African heads of state have identified the continued heavy reliance on the primary sector and exports of raw materials as one of the factors behind the continent’s economic vulnerability.
At the just-concluded 27th France-Africa Summit held in Bamako, Mali, attended by President Paul Kagame, leaders present noted the need to diversify their economies further to reduce the vulnerability.
According to a post-summit communiqué, among the ways forward to be adopted include value addition, local content development among others.
“The Heads of State and Government highlighted the need to promote inclusive growth, industrialization, value-addition, local content development and the diversification of African economies which will result in the creation of industries and real jobs,” the communiqué read in part.
In recent months during the global economic slowdown, a majority of African economies have seen growth slowdown significantly largely due to dependence on commodities trade.
With the declining prices of commodities in the international market including oil and minerals, sources of revenue were severed.
Analysts including the International Monetary Fund established that economies that relied heavily on commodities showed the largest dip while those that rely on services remain afloat.
The IMF projection for sub-Saharan Africa growth in 2016 was one of the slowest growth rates for the sub-Saharan region in 20 years, at 1.4 per cent, largely due to activities in oil exporting economies which have either contracted or stagnated.
A recent paper by the fund on subdued growth showed that the continent’s powerhouses such as Nigeria were also significantly affected while non-commodity exporters such as Rwanda grew by over 5 per cent.
“Sub-Saharan Africa’s largest economies continue to struggle with lower commodity revenues, weighing on growth in the region. Nigeria’s economy is forecast to shrink 1.7 percent in 2016, and South Africa’s will barely expand. By contrast, several of the region’s non-commodity exporters, are expected to continue to grow at a robust pace of more than 5 percent this year,” the paper read in part.
The Heads of State and Government also reviewed the role and importance of innovation and digitization to further encourage diversification of economies.
To support innovation and entrepreneurship, it was agreed that governments will support incentive-based policies to facilitate innovation, including incubator and acceleration programmes for start-ups and clusters, as well as access to finance and investment capital.
“They will try to increase links between the private and public sectors in order to speed up the digital transition of economies, including through technology transfers,” the post-summit report read.
Participating countries also told of their commitment to facilitating youth empowerment through educational, vocational and entrepreneurial training to create a new generation of useful citizens for Africa and the world.
Aware that mobility, tourism and innovation is ideal for dynamism and innovation the leaders will work towards facilitating mobility of students and entrepreneurs, especially young people.