Africa: Progress and pitfalls - Hoofdinhoud

Africa is increasingly attracting attention for its economic buoyance and success in reducing poverty and is now viewed as an opportunity rather than a challenge, panellists told a Friends of Europe’s Development Policy Forum Africa Summit on 24 June.

The continent’s economies grew at an average of 5.2% a year between 2003 and 2011, and eight of the 10 fastest-growing economies in 2012 were African. This is slowly but surely translating in to a new Europe-Africa relationship based on eqaulity. EU aid is still important for Africa but funds are also pouring into the continent from foreign investors, remittances as well as better domestic tax collection. Europe needs to change its traditional relationship with Africa based on aid, while contributing in new ways and still helping efforts to maintain peace and security where needed.

“Today is the time to finally unleash Africa’s huge and unrivalled potential,” said Andris Piebalgs, European Commissioner for Development. “In recent years I have noticed strong willingness among African leaders and citizens alike to change the perception of Africa. They want Africa to become a continent of opportunity and success rather than a land of starving children and poverty.”

At the same time, the continent faces ongoing challenges. Home to the world’s youngest and fastest-growing population, Africa potentially has the labour force it needs to boost production and consumption. But that requires the creation of million of jobs.

There are currently 500 million Africans of working age, said Vincent Biruta, Rwanda’s Minister of Education. By 2040 that figure will rise to 1.1 bn. “This is a daunting prospect,” he said. “Our country needs to invest to turn our youth into a skilled workforce.”

One important goal is a workforce that can operate in a knowledge-based economy rather than just agriculture. Until recently, Africa has tended to focus on university education, but it now requires greater emphasis on primary education and basic skills, Biruta said. “We need to make sure that education meets the needs of the labour market.”

Generating new jobs requires moving beyond many African countries’ dependence on natural resource wealth, which makes them potential victims of the so-called “resource curse”. Under this, resource-rich countries sometimes fail to develop an economic infrastructure - such as skills and the rule of law - because they can, for the time being, live off the export of resources.

Low participation in global value chains

Foreign investment in Africa rose from $5bn in 2000 to $55bn in 2010, including significant investment in manufacturing and services. But Africa still lags behind Asia and Latin America in its participation in global value chains, which allow developing countries to develop areas of expertise and specialisation.

Around 60% of global trade is based on intermediate goods, as companies produce components and product parts for use in manufacturing processes in different locations, said Mario Pezzini, Director of the Organisation for Economic Co-operation and Development (OECD) Development Centre. “Africa is without doubt in the global value chain,” he said. “The challenge is to increase its participation in the new opportunities.”

Resilience

Overall, said Hiroshi Kato, Vice President of the Japan International Cooperation Agency (JICA), Africa needs to become more inclusive and resilient. “Inclusiveness means nobody gets left behind, and no country must be left behind,” he said. That could be helped by developing regional integration and infrastructure, as well as promoting numeracy and literacy, which are conditions for effective participation in society.

Resilience means being able to withstand unexpected setbacks, from economic downturns to natural disasters. “The current African economic outlook is very good,” he said, “but we must be prepared for shocks.”