural resourceendowed countries in the continent have grown, some others quite less endowed have also grown. In effect, while it is possible to attribute West Africa's growth to external forces, such external forces can no longer be limited to only the global commodity market nor is it possible to easily discountenance domestic factors that may have been at play. There are arguments that Africa's current growth is more than just the outcome of resource boom. Specifically, the McKinsey Global Institute (MGI) produced some evidence indicating that resources accounted for only

Fig. 3 Trends in agricultural and manufacturing value added

about 32 % (roughly a third) of Africa's growth between 2000 and 2008 with the rest resulting from internal structural changes that have activated higher levels of activity within the broader domestic economy. Such higher levels of economic activity have particularly centered on sectors such as wholesale and retail, transportation, telecommunications, and manufacturing. The report argues that the current growth resurgence is particularly widespread, covering at least 27 of the continent's 30 largest economies and that both countries with and those without significant resource exports have had similar output growth rates.

But the challenge is that whether external o internal forces, the sort of structural changes that should follow growth for countries with very weak initial conditions, are not showing up among West African countries. Figure 3 shows trends in Manufacturing and agricultural value added. So far as such theories as the structural change model go, agriculture should gradually be donating labour and other resources to the secondary sector spurring growth in manufacturing. But as the figure shows, even though the share of agriculture is currently below what it was in the mid-1990s, it is not lower than its value in the early 1970s. In addition, whatever seems to have been lost in agricultural value added is picked up by services and not necessarily manufacturing. This would not have been such a challenge were the services to be high value added ones, as opposed to what obtains in many countries where the service sector comprises of exchange activities that merely support production in countries outside the continent.

Found a mistake? Please highlight the word and press Shift + Enter  
< Prev   CONTENTS   Next >
Business & Finance
Computer Science
Language & Literature
Political science