Africa urged to use domestic resources to diversify economies

Monday May 14 2018

Vera Songwe, Uneca’s Executive Secretary

Vera Songwe, Uneca’s Executive Secretary, has urged Africa to diversify the economies. FILE PHOTO | NMG 

More by this Author

Increased investments and infrastructure spending in East Africa has seen the region’s economy grow the fastest in the continent.

According to the Economic and Social Conditions in Africa report, East Africa has sustained an average annual growth rate in excess of six per cent between 2012 and 2017.

The region's growth was boosted by more spending on mega infrastructure projects in Ethiopia, Kenya, Uganda and Tanzania, the report noted.

North Africa was second, growing at 4.9 per cent followed by West Africa at 2.2 per cent, and Southern Africa at 1.4 per cent. Central Africa trails after contracting at -0.1 per cent.

The report was presented at the ongoing Conference of African Ministers of Finance, Planning and Economic Development in Addis Ababa, Ethiopia.

Africa recorded a 3.1 per cent growth in 2017 and is forecast to rise to 3.6 per cent and 3.8 per cent in 2018 and 2019 respectively.

Globally, it is the second fastest growing continent after Asia.

"We should not be complacent. Our continent still needs to confront some serious developmental challenges, such as poverty and inequality rates and lack of decent jobs as well as lack of diversification and structural transformation,” cautioned Adam Elhiraika, the Director of Macroeconomic Policy Division at the United Nations Economic Commission for Africa (Uneca).

He added that addressing these issues was important for the continent to attain the Sustainable Development Goals by 2030.

He also noted that the dependence on the exportation of primary commodities by Africa has intensified social inequalities and led to little job creation as well as constrained poverty reduction efforts.

“African countries need to enhance domestic resource mobilisation and create the fiscal space needed to foster investment and transformation growth,” he said.

Vera Songwe, Uneca’s Executive Secretary, said though Africa showed some signs of industrialisation and structural transformation, there was urgent need to diversify the economies.

“Accelerating inclusive growth and structural transformation hinges crucially on the ability of the continent to mobilise and effectively use domestic resources and to expand the regional market. The global economy is more volatile than ever, and protectionism is on the rise, risking to curtail Africa’s exports,” she said.