African Development Bank (AfDB)
has called for massive investment in
infrastructure to drive inclusive growth in
Africa.
AfDB made the call in the presentation of
Economic Outlook (AEO) 2018 to African
Union Summit delegates in Addis Ababa,
made available on Saturday in Abuja.
The Bank said the continent was still
experiencing jobless growth in spite of
increased Gross Domestic Product (GDP).
“As a leading African institution, the bank
is the first to provide headline numbers on
Africa’s macroeconomic performance and
outlook.”
It said African economies had been
resilient to negative shocks, adding
that poor infrastructure was a serious
impediment to inclusive growth.
The bank said the African Union
Commission (AUC) report urged African
countries to adopt recommendations from
the summit.
Chief Economist and Vice-President for
Economic Governance and Knowledge
Management of the banks, Célestin Monga
said the report was presented in January to
give policymakers enough time to reflect
on the recommendations for economic
planning and transformation.
The outlook quoted Monga saying
the bank would be translating the
report into key African languages and
engaging with policymakers and civil
society organisation’s to ensure its
operationalisations.
Beyond the observed increase in GDP,
Monga called for structural change in
Africa.
The outlook stated that Commissioner
for Infrastructure and Energy at the
African Union Commission, Amani
Abou-Zeid, described the report as highly
relevant and useful for governments and
other stakeholders.
Abou-Zeid said AEO puts average real
GDP growth in Africa at 3.6 per cent in
2017, a good recovery from the 2.2 per cent
recorded in 2016.
He said the 2017 figure was projected
to grow by 4.1 per cent a year in 2018 and
2019.
Monga said the growth was driven by
improved global economic conditions,
better macroeconomic management,
recovery in commodity prices mainly
oil and metals, sustained domestic
demand and improvements in agriculture
production.
He however, said: “Africa is still
experiencing jobless growth due largely to
limited structural change.’’
He added that consequently, sustained
high growth had not had substantial
impact on job creation.
Monga quoted the report, saying “about
two thirds of countries in Africa have
experienced growth acceleration.
“Basically, a growth acceleration period
is one in which the average growth rate
of GDP per capita over a period of eight
years is at least 3.5 per cent per annum,”
the report noted.
The outlook stated the Commissioner
for Economic Affairs at the AUC, Mr
Victor Harrison endorsed the report,
urging African countries to adopt the
recommendations for inclusive growth.
“These studies present the behaviour of
African economies in the face of difficult
external conditions and announce the
revival of growth with an estimated rate of
4.1 percent in 2018.
“We all know that growth is not yet
inclusive in Africa and unemployment
affects more women and young people,”
he said.
Harrison urged member states to
improve the business climate and
stimulate the private sector to participate
in the development.
According to the outlook’s findings,
Africa’s infrastructure is still behind those
of other regions in quantity, affordability,
and quality due to lack of investment.
“At the same level of GDP per capita,
South Asia, East Asia and Latin America
have higher access to electricity and water
than most African countries.
“It observed that Africa needs higher
growth and investment rates, but debt
levels must be monitored closely. Public
debt ratios are rated to be on the rise,
stocked by appetite for infrastructure
spending,” he said.
The Outlook indicated that 40 countries
in the region recorded increases in
external debt from 2013 to 2016, adding
that nine countries experienced a decline.
The report stated that though there
were growing concerns about the debt
levels in Africa, indicating that if used
productively, debt may be necessary to
unlock long-term growth potential.
“Tackling poverty will need efforts
to increase employment elasticity of
growth. The employment elasticity of
growth of 0.41 in Africa is below the
desirable 0.7 for all developing countries.
“Pressing policy concern is, therefore,
to ensure that growth is reflected in
creation of high and quality jobs,” the
Outlook stated.
The report noted that Africa could
be the next investment frontier and
recommends three options for the
international financial community to
resolve the savings glut.
It said the adaptation of a policy of
more negative real interest rates in
high-income countries; the use of excess
savings to finance public investment in
rich countries; and the facilitation of the
flow of capital to developing countries.
The report estimates show that
investment needs for infrastructure
would be in the range of US 130 to 170
billion dollars a year.
It also called for infrastructure in
special economic zones and industrial
parks and the mobilisation of domestic
resources through well-targeted
subsidies and rigorous collection of fees
using technology.
It urged Africa to attract more private
funding to infrastructure projects,
focusing on risk mitigation; to creating
an infrastructure asset class to attract
institutional investors; choosing
appropriate financing instruments to
develop infrastructure. Source: TBI

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