Realising Africa’s potential

Secretary-General of the OECD

Can Africa sustain its recent strong economic performances and benefit more from its abundant resources?

Since 2000 Africa’s GDP has grown by 5.1% per year on average, nearly three times the rate of growth of the OECD area during the same period. In spite of recent country-specific challenges and headwinds from the global economy, growth is set to remain strong.

While the global crisis has affected Africa’s growth performance, mainly because of weaker global demand, lower commodity prices and declines in capital flows, as well as promises of aid that never materialised, the outlook remains bright. Africa’s economy is projected to grow by 4.8% in 2013 and 5.3 % in 2014, driven by increases in agricultural production, a buoyant services sector, and expansion in oil production and mining.

Africa’s recent economic dynamism has been underpinned by sound macroeconomic policies and stronger partnerships with major emerging markets. The continent has become more resilient to shocks and has benefited from strong demand for commodities, increased investment flows and closer links to global value chains. Since 2000 Africa’s exports have almost quadrupled in value, to close to US$582 billion in 2011. Better macroeconomic management has also helped, and the continent’s average budget deficit is now close to zero.

Despite this progress, the continent still faces several structural challenges.

Nearly 78% of the population of sub-Saharan Africa lives in poverty, with some 49% living below the international poverty line of $1.25 per day in 2010. Africa will probably be the only developing region not to reach the Millennium Development Goal of halving poverty by 2015, and will struggle to reach the other goals as well. Only a third of Africans have access to sanitation, and another third have no access at all to clean water. Under such conditions fighting diseases remains an uphill battle.

In addition, the predicament of Africa’s fragile states, whose 200 million inhabitants need constant support, underlines the importance of development aid and the need for donors to reverse falling aid trends.

Education and job creation are also a priority. About 40 million young people are jobless, and youth unemployment reaches nearly 25% in Egypt and 50% in South Africa. The International Labour Organization (ILO) estimates that between 2000 and 2008 Africa created 73 million jobs, of which only 16 million were for 15 to 24 year olds.

Inequality is another serious concern, as wealth disparities in Africa are among the widest in the world. In 2010, 6 of the 10 most unequal countries in the world were in sub-Saharan Africa. Progress in reducing inequality has been slow, even as Africa’s growth has picked up.

Another factor hindering progress is the gender gap, with sub- Saharan Africa registering the highest level of gender inequality. This affects productivity and growth. The UN Food and Agriculture Organization (FAO) estimates that if women farmers had the same access to productive resources as men, the resulting gains in agricultural productivity could lift as many as 150 million people out of hunger.

Africa has to transform its economic structures so that its population can benefit from stronger, more inclusive growth. How can such a structural transformation be achieved?

The continent has a strong comparative advantage in natural resources, whether in energy, mineral resources or agriculture, which could be the basis for action. The OECD recommends a fourlayered policy approach:

The first layer consists of adopting policies designed to improve infrastructure, logistics and skills, as well as promoting private sector development. For instance, in South Africa, if constraints such as infrastructure bottlenecks, water scarcity, and skills and energy shortages were resolved, the mining sector could potentially grow by 3% to 4% annually until 2020 and generate at least 300,000 jobs.

A second layer consists of strengthening the natural resource sector through greater investments in value added activities and know-how, thereby generating more revenue for government and more job opportunities for Africans.

The third layer involves managing natural resources more efficiently and sustainably, putting in place a transparent and fair tax system, as well as promoting competition and fighting public and private corruption.

The fourth layer involves initiatives to raise agricultural productivity and build linkages to and from the extractive industries.

The time is ripe for Africa to make better use of its natural resources and achieve more inclusive growth. The OECD is committed to working alongside African policymakers in this effort. We can share experiences and help design better policies through our dialogue and global forums. With the right policies and strategic approach, the social and economic progress of recent years could be the prelude to long-lasting, sustained prosperity in Africa.


© OECD Observer No 296 Q3 2013

Economic data


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