How can Africa meet those unique challenges? Lessons from demographic, urban and economic transitions in OECD or Asian countries may be too inconsistent with Africa’s circumstances to inform policy response. Similarly, policy prescriptions focusing on specific economic sectors – such as industry or agriculture – are not comprehensive enough. What African countries need are innovative, context-specific, multi-sectoral and place-based development strategies.
Promoting regional development and spatial inclusion should be at the heart of Africa’s development strategies. Efforts to tackle regional inequalities through spatial management, infrastructure development and decentralisation have had limited impact. Policy makers must therefore take a fresh look at regional dynamics, such as the fast-changing relations between urban and rural areas. They should focus beyond economic sectors, improve regional statistics and deepen their knowledge of local areas. People and places need to be at the centre of development strategies that create productive jobs, accelerate demographic transitions, invest in education and promote intermediary cities to capitalise on urban/rural dynamics. Financial resources must be scaled up to meet the associated long-term investment needs, in particular by better mobilising domestic resources at local and national levels.
Given Africa’s comparatively low skill-to-labour ratio, it needs mainly low-skilled jobs to ensure wide and faster structural transformation. Manufacturing rather than services provides the basis for low-skilled jobs. However, in many countries the conditions are not yet in place. To get there, Africa must work on its strengths. The continent has a strong comparative advantage in natural resources, either in the form of energy, minerals or agriculture. These can be drivers of structural transformation through linkages, employment, revenue and foreign investments, provided adequate business environment and supporting policies are in place. There is no inherent trade-off between commodity-based and labour-intensive industries: countries with diversified natural resource sectors also exhibit more diversified manufacturing.
This report argues that since natural resources – energy, minerals, and agriculture – will remain the continent’s comparative advantage for the foreseeable future, by contrast with most of Asia, the priority of an active transformation strategy should be to establish a strong, diversified resource-based economy. To harness Africa’s natural resources for structural transformation, a four-layer policy approach is suggested:
i. establish general framework conditions for structural transformation such as education, infrastructure and access to sufficiently large, regional markets;
ii. establish specific conditions required for natural resource sectors to thrive;
iii. optimise the revenues from natural resources and invest them strategically to promote structural transformation;
iv. address structural transformation directly by increasing agricultural productivity and enabling economic linkages between the natural-resource sector and the economy as a whole.
Entrepreneurship and industrialisation
Sustainable Cities and Structural Transformation
Regional development and spatial inclusion
Global Value Chains and Africa's Industrialisation
Structural Transformation and Natural Resources
Public Resource Mobilisation and Aid in Africa
Unlock the potential of African entrepreneurs for accelerating Africa’s industrial transformation, says the African Economic Outlook 2017
AfricanEconomicOutlook.org offers comprehensive and comparable data and analysis of 54 African economies.