Africa’s growth rates have been impressive over the last decade with many countries posting on average levels of 5 percent or higher, in some cases, making the continent one of the fastest growing region. Two questions arise that need to be addressed when analysing this remarkable turnaround. Firstly, how can this growth be harnessed to address the myriad challenges that face the continent? Secondly, what steps do African counties still need to take to consolidate and lay a solid platform for sustainable growth and development going forward? This brief article will focus aspects of these questions by highlighting some of the issues raised in the World Bank’s Africa Competitiveness Report 2013.
Africa’s challenges need to be discussed in the context of the governmental and institutional architecture of the state that drives the policy imperatives that underpin critically important economic oriented initiatives. Africa today has far more democratic governments than at any time since the independence movements in the 1960’s. This is critical because it is only when there are strong governance practices, including regular elections and where the will of the people can be voiced that governments can put in practice policies that are a reflection of the popular will. Democratic states are also well placed to attract higher levels of foreign direct investment and drive economic reform initiatives. Higher rates of growth need to be supported by policies and initiatives that enable funds to be channelled into sustainable development programmes that are geared to building strong, stable and competitive states.
Sound policies geared towards sustainable development become all the more critical when one considers the demographic projections for the continent. One of the key challenges for the future will be providing jobs for the so-called “youth bulge” the continent is experiencing. According to a report in the Globalist, Africa’s population is projected “to double to 2.1 billion by mid-century”. This would mean that Africa could account for nearly “a quarter of the world’s population”. A young and emerging population can prove to be strength and opportunity only where sufficient employment opportunities abound and policies of inclusiveness are fostered. This makes thinking about economic competitiveness all the more relevant.
The World Bank’s Africa Competitiveness Report 2013 was unveiled in Cape Town during the World Economic Forum held in May this year. The report notes that, despite high levels of growth, living standards have not kept pace. The World Bank report highlights the need for strong public institutions, aligned with social investments in education and skills building programmes and projects that nurture innovation. The report notes the need to foster public-private initiatives in building the continent’s infrastructure across the social and economic spectrum. The report goes further and argues that this type of initiative, namely partnering with private sector organisations holds the key to unlocking Africa’s competitiveness.
Three areas persistently appear in any discussion of what Africa needs to achieve to move onto a sustainable growth trajectory. The World Bank’s report too underlines these, including: regional integration; trade liberalisation; and infrastructure development.
An economic growth and development agenda centred on regional integration, infrastructure expansion and trade liberalisation should be key objectives for the following reasons:
•The power to unlock innovation and technology transfer;
•Sharing of expertise coupled with shared learning;
•Greater economic efficiency and productivity;
•Enhanced linkages with both internal markets (within Africa) and external thereby boosting trade;
•Higher levels of foreign direct investment;
•Enhanced competitiveness; and
•Increased revenue generation to underpin governmental programmes.
Why does the report have competitiveness as a central area of concern? It is argued that one of the most important factors in attracting foreign investment and thereby assisting in boosting economic growth is competitiveness. Competitiveness also means that one will realise higher rates of return on one’s investment. More competitive countries are characterised by populations who are skilled and highly productive thereby making investments more efficient and effective.
The World Bank Report lists a number of policy initiatives that are needed to drive regional integration and competitiveness, namely: streamlining import and export procedures; harnessing ICT’s; improving the energy sector; modernising and strengthening the transport sector; and finally building growth poles.
All of these initiatives will depend upon strong states and robust state institutions governed by leaders who support and design policies geared to boosting education and skills training, including innovation and a greater reliance on ICT’s leading to higher levels of productivity. Regional integration initiatives will produce the economies of scale so sorely required and a range of critical spin-offs. Multi-pronged strategies focusing on the development of human capital, state building and a strong and vibrant regional agenda, allied with drawing in the private sector will ensure a continent on the road to being more competitive. The key to competitiveness is that it ultimately unlocks economic growth through securing higher levels of foreign direct investment and thereby securing sustainable socio-economic development. Only strong, vibrant and competitive economies will provide for the citizens of today and the burgeoning youth of tomorrow.
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