Africa should embrace new economic giants amd boost social inclusion, says African Economic Outlook 2011
African countries should develop closer cross-border ties in dealing with traditional and emerging partners so they can boost sustainable and inclusive growth, according to the African Economic Outlook 2011, launched today.
Africa´s economies have weathered the global crisis relatively well and have rebounded in 2010. Recent political events in North Africa and high food and fuel prices are likely to slow the continent’s growth down to 3.7 percent in 2011. During this year, sub-Saharan Africa will grow faster than North Africa. The new report predicts a rebound to 5.8 percent in 2012.
“Africa is growing but there are risks. Urgent attention is needed to foster inclusive growth, to improve political accountability, and address the youth bulge,” said Mthuli Ncube, Chief Economist and Vice-President of the African Development Bank (AfDB).
Co-authored by the African Development Bank (AfDB), the OECD Development Centre, the United Nations Development Programme (UNDP) and the United Nations Economic Commission for Africa (UNECA), the report emphasises that governments’ efforts need to include measures to create jobs, invest in basic social services and promote gender equality.
“Prioritizing health, education and basic services is key to ensuring that the most vulnerable are not left behind,” said Pedro Conceição, Chief Economist at UNDP’s Regional Bureau for Africa. Growth alone is not enough for human development. Growth must be broad-based and bring down high levels of inequality.
However, new routes opened between Africa and emerging countries are promising, states the report. “New partners bring new opportunities for African countries. Defining national development priorities, trade, aid and investment is key to reaping the benefits of this new configuration,” said Mario Pezzini, Director at the OECD Development Centre.
Africa is becoming more integrated in the world economy and its partnerships are diversifying, revealing unprecedented economic opportunities. In 2009, China surpassed the US and became Africa’s main trading partner, while the share conducted by Africa with emerging partners has grown from approximately 23 percent to 39 percent in the last ten years. Africa’s top five emerging trade partners are now China (38 percent), India (14 percent), Korea (7.2 percent), Brazil (7.1 percent), and Turkey (6.5 percent).
While traditional partners, as a whole, still account for the largest proportion of Africa’s trade (62 percent), investment (80 percent) and Official Development Assistance (90 percent), the report notes that emerging economies can provide additional know-how, technology and development experiences required to raise the standard of living for millions of people on the continent.
Putting people first must go hand in hand with efforts to accelerate regional coordination and integration. Trade agreements that benefit the continent as a whole, unleash the full potential of the private sector and develop regional investment opportunities are the way forward.
“A race to attract the largest amounts of investment or aid from emerging partners at any cost should be avoided,” said Emmanuel Nnadozie, Director of the Economic Development, UNECA. “Africa needs more progress towards regional integration and bigger markets to improve the bargaining power of African countries and improve economic growth.”
While a greater diversity of partnerships can benefit Africa, over-specialisation on unprocessed raw materials, debt burden and good governance remain important challenges to address. The report recommends that African countries put in place development policies that promote different economic sectors and reduce reliance on commodities such as cash crops and minerals to address these challenges.