INCLUSIVE GROWTH Challenge of a Generation? Steve Kayizzi-Mugerwa, Director, Research Department (EDRE) AfDB Partnership Forum April 2012

Inclusive Growth Background (I)—the challenge of a generation? A response to recent expressions of people/youth power, including the Arab spring, occupy Wall Street movement, etc. Conditions that ignited the “Arab Spring” can be found in many other places in Africa. Is inclusive growth “the challenge” of our generation? If seen as a mere recycling of past initiatives we would have failed to harness the power of the moment. 2

Inclusive Growth Background II—What is New? 50 years ago, newly independent African Governments believed strongly in “inclusive growth”. Much later still, emphasis was put on policies, markets, and politics (Poverty Reduction Strategy Papers etc.) In plotting the way forward, what have we learnt from past successes and failures? The risk of repeating past mistakes is real. 3

Inclusive Growth Background III—Stability and Growth Africa has witnessed among the highest growth rates since independence in the 1960s. Countries such as Cote d’Ivoire, DRC etc. have returned to growth. Africa, least affected by recent global crisis (mainly because demand for its resources remained high). The African middle class is expanding, as are its consumer markets. 4

Inclusive Growth Background IV—Growth Benefits Uneven The impact of recent high growth on poverty has been uneven/patchy. Structure of growth—from resource extraction and services, capital intensive and “enclave” like (vs BRICs—labor-intensive manufacturing. Africa’s has high level of inequality—only second to Latin America (blunts the impact of growth on poverty reduction) Burden of unemployment falls on the youth 5

Inclusive Growth Looking Ahead I: To Do List Need to renew emphasis on economic and political governance Make Regional Member Countries aware of the pressures of economic and demographic trends Promote inclusive growth in well-targeted infrastructure projects (rural electrification, mobile telephony etc.) Look also at the soft side (governance and accountability) 6

Inclusive Growth Looking Ahead II: New Approaches Direct Investment in economic and social inclusion (a la Lain America?) Expand investments in clean energy and climate change adaptation. Innovative financing (including tapping remittances, pension funds). Reform development financial institutions 7

Inclusive Growth Looking Ahead III: Partnerships EDRE is planning a number of studies: country, cross country, cross continent on the issues of inclusive growth. We have already initiated collaboration with many of you and intend to develop these further together with colleagues in other departments. My colleagues here present will provide information on specific projects. 8

Inclusive Growth Contacts: Steve Kayizzi-Mugerwa, Director Research Department, EDRE Shimeles Abebe, Division Manager 9