Growth Strategies for Africa in a Changing Global Environment Shahid Yusuf Growth Dialogue Washington DC

This Time it is different  Africa has growth momentum sustained for a decade.  Many countries have achieved macroeconomic stability.  Demand for mineral wealth is strong and likely to remain so.  Chinese and other FDI helping to promote mineral sector and infrastructure development.  South –south trade on upward trend.  Advantages of a ‘late starter’ and technological catching-up buoyed by prospect of “second unbundling” and transfer of industry from East Asia.

But some past trends persist and there are new challenges  Gross savings have declined, investment shows only modest increase.  Industrial share of GDP declining. Large urban centers are “consumer cities”.  Little progress with industrial and export diversification. “Resource curse” a threat to mineral exporters.  Agricultural yields low because fertilizer application is minimal, there is too little R&D and rural infrastructure underdeveloped.  Populations on the rise and migration to cities leading to sprawl and shanty towns.  Climate change looms ahead threatening desertification, water scarcity, extreme weather events, and coastal inundation.

Growth Prospects can be improved by promoting Global Public Goods  Strengthening institutions that underpin globalization esp. international and regional trade and FDI.  Reinforcing institutions vital to political stability.  Engaging with other nations and taking concrete steps to contain global warming.

Enhancing National and Regional Growth Drivers  Efficient natural resources exploitation and management of revenues.  Raising agricultural productivity.  Enlarging youth dividend by improving human capital quality and skill mix.  Stimulating export-oriented industrialization via FDI and participation in GVCs.  Narrowing technology gaps through market competition and incentives for technology absorption.  Increasing urban agglomeration economies by creating skilled/producer cities.  Leveraging demand from growing middle class to grow local firms and seed local innovation.

By adopting a strategic approach that augments and harnesses  Democratic institutions for better governance.  Organizational capacity of state to guide, coordinate and implement developmental activities, including industrial and export diversification.  Financial institutions to mobilize/allocate resources and grow local firms, build logistics capabilities.  Learning and innovation system to support diversification and long run productivity growth.  Aid and FDI to supplement domestic resources, accelerate technology transfer and facilitate entry into GVCs.

Thank You