African economy to grow by 5.8pc in 2007: UN report

United Nations, Apr 3: African economies are expected to grow by 5.8 percent in 2007, short of the 7 percent needed to reduce poverty, and are built on a fragile foundation of oil and commodity exports, a U.N. report said on Tuesday.

The U.N. Economic Commission for Africa's report called for greater diversity in African economies to reduce vulnerability to oil and commodity price shocks.

Policies drafted by African nations and international aid agencies should aim to ease credit restrictions to help countries turn their raw commodities into manufactured goods for export, the report said.

It also stressed that international aid agencies should tailor policy to individual countries and avoid ''one-size-fits-all'' macroeconomic goals for the continent.

''African economies continue to sustain what we call the good momentum of the past few years,'' the commission's Eloho Otobo told reporters on Monday, ahead of the release of the report. ''The growth momentum however rests on a very, very fragile foundation.'' With so many wars in Africa, policymakers need to categorize countries by whether they are in a conflict, emerging from one, politically tense but short of warfare, or stable democracies, Otobo said.

The projection of 5.8 percent GDP growth would mark the fourth straight increase following expansion of 5.2 percent in 2004, 5.3 percent in 2005 and 5.6 percent in 2006.

But only eight African countries surpassed 7 percent growth in 2006, the level at which U.N. experts say poverty begins to be reduced. They were Angola, Mauritania, Sudan, Ethiopia, Liberia, Libya, Mozambique and the Republic of Congo.

Five African countries experienced virtually no growth or a contraction: Ivory Coast, Comoros and Swaziland all grew 1.2 percent, Seychelles 1 percent and Zimbabwe's GDP shrank 4.4 percent in 2006, the report said.

New and more flexible growth policies are required, and economic reform must include combating corruption, Otobo said.

Amid economic crises in the 1980s, African countries adopted stabilization policies such as reducing public deficits, stabilizing exchange rates, and lowering interest rates and tariffs, Otobo said.

A second generation of reform that has included combating corruption and establishing efficient public services is not enough, he said.

''The time has come for Africa to embark on a more systematic effort at diversifying its economy. This can only come about by promoting proactive growth policies,'' Otobo said.

Africa has failed to benefit from preferential trade agreements and globalization, with the continent's share of global trade declining amid greater liberalization, the report said.

Reuters