The Economic Report on Africa 2023 (ERA 2023) has revealed that achieving sustainable growth and building resilience requires structural transformation. It added that any successful industrial policy requires sectoral focus as well as getting the basics right, stressing that it is essential for countries to identify optimal combinations of policy actions to nurture an industrial program.
Titled ‘Building Africa’s Resilience to Global Economic Shocks” and presented by the Director of Macroeconomics and Governance Division at the United Nations Economic Commission for Africa (UNECA), Adam Elhiraika, in Abuja, the report shows that the current global economic architecture affords opportunities for African countries to leapfrog and accelerate industrialisation through careful experimentation of what has worked elsewhere and adapting it to local conditions.
Elhiraika further explained that firm survival and growth in Africa were closely linked with exporting, working with international capital and international or global firms, adopting international managerial norms and standards as well as developing industrial clusters.
These elements, according to the report, come in different shades depending on the type of firms and their technology intensity. Broadly, however, three economic fundamental gaps require attention to get the basics right: skill gaps; infrastructure gaps and overall institutional quality gaps.
On promoting regional value chains, the report states that countries can collaborate in creating regional agricultural commodity markets that will help to connect surplus economies with net importers of wheat, sugar and rice and will in turn, reduce dependence on Russia and Ukraine. “Financial integration could also protect the continent from the vicious cycle of debt distress and liquidity crunches through regional bond markets that would enhance savings mobilisation, risk pooling and funding for regional and national infrastructure,” the report added.
UN Resident and Humanitarian Coordinator, Matthias Schmale, represented by the Economist in the Resident Coordinator’s Office, Nonso Obikili, noted that the convergence of many crises, such as the shocks generated by the consequences of the pandemic, ripple effects of the Russian-Ukraine war and climate change, had resulted in Africa experiencing a setback or lack of progress in achieving the targets set by the Sustainable Development Goals (SDGs). He cited an example of the impact of shocks on poverty, in 2021, when almost 30 million Africans experienced severe poverty, and the loss of 22 million employment occurred.
“The top ten countries with the highest number of poor people account for 64.7 per cent of the continent’s poor population. The first four countries, Nigeria (100 million), DR Congo (67 million), Tanzania (36 million) and Ethiopia (33 million), account for 42 per cent of the poor population,” he said.
The report calls for new approaches for African countries to address the challenges of global economic shocks and calls for improving risk management and building resilience strategies through well-designed national development plans and good governance, as well as structural transformation through equitable green growth and smart industrial strategies.
Special Adviser to the President on Economic Matters, Dr. Tope Fasua, highlighted economic recessions that Nigeria had experienced in the past, commodity price crashes of the early 1970s after the oil boom in 1973; recession of the 1980s due to a fall in commodity prices and another crash in the mid-2000s due to crude oil crash. “We live a life of volatility in terms of our finances and most of Africa is still tethered to these kinds of risks”, he said.
