As the global economy totters from crisis to crisis, Africa is fast becoming a magnet for investments and a safe haven for international capital.
Our two institutions, the United Nations Economic Commission for Africa and the African Union Commission, are working with African policy-makers to unleash the potential that this new development offers.
And this is the focus of the ongoing annual conference of African ministers in charge of finance, planning and economic development that is taking place from March 22-27 in Addis Ababa.
We think there is a strong basis to start seeing Africa as a pole of global growth.
Of the top 15 fastest growing economies in the world today, 10 are African.
Foreign direct investments to Africa have increased from $9 billion in 2000 to $62 billion in 2009 and are expected to continue to rise in the near future.
Portfolio investments were also a healthy $22 billion in 2010. Also in 2010, two African countries had a higher per capita GDP than China, and six more than India.
More reassuring, it is not only the resource-rich countries that are experiencing this growth — many African countries that do not boast of oil or mineral wealth are growing as well.
Exports are also becoming more diversified by composition and by destination.
For example, in 2009, manufactures accounted for 19 per cent and 27 per cent of African exports to China and South Korea respectively.
This resurgence is giving rise to Africa’s growing recognition as an emerging market.
Indeed, there is a growing consensus that Africa is on the verge of an economic take-off and could become a pole of global growth.
This is largely based on factors such as Africa’s untapped natural resource endowment, which provides significant investment potential; the continent’s steady population growth, which, if properly managed, could yield positive returns; the rise of the middle class and the untapped regional market; high economic growth rates; improvements in the general macroeconomic environment; strategic and timely institutional reforms, as well as improved governance in many African countries; improved business environment in many African countries and increased FDI in recent years.
The growth resurgence has transformed Africa from the world’s slowest growing regions into one of the fastest.
However, to sustain economic growth, Africa will need to enhance productivity and competitiveness through innovation and investing in infrastructure, technology, higher education and health; broadening the range of and adding greater value to exports; and making the necessary investments in productive sectors and trade facilitation.
All these measures require collaboration among stakeholders in a developmental state.
If Africa maintains its 2000-2008 average annual growth of 5.6 per cent and the rest of the world does the same at 2.9 per cent, the continent’s contribution to world GDP will increase from 2.4 per cent in 2012 to reach 5.1 per cent in 2034.
Needless to say, other things being equal, the higher the growth rate of Africa, the sooner its share of global GDP hits the 5 per cent mark.
If, for example, Africa can maintain an average of 7 per cent growth (specified as the required growth rate to meet the MDGs) while the rest of the world maintains 2.9 per cent, Africa’s contribution to global GDP would reach 5 per cent in around two decades from now.
Studies suggest that in most African countries, inadequate infrastructure is a key constraint to doing business and can depress firm productivity by around 40 per cent.
Estimates show that closing Africa’s infrastructure gap would require approximately $93 billion a year over the next decade.
While it is encouraging that about half of the continent’s infrastructure financing needs are currently being met, there is still a need for increased and substantial external support in this area.
Increasing women’s access to electricity and roads would lead to greater agricultural output and better food availability in markets, since women comprise 70 to 80 per cent of the agricultural labour force.
Another key constraint is investments in human capital and innovation.
Education and skills development, especially for young people, is of paramount importance to Africa if we are to reap the demographic dividend.
Innovation and new technologies are also crucial to maintain productivity and absorb the still growing labour force.
In recognition of this, our two institutions are now collaborating with the African Innovation Foundation, and have established the Innovation Prize for Africa.
This annual prize honours and encourages innovative achievements that contribute toward developing new products, increasing efficiency or saving cost in Africa.
The first price for the winner and runners up, worth $100,000 and $50,000 respectively, will be awarded on March 26.
The necessity for co-ordinating development policies at the regional level is an imperative.
In fact, the central challenge for African countries is to have a unified framework for negotiation and cooperation with emerging as well as old partners that will help them maximise gains in terms of trade, FDI and other kinds of capital flows, technology transfer, loans, and aid especially from emerging large economies.
This challenge is especially important considering the key differences between African countries in terms of the size of the economy, governance structures and negotiating capacity, and resource endowment.
The world needs a new driver of consumer demand, a new market and a new dynamo, a role that Africa is poised to play.
Future growth in the world economy and in the developing world will depend on harnessing both the productive potential and untapped consumer demand of the continent.
Abdoulie Janneh is UN Under Secretary-General and Executive Secretary of the Economic Commission for Africa; Jean Ping is the Chairperson of the African Union Commission.