Between March 18 and 20 this year, a major international Conference on the Emergence of African countries took place in Abidjan, Côte d’Ivoire. It was jointly organized by the Government of Cote D’Ivoire and the United Nations Development Program (UNDP), in partnership with the World Bank and the African Development Bank (ADB). The general objective of the conference was to spur exchange of ideas on emergence and pre-conditions for it’s acceleration in African countries, drawing on the dynamics that have driven economic and social transformation in the well-known emerging countries, mainlyChina, Brazil, India, Malaysia, Singapore, South Korea and Taiwan. This came on the heels of the increasingly prominent debates that have been going on within the academic and policy circles over the past ten years on issues of emerging countries and economies around the world. In Africa in particular, the optimism associated with the significant economic growth rates witnessed since the late 1990s has given confidence to many countries such as Côte dIvoire, Burkina Faso, Gabon, Republic of Congo, Cameroon, Equatorial Guinea, Ghana, Kenya, Nigeria, Rwanda, and Senegal, among others, to aim at becoming emerging or middle income economies by set deadlines through their medium- and long-term or perspective national development strategies. At the continental level, a prospective study carried out for the region by the Emerging Markets Forum[1], entitled “Africa 2050: Realizing the Continent’s Full Potential”, outlines the strategy which is supposed to propel African countries onto the path of emergence. The African Union Commission established an Agenda 2063 for “a global transformational strategy to optimize the use of Africa’s resources for the benefits of all Africans”. It could be argued that for the continent, reflections on the issue of emergence in recent times reached a peak at the above-cited March 2015 Conference in Abidjan. At the same time that discussions on emergence in Africa are picking up momentum, there has also been a steady return to the focus onstructural economic transformation known in the immediate post-independence period when a range of leaders such as Kwame Nkrumah, Houphoet Boigny and Kenneth Kaunda, among others, implemented ambitious development programmes explicitly aimed at transforming the economic structures of their countries similar to ways being aspired to presently. It could be argued that this renewed focus on economic transformation across the continent has been partly prompted by the downsides of the continent’s sustained economic growth over the past fifteen years, which include the continued failure to diversify the sources of the growth, thus posing the risks of reversals as well as inadequate impact of the growth on poverty reduction and productive employment creation. Many people have been confused by these two parallel discourses on the way forward for African countries in the wake of the sustained, but non-inclusive and non-employment growth the continent as a whole has been enjoying over the last decade and a half. It is therefore useful for policy advocacy and transformational development planning to discern to what extent there is convergence between these two strands of thought: emergence on one hand and economic transformation on the other and the implications for African countries. In this regard, the concept of emerging countries first appeared in the 1980s with the development of stock markets in many developing countries then, notably the Newly Industrialized Countries (NICs), many of which are referred to as the Asian Tigers.. In discussing the new trends where developing countries had become the next investment frontiers, Antoine van Agtmael, a Dutch Economist at IFC, coined in 1981, the phrase “emerging markets”. Over the years, the concept of emerging countries has developed as a designation of the most dynamic countries among developing countries and those that have effectively integrated into the global economy as well as developed relatively sophisticated financial and stock markets.In simpler terms, these countries have over distinct periods of time (ranging from a couple of decades to a generation) emerged from the “cocoon” of under-development into budding industrialized economies. This dynamic metamorphosis is observed through what the economists term as structural changes relating to, or due to, : (i) the reform and strengthening of legal and institutional frameworks; (ii) the transformation from an agriculturally - based economy to an industrial –type; expansion and increasing sophistication of the services sector; and (iii) growing participation in international trade in manufactured goods (growth of exports of manufactured goods greater than 2% per year to growth of world trade) as well as international capital flows. It is evident from the above that the characteristics of an emerging economy also clearly reflect what are generally recognized to be the key features of the structural economic transformation process that most African countries aiming at presently. But what does structural or economic transformation mean in more precise terms? There is consensus that structural transformation involves the reallocation of economic activities from low to high productive sectors, which is mostly underpinned by shifts of investments, output and labour from agriculture to manufacturing, followed by another relative shift from manufacturing to services during the later stages of development. Emergence is, therefore, a close proxy for the process of structural transformation by a developing country, whereby its economic structure is gradually diversified, with the industrial and service sectors increasingly playing more prominent roles in GDP formation. Emergence is also multidimensional and is characterized by a progressive move towards a middle-income economy,with a diversified productive base and progressively integrating into the global economy;and witnessing increasing sophistication of its economic management system and structures as well as of its financial and capital markets. Therefore, for analytical and policy purposes, both phenomena could be taken as inter-changeable. What is Africa’s current growth, transformational and emergence landscape? All of these have come under intense scrutiny over the past few years and so only their brief recapitulation here will suffice. Starting with the growth performance, analysis of real economic growth rates attained by the African countries as a whole indicate that the continent consistently registered an average real growth rate of 5% during the decade through 2013. Although this dipped to 4.5% in 2014 owing to continuing global financial crisis and tepid recovery of the major industrial countries, it is expected to recover to over 5% in 2015. The point has been made by many observers that this is impressive both from the historical standpoint and in comparison to the aggregate performance of other regions. For instance, since 2001, seven of the ten fastest growing countries of the world have been from Africa, including Rwanda, and the continent has continued to be the second fastest growing region in the world. It is also notable that this consistently positive growth performance of many African countries is attributable as much to commodity price booms as to significant improvements in economic management and governance processes. However, there is consensus that Africa’s positive economic growth performance over the past decade and a half has not been accompanied by much structural transformation. How do we precisely measure the extent of economic transformation? Although there is a more comprehensive index for gauging the extent of structural transformation achieved by a country (calculated by UNCTAD globally and by the African Center for Economic Transformation for African countries), the changes in the broad sectoral composition of GDP formation (agriculture, industry (including construction and mining) as well as services) provides a glimpse of the transformational changes that have taken place, or is in progress in an economy. Thus, an economy is considered to be transforming if its manufacturing sector,for instance, exceeds 25% of GDP, with significant export orientation of industrial goods combined with an increasingly sophisticated services sector. When we look at the structure of growth today in African countries, it would be observed that agriculture continues to dominate GDP formation, with manufacturing’s share still falling well below 10% in most countries. Although prima face, the services sector has exhibited robust performance in most of the countries, deeper analysis of the sources of that growth would indicates that it has come mainly from low quality/value activities. In countries, where the industrial sector seems to be relatively large, this is attributable mainly to the dominance of the construction sector as well as extractive activities, such as petroleum and minerals production and exports. Thus, the foregoing clearly indicates that African countries as a whole continue to face serious challenges regarding transformation and diversification of their productive structures. Additionally, the impact of this growth performance on poverty reduction and productive employment creation has been quite limited. Therefore, while the potential for emergence in Africa has increased significantly over the past few years, serious challenges still remained to be resolved. Thus, if there is by now more clarity about what emergence or economic transformation entails, better understanding of how to support, nurture and accelerate transformation in Africa and rendering the process more inclusive are important policy issues (Breisinger and Diao, 2008). In trying to address these issues, many analysts have put forward the following major sources of transformation: technology-led productivity growth; transformation of traditional, low productivity agriculture sector into a modern high-productivity one, which could also act as a major engine for industrial growth; rapid capital accumulation; creation of mutually reinforcing forward and backward linkages between the key productive and service sectors; rapid development of the financial and capital markets; as well as fostering appropriate balance between the state and the private sector. The latter implies a more robust institutional and human capital development. If one of the major concerns about Africa’s on-going unprecedented growth episode has been the failure so far to render it more broad-based, thereby reducing the attendant risks of fragility and vulnerability to unexpected unfavorable exogenous changes, the other major preoccupation is its continuing lack of inclusiveness and equity. In recent years, there has been increasing consensus that, apart from ethical considerations about inequality, growth processes cannot be sustained without progressive improvements in the equitable distribution of their benefits and impacts. Thus, today, Africa’s leaders are,therefore,aiming not only at sustainable transformation of their economies but also placing it on an inclusive and equitable path. This undoubtedly adds more complexities to the development policy processes. In contributing to the search for the right mix of policies for successful inclusive and equitable economic transformation, the following proposals are put forward. The first relates to the role of developmental states, leadership and institutional transformations. There is by now broad consensus that emergence and transformation are not simple and straightforward quantitative phenomena (growth and diversification of economic activities), but are also significantly qualitative, characterized by complex organizational, institutional and governance changes. The role of proactive but visionary leadership in facilitating inclusive transformation is crucial. In simpler terms, successful emergence or transformation has to be supported by a clear vision, strong political commitment and a leadership capable of clearly defining the process, mobilizing the population behind it and managing and driving it to its completion. Cases of Singapore and Malaysia are often cited in this regard. Today the Rwandan leadership is receiving increasing attention in this regard. The policy content for ensuring inclusivity and equity of the transformational process necessarily has to include the following: expansion of productive and decent employment creation, especially for the teeming youthful segment of the populations, more investments on infrastructure and social services provision, in both urban and rural areas, strengthening of social protection schemes, reinforcement of measures aimed at promoting gender and spatial equalities, formulation of more appropriate population policies to enable the continent reap the benefits of demographic dividends and adoption of pro-poor urbanization strategies. In addition, policies aimed at stimulating and nurturing innovation, scientific research and technological adaptation are essential. Added to all this should be robust measures for sound environmental management and protection, promotion of sustainable consumption and production patterns and acceleration of transitions to green economies/growth. This stance offers real opportunities for ensuring sustainability of economic transformation processes as embodied in the incoming SDGs.I believe that Rwanda’s budding transformation process provides glimpses into the path towards accelerated transformation and emergence in many other African countries, and also that the new Post-2015 development agenda will reinforce that trajectory. The writer is the UN Resident Coordinator/UNDP Resident Representative, Rwanda
