3 Min Read
CAPE TOWN (Reuters) - North Africa's growth forecast for 2011 has tumbled to less than one percent from 4.5 percent achieved in 2010, dragged down by ongoing violence in Libya, the president of the African Development Bank said on Thursday.
A surge of pro-democracy revolts across North Africa have hurt economies, including Africa's second largest Egypt, just as the world's poorest continent sought to build on frothy forecasts amid a global economic downturn.
"For this year the figure for the whole of the North Africa region is no more than one percent, probably 0.7, because the big weight that is negative is Libya. Last year (actual) growth was 4.5," Donald Kaberuka told Reuters on the sidelines of the World Economic Forum for Africa.
He said Tunisia, where a popular uprising forced the president out after decades in power and inspired revolts elsewhere in the Arab world, was expected to grow by 1-1.5 percent this year, in line with World Bank projections.
The AfDB and World Bank have committed to provide Tunisia with urgent budget support totalling $1 billion, and Kaberuka said ongoing discussions with Egyptian authorities for similar aid would depend on whether programmes met the people's needs.
"It is not simply about the money, it is about the kind of programmes we are prepared to support, because these changes in North Africa were a reflection of the aspirations of the people for change, for direction, for opportunities," he said.
Kaberuka said he hoped the bank and Egypt could agree on a figure and form of support within the next few months.
In April, the AfDB's chief economist Mthuli Ncube said the bank had cut the continent's growth forecast to 5 percent mainly due to the North Africa turmoil. .
Kaberuka said, rising international oil and food prices posed a risk to budgets as governments were likely to introduce subsidies to quell violent unrest such as those seen in 2008..
"The risk is that countries faced with social pressures go back to product subsidisation, which of course could undermine public finances," Kaberuka said.
However, the global food price rise also presented an opportunity for African farmers to cash in as the AfDB targeted the agriculture sector, one of its major focus areas.
Kaberuka said this year the bank planned to invest $2.1 billion, specifically for water management systems to reduce rain-dependence, and for waste-reduction measures after harvest.
"In this year alone we intend to put an additional $2.1 billion in support of these two things," he said.