Africa growth prospects remain steady, industry
should lead growth
The African
Economic Outlook (AEO) analyses macroeconomic developments and prospects in the
different African economies. The report has been published
annually since 2003 by the African Development Bank Group, and provides
headline numbers on Africa’s economic performance and outlook. It also provides
relevant and essential reference material on Africa’s economic development, for
researchers, investors, civil society organisations, and development partners.The
2019 African Economic Outlook report analysed gains of regional public goods,
including synchronizing financial governance frameworks, opening regional
aviation to competition, and facilitating the free movements of people, goods,
and services through open borders.
Africa’s
general economic performance continued to recover with GDP growth projected to
accelerate to 4.0 percent in 2019 and 4.1 percent in 2020, mainly on account of
factors such as mild recovery in commodity prices and improved macroeconomic
stability. This growth performance however is claimed not to be sufficient to
address the challenges of structural transformation. It rather suggests a
rebalancing of Africa’s imports from consumption to intermediate and capital
goods as a critical step to help countries benefit from scale and scope
economies, exploit knowledge transfers and promote structural transformation.
Africa
still faces a huge job challenge and despite industry’s potential to create
high-quality jobs, Africa has de-industrialized prematurely. There is thus an
urgent need in creating job in higher productivity sectors by developing a
strong manufacturing sector. The report however notes that this cannot be
achieved if constraints to doing business such as poor governance, low
institutional quality, and inadequate infrastructure, continue limiting firm
survival and dynamism. Reviving Africa’s industrialization particularly through
regional industrial policies will be needed to benefit from externalities’ and
agglomerations’ effects.
With the
current rate of labour force growth, Africa needs to create about 12 million
new jobs every year to prevent unemployment from rising. The report states that
a “concerted industrialization effort that builds on countries’ comparative
advantage,” is required.
The focus of
this report was on regional integration for Africa’s economic prosperity,
highlighting integration for trade and economic cooperation and the delivery of
regional public goods.The African
Economic Outlook
highlights that the Continental Free Trade Agreement (CFTA) can offer
substantial gains for all African countries. At the core
of African integration, the report suggests that “a borderless Africa” is one
of the key foundations of a competitive continental market that could serve as
a global business centre”For instance, a scenario where today’s
applied bilateral tariffs are eliminated would bring an estimated gain of $2.8
billion in real income; and increase intra-African trade by 15 percent.
Additionally removing nontariff barriers can increase total real income gains
by $37 billion; and intra-African trade by 107.2 percent. The report further
highlights that pushing further and implementing the World Trade Organization’s
Trade Facilitation Agreement (TFA) would yield total gain of about $100
billion; and boost intra-African trade by 132.7 percent. To reach such a deep
level of integration, further progress should be made on rules of origin, free
movement of persons, financial governance frameworks, and regional public goods
(infrastructure and regional bodies).
Significantly,
the report identifies five key trade policy actions that could potentially
bring Africa’s total gains to 4.5 percent of its GDP, or U$134 billion a year:
- eliminating all applied bilateral tariffs in Africa
- keeping rules of origin simple, flexible, and transparent
- removing all non-tariff barriers on goods and services
- implementing the World Trade Organization’s Trade Facilitation Agreement to reduce cross border time and transaction costs tied to non-tariff measures and
- Negotiating with other developing countries to reduce their tariffs and non-tariff barriers, by 50%.
The
report further suggests deep reforms in public financial management so as to
improve revenue mobilization, and ease debt vulnerabilities. The report concludes by emphasizing the need for industry to lead
growth if we are to maintain the improvement in macroeconomic and employment
outcomes
In its last part, the report provides
short-to-medium term forecasts on the evolution of key macroeconomic indicators
for all 54 regional member countries, as well as analysis on the state of socio-economic
challenges and progress made in each country. The report focused on three key areas - Africa’s macroeconomic performance
and prospects; Jobs, growth, and firm dynamism and Integration for Africa’s
economic prosperity.
In his opening
remarks to the diplomats, government officials, policy makers and students-as i conclude,
Cote d’Ivoire, Senior Vice President Charles Boamah made remarks that even
though the report presents daunting challenges, “Africa has the means to
overcome them by joining hands together and removing barriers to integration
and drivers of migration.”
Emmanuel Nambaale is a
young Economist with
Economic Hub Uganda
(EHU)
Emmanuel Nambaale is a
young Economist with
Economic Hub Uganda
(EHU)
