Fostering recovery and transformation in Africa to reduce inequalities and vulnerabilities

By ALBERT M. MUCHANGA

The ‘Fostering Recovery and transformation in Africa to reduce inequalities and vulnerabilities,’ theme is a clear demonstration of the unwavering commitment of the United Nations Economic Commission for Africa to inclusive growth and sustainable development in Africa in support of the United Nations Sustainable Development Goals, the African Union Agenda 2063 and the High 5s of the African Development Bank, which all include focus on improving the quality of life of the African people.
The poverty and inequality profiles of Africa are insightful. Although we are the richest region in the world in terms of endowment of natural resources, we are the poorest when it comes to measures of income and wealth.

Coming out of these low levels of income and wealth is now being made more challenging by climate change as seen in the recent flooding in Madagascar, Malawi and Mozambique. We must add to this the looming debt crisis which could undermine all the growth achievements of the past 23 years. Africa’s economic growth has not been sufficiently inclusive to engineer decent jobs and reduce widespread poverty, inequalities, exclusion and resilience. To surmount poverty, inequality and exclusion, Africa must embark on people-centred recovery and transformation. For this transformation to be attained and sustained, there is need to secure abundant financial resources. In this respect, mobilisation of domestic resources should be prioritised with a particular emphasis on fighting against illicit financial flows, which deprive the continent of approximately, US$90 billion annually. My starting pitch is hence the need to create fiscal space for high and sustained levels of economic growth. The fiscal space generates four capacities to invest in programmes and projects that reduce poverty and inequality. The lesson of experience in this area is from China’s efforts, which by 2019 enabled the Chinese Government to overcome absolute poverty, well ahead of the 2030 target of the United Nations Sustainable Development Goals by promoting inclusive economic growth. With this in mind, we have partnered with the African Development and AUDA-NEPAD to commission a study on achieving inclusive growth and sustainable development in Africa.

The study, which operationalises the first aspiration of Agenda 2063: ‘A prosperous Africa based on inclusive growth and sustainable development’ will be completed by December this year. It is anchored on attaining and sustaining seven to 10 per cent growth rates between 2023 and 2063. The seven to 10 percent growth target, in addition to being supported by economic theory, is part of the UN Sustainable Development Goals, African Union Agenda 2063 as well as the Instanbul Programme of Action for Least Developed Countries and its successor, the Doha Programme of Action for Least Developed Countries. Key to this high growth is taking advantage of the fact that Africa is a low-income region as well as coming up with serious efforts in raising investment levels across Africa through, as earlier mentioned, domestic resource mobilisation. In addition, there should be mobilisation of the private sector, both domestic and foreign as well as undertaking sustainable borrowing. The study gives prominence to investment in human capital development and utilisation. The major elements of this are: investments in education and science, with a focus on employability; investments in technology and innovation; investment in health; harnessing the demographic dividend by, among others, investing in the growth of decent employment opportunities; leveraging the African diaspora; mainstreaming the informal sectors into the formal sectors; investing in gender equality and youth empowerment; and, investing in the development of morality, integrity, discipline, self-esteem and self-confidence. Of course, we do not overlook other drivers of inclusive growth and sustainable development such as macroeconomic management and stability; physical infrastructure; environmental sustainability; industrialization; transport, communication, financial and tourism services; agriculture; digital transformation; intra-African Trade and diversifying and growing trade between Africa and the rest of the world. I will say more on digital transformation, intra-African trade and export growth and diversification.

Digital technologies offer us a chance to unlock new pathways for rapid and inclusive economic growth, innovation, job creation and access to services. Africa has several headline successful and dynamic ecosystems. The mobile money revolution is a well-known example: with 300 million accounts, one of the highest in the world. In this connection, mobile money has begun transforming Africa’s job markets, expanding financial services to the underserved and unlocking innovative business models for local small and medium sized enterprises. To date, more than 500 African companies provide technology enabled innovation in financial services (fintech). Johannesburg and Cape Town in South Africa, Nairobi in Kenya and Lagos in Nigeria rank among the top 100 cities for fintech ecosystems worldwide. In addition, over 640 tech hubs and incubators are active across the continent, up from 314 in 2016. However, in order to achieve the objectives of Agenda 2063 and create a massive number of jobs for the youth, tackle poverty and inequalities, digital transformations will need to expand beyond these islands of success and this is what we want to achieve during implementation of the study referred to earlier. It is a common refrain that power abroad flows from power at home.

In this connection, the entire African Union system will fully collaborate with the Secretariat of the African Continental Free Trade Area in implementing the programme of action emanating from the theme of the ear which is focused on implementation of the Agreement and Protocols establishing this continental market. One of the key programmes is the development of agro-parks aimed at initially making Africa food secure and later, a net food exporter. The agro-parks will, through specialization, also promote the development of regional and continental value chains in agriculture, and consequently, increase intra-African trade in food products and intermediate goods. Inclusive and sustainable industrialisation is another key focus area. Some of the key programmes that we plan to collaborate with our partners in this area involve: building capacities for rural cooperative agro-processing; building capacities for production of intermediate goods from Africa’s vast array of natural resources; building capacities to mainstream research and development to boost innovation; and, development of regional and continental value chains such as the DRC-Zambia batteries for electric motor vehicles project. The strategic importance of this project lies in the fact that the global drive to sustainability offers an opportunity to create decent jobs through transformative investments in industrial processing of strategic minerals that the continent is endowed with.

Some of the soft elements of the industrialisation drive are intellectual property rights protection, investment promotion and development of quality infrastructure. With respect to the first element, we are collaborating with the Secretariat of the African Continental Free Trade Area in coming up a common and aligned institutional arrangement for intellectual property rights protection. We will do the same with respect to investment promotion. As far as quality infrastructure is concerned, we are in the process of coming up with the Made in Africa standard, which when operational, will promote competitiveness among qualifying companies as well as contribute to removal of technical barriers to trade. The African Continental Free Trade Area market has a bright future. We have a young population with a growing middle class whose demand for industrial goods in 1.5 times higher than the global average. In this respect, I look forward to finalisation of our collaborative project with the United Nations Economic Commission for Africa on the mainstreaming of cross-border trade. Once we have reliable statistics on intra-African trade through this project, we shall be better placed to capture demand and, consequently, attract increased investments into the market.

Although the process of de-globalisation is underway, and that we have since the 1970s, experienced progressive decline of our share of global trade from six percent to 2.7 percent currently, Africa is still committed to international trade. International trade is, among others, a source of foreign exchange and transfer of technology just as much as it is a key measure of competitiveness. In this connection, we have started work on coming up with a programme on export diversification and growth. Through the programme, we plan to move Africa away from a producer and exporter of commodities to an exporter of manufactured and agro-processed goods as well as services such tourism and labour. As I come to the end, let me make five points. The first point is on climate financing. As we go towards the green transition, there is a real danger that Africa’s climate financing gap will grow. New estimates by the African Development Bank show that Africa will need between US$1.3 and US$1.6 trillion between 2020-2030, or US$118 billion to US$145 billion annually, to implement its commitments to the Paris Agreement and its nationally determined contributions. If these targets are not attained, there is a possibility of increased climate induced poverty and destitution across Africa.

The second point is on collaboration. In this respect, we look forward to collaborating with the United Nations Economic Commission for Africa in the implementation of the decisions and recommendations of this Conference on this theme. We are also collaborating with the United Nations Economic Commission for Africa on a readiness assessment towards an African Customs Union/Common which is key to deepening the African Continental Free Trade Area market. This deepening will bring us closer to macroeconomic convergence which is critical to facilitating Africa-wide poverty reduction and inclusivity. My third point is that inclusivity is an absolute necessity. Our progress will be determined not by those at the top ladder of our income profiles but by those at the bottom. The faster we improve the social and economic status of those Africans at the bottom, the faster will be our progress.

My fourth point is that one of the key resources required to reduce poverty, inequality and exclusion in Africa is continuous effort. Once momentum is established, it must be sustained. Any slippage can lead to major set-backs and these must be avoided at all costs. In this respect, Africa must have strategic focus on, in the words of the theme; Fostering Recovery and transformation in Africa to reduce inequalities and vulnerabilities.’ We must hence avoid distractions but persevere with unshakable resolve. My fifth and last point is that development is a Do It Yourself (DIY) process. Do It Yourself. Let us always remember this. Nobody but ourselves will end our poverty, inequalities, destitution, vulnerabilities and underdevelopment. Let us do it, with resolve, integrity, discipline, self-esteem and self-confidence.

The author is African Union Commission Commissioner Economic Development, Trade, Tourism, Industry and Minerals (ETTIM)