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GEO-3: GLOBAL ENVIRONMENT OUTLOOK  
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Economic development

The economies of African countries have been largely based on primary products or extraction of natural resources, both exported unprocessed. As a result, economic growth has been below potential, because revenues from the value that is added by processing accrue outside the continent, making African economies extremely vulnerable to external price fluctuations and trade regulations. The first oil crisis, in 1973-74, sparked a series of setbacks and economic recessions that have lasted for more than a quarter of a century. Falling prices for coffee, cocoa and other cash crops during the 1980s had catastrophic impacts on the economies of the region. Between 1970 and 1995, Africa lost half its markets, representing a loss of income of about US$70 billion a year (Madavo 2000).

Africa's dependence on rain-fed agriculture means that production is vulnerable to climatic variability, which can severely affect food and human security, and exports. The focus on mineral extraction, cash crops and timber harvesting has also had detrimental impacts on the environment.

With the additional constraints of a growing population, Africa's economic performance has been poor over the past 25 years. Annual growth of per capita GDP for sub-Saharan Africa was -1 per cent between 1975 and 1999, and incomes have fallen (UNDP 2001). Nevertheless, 34 African countries recorded increases in per capita incomes between 1994 and 1997, and 18 grew at aggregate rates above the 5 per cent a year threshold for reducing poverty (Madavo and Sarbib 1998). There is some speculation that this may signal a sustained economic recovery, partly reflecting the positive results of implementing growth-oriented macroeconomic and structural reforms (Madavo 2000, Madavo and Sarbib 1998).

GDP per capita (US$1995) by sub-region: Africa

While GDP per capita has climbed steadily since 1972 in Northern Africa, it has stagnated or declined in sub-Saharan Africa

Note: data for Eastern Africa are unreliable pre-1992

Source: estimated from World Bank 2001a

Since the mid-1990s price controls have largely been lifted, marketing boards abolished, trade taxes rationalized, financial markets liberalized and the process of privatization accelerated (ADB 2000).

National external debt is still a significant barrier to economic growth and poverty reduction in Africa. For the region as a whole, it increased almost 22-fold from US$16 960 million in 1971 to US$370 727 million by 1999 (World Bank 2001a). In 1970, the debt burden of sub-Saharan Africa was just US$6 000 million, or 11 per cent of GNP; this grew to US$330 000 million or 61 per cent of GNP by 1999 (ADB 2000). Since then there has been a small decline (World Bank 2001b). In Northern Africa, growth of external debt has followed a similar pattern. Recently, more emphasis has been placed on debt relief and increasing foreign direct investment (FDI). Although 20 African countries have had debt-reduction packages approved under the enhanced Heavily-Indebted Poor Countries Initiative (IMF 2001), indebtedness remains an issue of major concern.