A new beginning for economic transformation in Africa?
Government ministers, economists, UN and World Bank officials have stressed the need for diversification from commodities and continent-led economic growth in Africa at a forum in Rwanda this week.
Speaking at the African Transformation Forum (ATF) in Kigali Monday, Carlos Lopes, secretary at the United Nations Economic Commission for Africa, said development models should be more tailored across the continent and emphasized the need for industrialization.
‘Africa needs structural transformation, which is changing the compositions of the economic structure. And the best way to do it is through industrialization,’ he said.
‘If you look at those experiments in other parts of the world, they do not adjust to our needs right now, because they were implemented under the world economic conditions that are no longer available to Africa.’
While commodity-rich countries like Ghana and Nigeria have experienced strong economic growth in recent years, ATF argues such growth is often not inclusive enough across societies.
Headline-grabbing GDP figures are often cited as concrete evidence for growth, but such percentages often mask deeper societal problems.
‘African current growth has not generated sufficient jobs and has not been inclusive enough to significantly curb poverty,’ Lopes added.
The Millennium Development Goals ended in 2015, and saw the number of people living on less than $1.25 a day drop from 1.9 billion to 836 million. Though many praised its outcomes, others criticized its top-down donor-led approach.
The inaugural ATF event, organized by the Accra-based think tank African Centre For Economic Transformation (ACET), is hoping to engage governments in greater economic change and aims to foster more ‘African-led’ growth.
KY Amoako, president of ACET, said the forum represents a ‘new beginning for economic transformation’ and the need for improved regional integration on the continent.
‘The sharp fall in commodity prices, or the slowing of the Chinese economy, has once again shown how vulnerable most African economies remain to external factors… transformation can help change that,’ Amoako said.
‘How can we mobilize our collective forces to drive the agenda? Every country can move at its own speed... but we must move together.’
Declining commodity prices have left many nations reeling. Angola, where oil accounts for 90 per cent of foreign-exchange revenues, saw inflation top 16 per cent in January; oil-rich Nigeria’s currency continues to plummet; South Africa, Ghana and Botswana are all enduring economic instability.
Talks focused on the need for countries to diversify productivity from reliance on commodities, by promoting local manufacturing, technology and growth in agri-business and by enhancing financial management.
Ghana’s deputy finance minister reflected on the need for strong, coherent governance as critical for economic transformation and the need to ‘show people you are doing the right thing’.
Britain’s Department for International Development (DFID) committed $2.6 billion to economic development in Africa in 2014. Its director general for economic development, David Kennedy, said it is vital to ‘improve governance, transparency and accountability to enhance the enabling environment and the investment climate’ on the continent.
‘We should have a focus on commercializing agriculture. There are opportunities to increase that and link smallholder farmers to markets and really impact poverty in that way, he said.
‘We think there is a really good opportunity for export-based manufacturing and we will look to have partnerships with a range of countries.’
ACET is looking to forge ties with the African Union, World Bank and African Development Bank to create localized development frameworks that can be adopted by countries.
It also launched its Coalition for Transformation agenda with the aim of engaging governments and organizations in promoting greater regional integration and more tailored development goals.
The current poster-boy for African economic growth is host country Rwanda. Paul Kagame’s 16-year authoritarian reign as president – much maligned for its human rights abuses – has seen the country transformed economically.
Moving away from a reliance on agriculture, its services sector now accounts for almost 50 per cent of its economy, while moves to promote ‘Made in Rwanda’ products and numerous foreign investments are helping advance manufacturing in the commodity-scarce, landlocked nation.
GDP growth has averaged 7.5 per cent for more than a decade, resulting in employment levels of a reported 98 per cent, a wave of infrastructure developments and even the promotion of a ‘smart’ technology city, among other notable successes.
‘Twenty-two years ago Rwanda’s very survival was at stake… we figured it out by doing it because we had no choice,’ said Kagame in an address to attendees in Kigali.
‘Help took years to arrive and was not appropriate to our circumstances. We had to start with our own resources and ideas and the desire to get out of the mess our country was in.’
In the current commodities slump, which further revealed the porous nature of many African economies, achieving tangible growth alongside democratic governance is paramount and the two are not always in sync. Whether ACET can help facilitate it remains to be seen.