A strategic task: improving the management of Natural Resources in Africa</li></ul>TALKING POINTS<br />A dynamic African Economic Growth<br /><ul><li>Africa recorded impressive economic performance over the past years, with real GDP growth averaging 6% between 2006 and 2008. However, this dynamic growth has slowed down to 2.5% in 2009 as a result of the global recession. The growth recovery in 2010 (4.5%) is forecast to continue in 2011 at 5.2%, despite the impact of the conflict in Cote d’Ivoire and North African revolution.
While the post-crisis recovery was mainly driven by an increase of African exports volume (3.2% in 2010 and 5% in 2011) and a rise in foreign investment in Africa (mostly in extractive industries), the continued growth is due in part to the rise of emerging economies and a growing middle class in Africa (200-300 million people, about 20-30% of total Africa population).
Strong growth combined with appropriate policies (macroeconomic, monetary and fiscal), improved spending on infrastructure and reformed business and regulatory environments have been major factors contributing to increased investment in Africa, particularly in telecoms, banking, retails and construction.
However, significant growth disparities among countries remain and the increases in per capita GDP have not translated into inclusive growth for many African countries. Growth has failed to reverse Africa’s persistent inequality, deliver jobs and significantly reduce poverty. Africa’s young people (currently representing 2/3 of its population and expected to increase to 40% by 2045), which has been neglected through lack of appropriate skills and employment opportunities, appears to be a major challenge for socio-political stability and sustained growth.
The North African revolution, rooted by a “youthquake”, is a lesson for many sub-Saharan African countries that share similar social, economic and demographic realities with Tunisia and Egypt. </li></ul>Impact of the Arab Revolution in Sub-Saharan AfricaThe mass movements in Tunisia and Egypt that have resulted in the collapse of longest-serving leaders by ordinary people are inspirational to marginalized citizens across the African continent. The North African uprisings have evoked so much excitement among many Africans, from Mauritania to Namibia, and created this strong belief that they can become masters of their own destiny. Will the Arab revolution have a real or apparent impact on the lives of many Africans south of the Saharan? To what extend the spirit of the Arab revolution spread south into Sub-Saharan Africa and translate into the collapse of despotic regimes in the continent? What is evident from this wave of revolutionary change in North Africa is the source of inspiration it has woken among workers and the youth across the continent. African governments (whether democratic or corrupt ruling elites) are taking conscience of the alarming indices of inequality and the depth of poverty in their societies, and hence attempting to address the challenging issues of employment, access to basic needs (health care, education, housing etc) and equal income distribution as preventing measures to any uprising or revolution. Developing partners are working closely with African countries (both north and Sub-Saharan Africa) to ensure that the recent and projected positive economic growth is inclusive and contributes to poverty reduction in Africa. <br />Path to Inclusive Growth<br /><ul><li>To accelerate growth and reinforce Africa’s capacity to ensure equal opportunities and benefits for all actors of the society, it is critical to address the following barriers to inclusive growth:
Lack of effectiveness and accountability of government and its related institutions. The poor quality of Africa’s institutions has been hindering factor for its economic performance and its efforts to tackle poverty. The continent as a whole performed very poorly on standard governance indicators (30% and 60% lower than Asian average and industrialized countries).
Lack of economic diversification. Low value added productivity, geographical concentration of industrial activities leading to income inequality, and limited government policy and expenditure toward pro-growth sectors.
Lack of economic integration, which is essential for building economies of scale and increasing Africa’s competitiveness.
Lack of an enabling environment for private sector development. The high cost of doing business in Africa (highest in the world), the inadequate regulatory frameworks and enforcement mechanisms create disincentives for formality, investment and entrepreneurship.
Financial exclusion. In Africa, there are about 67 million SMEs with collective financial needs of up to US$ 450 billion. Improving SMEs access to finance will not only help boost their entrepreneurial activities, it will also contribute to employment creation and poverty reduction.
Vulnerability to shocks. African economies remain vulnerable to both internal and external shocks, such as rising food prices and climate change.</li></ul>Role of the AfDB in supporting inclusive growth and democratic governance in African countries<br /><ul><li>While the Bank has contributed (in terms of financial and technical supports) to agricultural development, regional integration, human development, good governance, and climate change in Africa, it has recently renewed its efforts to more effectively support the inclusive growth agenda in the continent. This new approach to inclusive growth is reflected in a new Long-Term Strategy for the Bank (expected in next 12 months):
Economic and political governance: in addition to current work on PFM as means to tackle corruption and improve budget execution, the Bank will put more emphasis on public access to government information, greater use of IT to promote transparency, support to CSOs, and define new ways of engaging the beneficiaries of development programmes in monitoring their impact.
Infrastructure development: increase investment in major transport linkages to promote regional integration and build economies of scale. Promoting the development of rural electrification and mobile telephony are also potential factors for reducing poverty and inequality in Africa.
Vibrant, dynamic and competitive private sector: achieving inclusive growth will require improving the business and investment environments, supporting SMEs development, and enabling easy access to reliable and affordable financial services for both firms and households.
Higher education, science and technology: the weak human capital base has been constraining in transforming African countries into knowledge societies and promoting high-valued productivity. The particular case of youth unemployment also hinders prospects for economic and inclusive growth. Increasing access to education and improving its quality and relevance (especially for the youth), and bridging the digital gap between rural and urban areas will help meet the needs of the labor market.
The new Long-Term Strategy for the Bank also highlights new areas of engagement for inclusive growth:
Economic and social inclusion – conditional cash transfer schemes, vocational training schemes for you young people and long-term unemployed, skills and knowledge transfer etc.
Clean energy and climate change adaptation – promote sustainable land use, agriculture and water-resource management, and climate-proofing key infrastructure and urban systems.
Promote and facilitate innovative financial products – remittance, diaspora bonds, pension funds etc.
Ethical Implications of Western World’s Intervention in African IssuesDeveloped economies such as France or the United States have in the past played important mediator roles in Africa, either through conflict resolution strategy or by helping shape the peace process in those countries. Because of their historically strong links (colonial and post-independence) with African countries, some developed countries such as France and the United Kingdom have played decisive role in defining the political, economic and social structure of African countries. The debate over the legitimacy of Western countries’ involvement in African issues lies more in the type and degree of involvement. A pro-development intervention through financial and technical assistance, whether bilateral or through international and regional institutions (IMF, World Bank, African Union etc), has very rarely been a subject of discontent by national, regional and international actors or civil society. However a military operation such as the one recently performed by France in Cote d’Ivoire or the US/NATO in Libya is being associated with some ethical issues and the legitimacy of military intervention by a former colonial power in its African colony or former cold-war ally. It is worth noting that such military interventions by Western powers in Africa could have been avoided should African states have more decisive role in conflict resolution strategy, and should African countries/leaders enforce open democratic rules and promote inclusive growth.