Together the African Development Bank (AfDB), the Organization for Economic Co-operation and Development (OECD) and the United Nations Development Program (UNDP) have just published the 2017 edition of the African Economic Outlook. A strong lesson emerges from the 52nd annual meetings of the African Development Bank Group (AfDB): “More than ever, governments will have to integrate entrepreneurship into their industrialization strategies. “
First line of force of the report
According to the AfDB, “in 2016, Africa’s economic growth fell to 2.2% from 3.4% in 2015, due to falling commodity prices, a weak global recovery and adverse weather conditions, which impacted agricultural production in some areas. However, it should rebound to 3.4% in 2017 and 4.3% in 2018, which assumes that with the recovery in commodity prices, the world economy will be strengthened and macroeconomic reforms implemented at the national level “.
Promising developments for Africa
The report reveals that there are promising developments on the continent, as Africa’s growth increasingly depends on local sources, as indicated by the dynamism of the private sector and public consumption which together accounted for 60 pc. growth in 2016. This growth also coincides with progress in human development: 18 African countries reached intermediate to high levels of human development in 2015.
Investment to diversify
In total, foreign direct investment, attracted by the continent’s emerging markets and rapid urbanization, amounted to $ 56.5 billion in 2016 and is expected to reach $ 57 billion in 2017. This investment has grown. diversified by no longer simply relying on natural resources, but also on the construction, financial services, industrial, transport, electricity and information and communication technology sectors.
Africa still resilient
“Despite the economic turmoil of the past two years which seems to have compromised Africa’s rise (Africa Rising), we are fully convinced that the continent remains resilient, with economies that are no longer dependent on resources and whose growth prospects are wider. With vibrant private sectors, an entrepreneurial spirit and vast resources, Africa has the potential to grow even faster and in a more inclusive manner, ”said Abebe Shimeless, Acting Director of the Department of Macroeconomic Policy, Forecasting and AfDB research. He said progress remained uneven “as African governments need to pursue more ambitious and better-suited policies for job creation. ”
Employment at the heart of concernz
Despite a decade of progress, 54% of the population in 46 African countries is affected by some form of poverty – be it health, education and living conditions. “And demand for better job opportunities is the main reason for regular public protests, a third of them between 2014 and 2016 – even though civil unrest has steadily declined. With a workforce expected to grow by 910 million people between 2010 and 2050, creating more decent and more jobs will remain the main challenge for African policymakers.
The importance of entrepreneurship
The key to successful development in Africa is the promotion of the emerging culture of entrepreneurship, to quote Hernando De Soto’s famous phrase, el otro sendero (the other way) of development; a path that can unleash greater creativity and turn opportunities into phenomenal achievements, ”said Abdoulaye Mar Dièye, regional director for Africa of the United Nations Development Program (UNDP).
Demography and industrial strategy
According to the report, “it is essential to transform the challenge of population growth into an opportunity for the success of Africa’s new industrial revolution.” “Today,” he said, “twenty-six African countries have an industrialization strategy in place. But most of these strategies tend to emphasize the role of large industrial companies at the expense of entrepreneurs in sectors with high potential for growth and job creation, such as start-ups and small and medium-sized enterprises. Companies with fewer than 20 employees and with less than five years of experience provide the bulk of formal sector jobs in Africa.
“In addition, the advent of digital technologies and new business models are blurring the lines between the industrial sector – which amounts to 11% of Africa’s GDP – and the service sector. Industrialization strategies must therefore support other sectors where African economies have a comparative advantage, such as agro-industry, tradable services and renewable energies. The new strategies must avoid dependence on companies that are not favorable to the environment “.
Mario Pezzini, Director of the Development Center of the OECD (Organization for Economic Co-operation and Development) and Special Advisor to the OECD Secretary-General on Development, said that ‘African economies cannot miss the goal of transformation of their production. Entrepreneurs must be the main actors in Africa’s transition to the Fourth Industrial Revolution. ”
An untapped entrepreneurial potential
Africa has untapped potential for entrepreneurship, according to the Outlook. In 18 African countries for which we have statistics, 11% of the working-age population have set up their own businesses to exploit business opportunities. This level is higher than in developing countries in Latin America (8%) and Asia (5%). However, few of them invest in high growth sectors, employ more workers or introduce innovations to markets. To make their dynamism a driver of industrialization, African governments will need to strengthen the skills of workers and the efficiency of trade poles – such as industrial parks and special economic zones – and increase their access to finance, with more credit. accessible and more innovative instruments for small and start-ups, the report added.