African countries are growing at the fastest rate of all economies in the world - but the World Economic Forum African Progress Report warns the current economic growth is not all positive.

The report was launched at the World Economic Forum t in Cape Town this morning.

In it, the APP says distorted incentives have led most African countries to concentrate on export-led growth policies focusing on the extraction of natural resources and raw materials rather than "value addition and diversification".

"While natural-resource extraction has accounted for only about a third of Africa's real GDP growth in the last decade, more than 80% of the continent's export earnings come from primary, generally unprocessed commodities," it warns.

And it says too many economies in Africa have grown by exporting single commodities.

These include copper exports from Zambia, aluminium from Mozambique, oil from Nigeria and other west African and central African states, and Angola.

"This has resulted in unbalanced development, with weak links between export-orientated and other sectors."

But there are exceptions such as Egypt, Tunisia and South Africa, where manufacturing and services account for 83 per cent of combined GDP.

There are few competitive industries in African countries, and the problem is compounded by the poor quality of Africa's economic relationships, with both African and other countries.

The report paints a picture of an almost colonial pattern being repeated, with increased prominence of non-European partners, particularly China, continuing what it calls the disadvantageous pattern of Africa exporting unprocessed commodities and importing cheap manufactured goods.

The pattern, says the report, is growing more entrenched as what it calls the "resource thirst" of emerging partners continues.

"With FDI concentrating in extractive industries, the Doha Development Round unresolved, and protectionism and other discriminatory measures against Africa unbroken, the continent has little opportunity to escape this pattern and drive much needed economic transformation through trade diversification.

AFRICAN TRADE IS ONE-DIMENSIONAL

The progress report says the one-dimensionality of Africa's global trade is all the more harmful, because trade between African countries remains weak.

"Intra-African trade (is limited) to a mere 10% of total exports. In comparison, trade within the Association of South East Asian Nations (ASEAN) accounts for about 60% of the region's total exports, and trade within the North American Free Trade Agreement (NAFTA) accounts for 56% of total exports.

"It also explains why so little of the continent's high GDP growth translates into social development and tangible improvements to people's lives. Driven by capital-intensive extractive sectors, the current type of economic growth has little positive impact on employment and income levels and virtually no effect on employment-intensive sectors such as agriculture."

lathamd@bdfm.co.