Economic Growth and Trade in sub-Saharan Africa

African economies have been experiencing the most sustained growth in decades thanks to rising levels of investment, expanded trade and an improved business climate.

FAST FACTS:

• In 2007, 23 African economies were growing individually at 5% or more; in total 18 non-oil producing African countries have averaged growth of 5.5% between 1995 and 2005.
• African ingenuity and entrepreneurship attracted a new wave of foreign investment of approximately $30.5 billion in 2007, up from $22 billion in 2006 and just $4 billion in 1995.
• Inflation in sub-Saharan Africa decreased from 18% in 2000 to approximately 8% in 2008.
• Senegal, Burkina Faso, and Botswana were among the top ten business climate reformers in the world in 2007-2008.
• Cell phone subscriptions in sub-Saharan Africa grew by more than 60% annually between 1994 and 2005.

Rwanda: Aid for trade promotes coffee exports

Private sector and USAID funding helped coffee producers in Rwanda to organize cooperatives, build washing stations, and meet coffee buyers. The investment resulted in Starbucks buying Rwandan Blue Bourbon coffee and highlighting it in 5,000 of its stores nationwide. Programs like this one have generated more than $35 million in exports each year as Rwandan coffee is sold to buyers like Starbucks, Costco, and others.

Lesotho: AGOA spurs trade, investment and infrastructure

The African Growth and Opportunity Act (AGOA) has given Lesotho the opportunity to export more than $300 million each year in clothing to the U.S. duty-free. As a result, the Lesotho apparel industry employs more than any other industry, or the national government, and has attracted increased foreign investment. Foreign assistance is also playing a role as the government is working with the Millennium Challenge Corporation (MCC) to increase access to clean water in Lesotho's industrial region and expand into fabric production.

Kenya: Cell phones improve efficency for farmers

A new effort in Kenya is using cell technology to enhance profitability of rural farmers. The number of mobile phone subscribers increased from by 300 percent between 1999 and 2007 in Kenya. The Kenyan Agricultural Commodity Exchange (KACE) has linked up with Safaricom, Kenya's largest cell phone company, to equip farmers with up-to-date commodity market prices over their phones. For about $0.20, farmers can access commodity prices at markets throughout Kenya, allowing them to reduce transaction costs and bypass middlemen, who often charge below-market rates. KACE is also looking into using FM radio in rural areas to disseminate information about commodity prices at markets.

$50 billion investment to increase mobile coverage in sub-Saharan Africa

In October of 2007, the Groupe Speciale Mobile Association (GSMA) - which represents the interests of the global communication industry - announced their intentions to invest $50 billion in sub-Saharan Africa over the next five years. A GSMA and Deloitte study estimates that an increase of 10 percent in mobile penetration - the number of people who have mobile coverage and are directly connected to the mobile system - can increase the annual GDP growth rate up to 1.2 percent in a developing country.