Africa's economy will grow if governments helpStaff writer ▼ | May 31, 2013
The African Development Bank (AfDB), Organisation for Economic Cooperation and Development (OECD) Centre, Economic Commission for Africa (ECA) and the United Nations Development Programme (UNDP), have hinged Africa's development on its ability to harness its agricultural resources for sustainable growth.
The agencies, in their joint African Economic Outlook 2013 report, noted that prudent and effective deployment of the continent's huge natural endowments is crucial for a sound economy. The report indicated that the continent's economic outlook for 2013 and 2014 is promising, confirming its healthy resilience to internal and external shocks and its role as a growth pole in an ailing global economy.
"Africa's economy is projected to grow by 4.8 per cent in 2013 and accelerate further to 5.3 per cent in 2014," reads the report. Africa accounts for 12% of the world's population but only contributes 1% of global GDP and only 2% of world trade. It is estimated that poor infrastructure cut productivity by as much as 40%.
About $93 billion is needed annually to be able to fund Africa's infrastructure for the next 10 years. That is about 15 percent of the region's GDP, according to the World Bank.
The report shows that the growth has been accompanied by insufficient poverty reduction, persisting unemployment, and increased income inequalities in some countries, as well as deteriorating levels of health and education.
"Now is the time to step up the tempo of economic transformation, so that African economies become more competitive and create more gainful jobs, widening the sources of economic activity is fundamental to meeting this challenge", the report adds.
The report argues that African countries must tap into their natural resource wealth to accelerate the pace of growth and ensure the process can benefit ordinary Africans.
Director at the OECD Development Centre, Mario Pezzini said: "Growth is not enough. African countries must provide the right conditions for turning natural resources into jobs, optimise their resource revenues through smart taxation and help investors and locals to make the most of linkages."
According to the report, four key elements are needed to achieve that objective. Firstly, African countries should create the right conditions for such a transformation to take place, including infrastructure, education and the creation of larger and more competitive markets.
The report also noted that the primary sectors require sound land management, balanced and effective tax systems and the right mechanisms and incentives to cause an acceleration and diversification of the sources of growth. Africa has 24 percent of the world's agricultural land, but accounts for only 9 percent of its production.
"Furthermore, governments and investors must ensure that a fair share of the proceeds from natural resources and extractive industries accrue to society: for example, they should be invested in people's capacities to take up new jobs in promising sectors", the report added.
"Ultimately, transformation means opening opportunities so people can find jobs, create businesses, as well as invest in health, education and food security. In turn, higher levels of human development for all, including the most vulnerable, can accelerate the pace of economic transformation, leading to a virtuous cycle of growth and development", it stressed. ■