The report released at recently held African Ministers of Finance Conference in Addis Ababa, Ethiopia, March 29, 2015, says Africa’s growth continued to increase, rising from 3.7 per cent in 2013 to 3.9 per cent in 2014.
It notes that the performance was underpinned by improved macroeconomic management, diversified trade and investment ties with emerging economies among other factors.
However, the report states, “Africa’s social development indicators reveal the weakness of the observed economic performance: high unemployment and poverty coexisting with robust growth. This is a paradox.”
The report prepared by the Economic Commission for Africa (ECA) identifies industrialization as the means to address the paradox by promoting economic diversification, inclusive growth, efficient utilisation of abundant physical, mineral and human resources and in the process eliminate poverty and hence structurally transform Africa economies.
According to the report trade continues to play a major role in Africa’s economic growth performance and it has potential to promote trade-induced industrialization of the continent provided it is deliberately directed at industrialization.
“For this purpose, trade policy must be consciously designed, effectively implemented and managed with regular monitoring and evaluation,” it says.
Adding that such a policy must recognise and key into developments in the goal production system especially internationalisation of production system with a view to promoting value addition through processing and manufacturing.
“Finally, the goal of trade-induced industrialization must also guide the conduct, negotiations and implementation of trade and investment agreements and arrangements,” it says.
Acknowledging challenges, the report notes, two but related challenges facing the continent. These, it says, are to maintain the strong economic growth and to transform it to productivity-induced sustainable, inclusive, employment-generating, poverty-reducing, and environmentally-friendly growth.
“The greatest deficiency of the current growth episode is its inability to promote structural transformation of the economies of the region. Rudimentary agricultural practices and provision of services dominate the structure of African economies.
This overt dependence on traditional agriculture and services sectors can only support limited growth,” it says.
Industrialization with its capability to generate direct and indirect employment, strong forward and backward linkages with other sectors of the economy including external sector not only promises to transform African economies but also to ensure that growth translates into sustainable development the report indicates.
By Emmanuel K. Dogbevi, back from Addis Ababa, Ethiopia.