AfDB Special Coverage
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African Economic Outlook 2013, an annual report on Africa’s business outlook, reveals that the continent’s economic transformation can be fuelled by its abundant natural resources
| By Maureen Chigbo, Marrakesh, Morocco | Jun. 10, 2013 @ 01:00 GMT
NATURAL resources can fuel Africa’s economic transformation, according to the African Economic Outlook 2013 launched on May 27, during the just-ended annual general meeting of the African Development Bank in Marrakesh, Morroco. According to the report, Africa’s agricultural, mining and energy resources can boost the continent’s economic growth and pave the way for a breakthrough in human development. The report is produced annually by the AfDB, the OECD Development Centre, the Economic Commission for Africa, ECA and the UN Development Programme, UNDP.
The report projected Africa’s growth rate at 4.8 percent in 2013. This growth involves little or no contribution from the manufacturing sector which the report says very little about. Without sufficient growth in the real sector of African economies, lasting solutions to the worsening unemployment situation in the continent will become a mirage. One of the authors of the report, Emmanuel Nnadozie,director, Macroeconomic Policy Division at UNECA, stressed the panel session before the launching, that there was a decrease in manufacturing and that this “should be worrisome because the sector is dominating importation. If we want to create 10 million jobs, something has to be done to the manufacturing sector,” Nnadozie said adding that intra-African trade remains low while manufactured goods are a major trade in Africa.
This explained why the report noted that the growth has been accompanied by insufficient poverty reduction, persistient unemployment, increased income inequalities and in some countries, 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 also create more gainful jobs”, the authors of the report said, adding that “widening the sources of economic activity is fundamental to meeting this challenge.”
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.“Growth is not enough. African countries must provide the right conditions for turning natural resources into jobs as well as, optimise their resource revenues through smart taxation and also help investors and locals to make the most of linkages,” said Mario Pezzini, director at the OECD Development Centre and one of the authors of the report.
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.“Access to markets is fundamental to structural transformation based on natural resources: regional integration and better access to the markets of large partners could open new opportunities for all”, said Nnadozie. In the second instance, 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. In the agricultural sector for instance, transport, fertilizers and more resistant seeds are required for an increase in productivity. Africa has 24 per cent of the world’s agricultural land, but accounts for only nine percent of its production.
Thirdly, 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. Finally, the report suggests that African countries can foster change and economic diversification actively, for example, through corridors of development around power, transport and communication lines. Stable and transparent use of budgets is key to achieving that goal.
“Now is the time”, said MthuliNcube, chief cconomist and vice-president of the African Development Bank, AfDB, who contributed to the report. “After 10 years of improved stability, sound macroeconomic policies and blossoming trade links, growth has made African nations freer than ever to choose their own development paths and implement active policies for economic transformation.
Pedro Conceição, chief economist at UNDP’s Regional Bureau for Africa said: “Ultimately, transformation means opening opportunities so that 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. Among the many other benefits, human development can help drive Africa’s structural transformation by speeding both the rate of innovation and uptake of new technologies. But for this to happen, more attention should be paid to improving access to and quality of education and healthcare systems, transforming agriculture and fostering job creation in order to narrow income inequalities,” he said.
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