How can Africa achieve the right kind of growth?

Despite weaker global growth, Africa continues to grow at a moderately rapid pace. The danger is it is the wrong type of growth: jobless growth that doesn’t reduce poverty fast enough. The hope for “Africa rising” is imperiled by food insecurity, the Ebola crisis, poverty and inequality, commodity dependence, environmental degradation, and low integration of the continent in the global economy.

Knowledge and innovation to overcome these challenges will come from the productivity gains and added value that accompany quality job creation. This means jobs producing and delivering sophisticated products and services. African economies have had too little of this type of job creation and this holds back our productive capacities and the transformation of our economies. The reality of the “Africa rising” story is that higher growth has resulted from increased exports of exactly the same products we were exporting decades ago, and from growing imports to feed an expanding appetite for consumption. There has been very little learning, and very little value addition along the way.

UNCTAD’s Reimagining Africa’s Future Report shows that sustaining growth for employment and poverty reduction on the continent will require increasing investment – both private and public – to drive structural transformation. For African countries to make significant progress reducing poverty we need sustained growth rates of at least 7% per year for the medium to long term, which would require investment rates of over 25% of GDP. Quality of investment also needs to improve. Although the productivity of capital has improved in Africa, public investment efficiency is low. Ensuring that investment goes to strategic and priority sectors, such as infrastructure, agriculture and manufacturing are crucial.

Investment in these priority sectors can boost infra-African trade through closer regional cooperation, more efficient taxation, and imaginative leveraging of private-public partnership. African leaders have been forging a regional pan-African dream, but it will take more efforts on the ground to turn these dreams into action. Governments need to overcome fears of losing tax revenues through declining tariffs and customs duties by developing a broader tax base. Local governments, businesses and entrepreneurs that will benefit most from improved infrastructure links and regional cooperation need to push their central authorities to get the deals done.

Reimagining Africa’s Future means seizing the opportunities to increase job creation, productive investment and regional cooperation today. Labour costs in Asia are rising, and industries offering higher value addition are looking for new production networks. These are not only low-cost, low-skill operations either. There are a number of sectors ripe for the picking — from manufacturing of garments, footwear and travel goods to basic electronic appliances, from telecommunications to pharmaceuticals.

With leadership and a little imagination, “Africa rising” can take hold from the bottom-up, through quality investment, regional cooperation, and improved productivity to bring prosperity for all Africans.

The World Economic Forum on Africa 2015 takes place in Cape Town, South Africa from 3-5 June. 

Author: Dr. Mukhisa Kituyi, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD)

Image: Train tracks are seen at the National Arts Theatre stop of the light rail system under construction in Lagos, Nigeria, May 30, 2014. REUTERS/Joe Penney