AFRICANGLOBE – To Rene N’Guettia, director of economic affairs at the African Union Commission, Africa’s fast growth in recent years stands as a paradox.
“Indeed, Africa is the second fastest growing economy in the world,” N’Guettia told reporters in an interview at the AU Headquarters. “But, the growth mainly comes from the export of coffee, coco and other raw materials.”
Recent years have witnessed sagging economies in Europe and the United States due to the impact of the global financial and economic crisis. But, Africa, a continent poor and weak in the eyes of some pundits, stood out as the second fastest-growing region of the world, trailing only Asia.
A January report by World Bank shows economy activity in Africa is predicted to grow 5.3 percent in 2014. In a forecast issued in October, 2013, the International Monetary Fund (IMF) says the region will see a 6.2 percent growth in 2014.
Like N’Guettia, Dossina Yeo, a senior statistician at the AU headquarters, cannot say he is satisfied with the rosy figures. The growth will not be sustainable if Africa does not reduce its dependence on the export of traditional agriculture products and raw minerals, and make a transition toward manufacturing and industrialization, he said.
An AU study co-authored by Yeo stresses that African countries cannot sustain growth and alleviate poverty without transforming their economies from dependence on the export of agricultural and mineral products to the export of manufactured goods.
Industrialization is by no means a new concept to African countries, many of whom started economic reforms and economic liberalization in the 1980s in order to create a favorable environment for industrial development.
However, almost three decades later, most African economies are still “mono cultural, agrarian, service-oriented or mineral-based, ” says the AU study. While East Asian and Latin American countries have been producing and exporting high-end manufactured products, most African countries still maintain colonial-type production structures that make them vulnerable to shocks and volatility in global markets.
The twists and turns in Africa’s economic development may provide fodder for the argument that its rich resources have served more of a bane than a boon to the continent. However, Yeo’s study finds that “natural resource endowment is not detrimental to industrial development.” The so-called “resource-curse” can be broken through effective trade and macroeconomic policies, a better-educated labor force, as well as good governance.
For African countries, a solution to the predicament is one featuring diversification and industrialization. Foreign Direct Investment flows to the region are usually in non-manufacturing sectors like oil, gas and services. “To promote industrial development, African countries should strive to introduce policies that attract FDI into the manufacturing sector,” Yeo argues.
During the ongoing African Union summit here, the regional organization is soliciting suggestions and recommendations on “Agenda 2063,” a development blueprint spanning half a century for a prosperous and united Africa, from all walks of life in the Africa community. The 54-member body is expected to officially adopt the vision and put it into force at its July summit.
“By 50 years, we shall eliminate poverty totally from Africa,” Yeo said. “Africa should have electricity. Africa should have safe water. Everybody in Africa should live a better life. We envisage that.”