Empowering African people through investments in skills and technology is needed to boost their abilities to produce more for world markets and strengthen their economies, experts said at the release of the African Economic Outlook 2014 in Kigali yesterday.
The report, produced annually by the African Development Bank (AfDB), the OECD Development Centre and the United Nations Development Programme (UNDP), was unveiled at the ongoing AfDB Annual Meetings in Kigali.
The African Economic Outlook 2014 shows that Africa’s growth is projected to accelerate to 4.8 per cent in 2014, and to between five and six per cent in 2015, levels which have not been seen since the global economic crisis of 2009.
The authors of the report argue that Africa’s economic growth is more broad-based and driven by domestic demand, better infrastructure and increased continental trade in manufactured goods.
“It (African Economic Outlook 2014) shows that Africa has weathered internal and external shocks and is poised to achieve healthy economic growth rates,” the authors said in a release.
But they also argue that achieving healthier economic growth rates and development breakthrough on the continent will require Africa-based businesses to better and more participate in the global production of goods and services.
“In order to sustain the economic growth and ensure that it creates opportunities for all, African countries should continue to rebuild shock absorbers and exercise prudent macro management. Any slackening on macro management will undermine future economic growth,” said Mthuli Ncube, the chief economist and vice-president of the African Development Bank.
“In the medium- to long-term, the opportunity for participating in global value chains should be viewed as part of the strategy for achieving strong, sustained and inclusive growth.”
Exporting low-value products
The report warns Africa against exporting low-value products and urges the increase of African presence in the regional and global value chains–the range of activities in different countries that bring a product from conception to delivery to the consumer.
It calls for economic diversification, domestic resource mobilisation, and investments in critical infrastructure.
The report says Africa’s exports to the rest of the world grew faster than those of any other region in 2012, but that they remained dominated by primary commodities and accounted for only 3.5 per cent of world merchandise exports in 2012.
Changing that trend, the experts say, would require investing in new and more productive sectors, building skills, creating jobs and acquiring new technology, knowledge and market information.
“African economies have a great potential to build on their demographic dynamism, rapid urbanisation and natural-resources assets. The challenge now for many of them is to ensure that greater insertion into global value chains is achieved and has a positive impact on people’s lives,” said Mario Pezzini, director of the OECD Development Centre.
He recommended that public policies be articulated in a targeted strategy that promotes more equitable economic and social transformation and an environmentally sound development.
In order for value chains to effectively integrate the poor and marginalised, targeted policies and inclusive business models should facilitate access to productive assets such as land and financing, enhance productivity, and improve the resilience of small producers.
“While regional and global economic networks present immense opportunities, women, men and communities must be able to compete from a position of strength,” said Pedro Conceição, chief economist at UNDP’s Regional Bureau for Africa.
The country’s growth is projected to recover to 7 per cent and 7.4 per cent in 2014 and 2015, respectively, due to the recovery in services, improvement in agriculture productivity and sustained implementation of public investment programmes.
African Economic Outlook 2014 recalls that Rwanda’s GDP growth slowed down to 4.6 per cent in 2013, from 7.3 per cent in 2012, due to the lower than programmed performance in agriculture and the aid-related delays in the implementation of strategic public investments.
The country’s abilities to produce more for regional and world markets will require expanding linkages between national value chains and global value chains by addressing three key factors of supply constraints, improving the quality of domestic raw materials and addressing infrastructure bottlenecks, particularly in energy and transport.