admineconomies entails diversifying and expanding the sources of economic growth and opportunity in a manner that promotes greater productivity for sustained and inclusive economic development.
“A major policy challenge for Africa today is how to broaden access to economic opportunities for its expanding population, including the most vulnerable groups,” the bank said in its 2012 Annual Report, which will be presented to the institution’s governors at the Marrakech meetings between May 27 and 31.
“Africa requires structural transformation to propel it towards inclusive growth,” the report added, citing high unemployment and underemployment especially among young people and women, as one of the main problems facing the continent.
Structural transformation will not materialise unless there is a concomitant investment in skills development in areas that have kept the continent behind other developing regions. In this regard, Africa needs to harness its natural resources to build skills for its youthful population in order to leapfrog development and secure a place in the global value chain. Developing skills will unleash the dynamism of Africa’s untapped entrepreneurship potential, creating opportunities for increased job and wealth creation.
An enlightened population is also important in Africa’s global engagement in trade and commerce.
“The key message is that Africa should accelerate its structural transformation by boosting the potential of its youthful population, investing in science and technology and innovation, speeding up its rate of economic integration, greening the economy and supporting private sector enterprise,” the report emphasised.
The report identifies leadership, degree of economic integration at the national, regional and global levels, as well as inclusive growth as the key factors that can influence transformation. Regional political events, weather, particularly climate change and price shocks must also be taken into consideration.
According to the bank, the Africa’s transformation can be realised by leveraging the huge potential in areas including infrastructure, natural resources, demographics, agriculture, private sector, technology and investments.
On infrastructure, the bank said the continent of one billion people requires US$390 billion to finance infrastructure, mostly power and energy in the medium term.
The bank said revenues from natural resources could finance a substantial part of Africa’s infrastructure development. Some countries have already issued eurobonds for infrastructure, on the basis of natural-resource revenues.
It is also estimated that Africa’s natural resource extractive industries will contribute over US$30 billion per annum in government revenues in the next 20 years.
The report noted young people comprise the bulk of Africa’s one billion population. To convert this “youth bulge” into a “demographic dividend” would require investing in skills and the creation of job opportunities on a large scale.
The agriculture sector employs the vast majority of Africa’s population, and provides direct inputs to the agro-processing value chain, supplies food to urban areas, and is a source of household savings for investment. And as Africa’s economies expand, the private sector, which accounts for 90 percent of informal employment, will become even more important, especially in the industry.
On urbanisation, it said Africa’s cities, with 40 percent of the population in 2010 and projected to be 50 percent in a generation, and 65 percent by 2060, are increasingly becoming the drivers of consumer demand and hence economic growth.
Improved governance and better macroeconomic policies – lower debt, low inflation and stable exchange rates are essential in fostering economic competitiveness.
Investment in technology, and particularly Information Communication Technology, have greatly improved public access to information, spurring a knowledge economy and innovative approaches to micro-finance and the mobilisation of rural producers, for example Kenya’s M-PESA, and Zimbabwe’s EcoCash.
AfDB noted the strategies to unlock Africa’s potential hinges in the elimination of the causes of national and regional conflict to bring peace; visionary leadership and strong and effective government institutions. In addition, empowering women and youth; strengthening human capital development through education and training, especially in science and technology, and improvements in basic services is also vital to unlock Africa’s potential.
Further, it is important to foster diversification, especially in agriculture and rural areas, including sustainable greening of the economy and promotion of manufacturing; and promoting intra-Africa trade through increased domestic and regional investment, and forging strong trade links with emerging partners.
The bank will continue to support and monitor the transformation efforts of the regional member countries. Accordingly, the bank has adopted a 10-year strategy whose overarching goal is to promote socially inclusive and environmentally sustainable economic growth.
The core operational priorities of this strategy include infrastructure development; regional integration; private sector development; governance and accountability; as well as skills and technology development.
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