ECA argues Africa’s potentials as next global growth pole

Following the global economic crisis of 2008 and the currently raging Eurozone crisis, the African continent is seeking to position itself as the next pole for global growth and the United Nations Economic Commission for Africa (ECA) is pushing the argument.

The continent is endowed in rich natural resources including minerals, forests, oil and has an array of competent human resources that when harnessed would effectively, fully catapult the continent into sustainable growth.

Prof. Emmanuel Nnadozie, a senior official of the ECA outlined the arguments, stating why the organisation believes that Africa can become the next pole for global growth.

Addressing the first working session of the experts’ segment of the 5th Joint Annual Meetings of the AU Conference of Ministers of Economy and Finance and ECA Conference of African Ministers of Finance, Planning and Economic Development, Prof. Nnadozie put forth eight reasons why that is possible.

Prof. Nnadozie who is the Director of ECA’s Economic Development and NEPAD Division spoke on the relevance and timeliness of the theme of the conference – “Unleashing Africa’s Potential as a Pole of Global Growth.”

In his view, given the current economic performance of an increasing number of African countries, as well as the standing of the continent on the global stage, it would be a reasonable assumption to state that Africa is on the right trajectory to becoming the next pole of global growth.

Firstly, he however, admits that despite the optimism, global economic crises and the resultant economic recession in the rest of the world are bad for economic and social progress in Africa.

“Weaker global growth and continued Euro zone debt crisis present Africa with serious challenges and have led to a slowdown of Africa’s growth momentum. Economic growth in Africa declined from an average of 5.6 in 2003-2008 to 2.2 in 2009, 4.6 in 2010 and 2.8 in 2011”, he said.

Secondly, he argues that as a result of the global situation, “it is in Africa’s interest to have a high performing global economy because a strong and growing global economy will benefit Africa through increased trade, financial flows Foreign Direct Investments (FDI)” as well as in Overseas Development Assistance (ODA) and remittances, which are necessary for growth, employment and poverty reduction.”

Making the third argument, he said, “in light of Africa’s interest in global economic recovery, we argue that both Africans and the rest of the world should see Africa as part of the solution to the global economic crisis and invest in the continent for mutual benefit.”

“Indeed, the emerging consensus is that the world needs a new driver of consumer demand, a new market and a new dynamo which can be Africa. The belief is that Africa is on the verge of economic take-off that can propel it into a global growth pole based on its record of strong economic performance, potential market size and growing middle class, population dynamics, natural resource endowments, socio-political achievements and improving economic conditions”, he explained.

His fourth argument is, “an Africa that joins the ranks of global growth poles will benefit both Africa and the rest of the world. It will generate higher incomes in Africa and enable the continent to tackle such nagging problems as youth unemployment and poverty while at the same time contributing to increased global demand for goods and services and ultimately to global economic recovery. Moreover, the idea is consistent with Africa’s interest in reducing its marginalization in the world as articulated in the African Union’s NEPAD.”

Fifthly, according to Prof. Nnadozie, “becoming a growth pole involves a growth imperative and a structural imperative. For Africa to become a growth pole, the size of the economy should be large enough and its growth rate high enough and sustained for a reasonably long period.”

“If Africa is able to maintain an average of seven percent growth rate (as experienced in 2001-2008) while the rest of the world maintains a three percent average growth rate, Africa’s share of global GDP should reach five percent within two decades and sooner if the growth rate was to double”, he warned.

He also threw some caution, “we recognize that Africa continues to face significant well-known challenges and binding constraints, which must be seriously and urgently addressed to unleash the continent’s potential as a global growth pole, build the continent’s capacity to achieve maximum growth and transform this growth into development.”

“Action is needed in promoting visionary leadership, strong and quality institutions and good governance; investing in infrastructure and in people, transforming agriculture, industrializing and developing rural economies”, he urged.

He indicated that, “Unleashing the continent’s development potential and building capacity to achieve maximum (double digit) growth requires promoting technology and innovation for transformation, increasing intra-Africa trade and accelerating regional integration; strengthening South-South cooperation and rationalizing African partnerships and addressing the daunting challenge of climate change.”

He also outlined areas that need urgent action for quick gains. He said, “mobilizing resources for economic transformation and take-off requires, in particular, paying serious and urgent attention to the challenges of low domestic savings and gross capital formation; limited taxable capacity and inefficient tax administration; and improving financial systems and maximizing the benefits of existing financial sources while pursuing new and innovative ones.”

The experts are discussing among other issues, Africa’s integration, harmonisation of statistical data, education, how to harness remittances to the continent’s advantage, gender and youth unemployment and intra-African trade.

The experts are expected to conclude deliberations Sunday March 25 and subsequently adopt the report of the Committee of Experts and adopt resolutions to be passed on to the ministerial conference.

The ministerial segment of the Conference opens at the new African Union Conference Centre, Addis Ababa Monday March 26, 2012.

By Emmanuel K. Dogbevi, in Addis Ababa, Ethiopia