Economic Outlook 2019 Growth accelerating but … still insufficient
In its economic outlook for 2019, the African Development Bank (AfDB) is optimistic about African growth, which should reach 4% this year and 4.1% in 2020. If the institution judges the economic performance the continent is good, but this is not enough to cope with structural deficits, including poverty and unemployment.
By Assanatou Baldé
Africa’s economic performance continues to improve, says the African Development Bank (AfDB) in its report on the economic outlook for 2019. According to its forecasts, “Africa’s economic growth should accelerate in the coming years to reach 4% in 2019, and 4.1% in 2020 “.
East Africa in the lead …
East Africa is leading the most dynamic regions of the continent with GDP growth estimated at 5.7% in 2018, followed by North Africa at 4.9%, the West of Africa at 3.3%, Central Africa at 2.2% and Southern Africa at 1.2%, “the report says, noting that” of the projected growth of 4% for Africa in 2019, North Africa should represent 1.6 percentage points, or 40%. However, the AfDB states that “average GDP growth in North Africa is erratic because of Libya’s rapidly changing economic situation.” By contrast, growth in the East Africa region, which is the fastest, is expected to reach 5.9% in 2019 and 6.1% in 2020, adding that between 2010 and 2018, growth averaged nearly 6 percent, with countries like Djibouti, Ethiopia, Rwanda and Tanzania recording above-average rates. “
According to the report, in several countries, including Burundi and the Comoros, “GDP growth remains low due to political uncertainties”. As for growth in Central Africa, “it is gradually recovering, but it remains below the average for Africa as a whole”, even if it is “supported by the recovery in commodity prices and better agricultural production”. On the southern African side, “growth is expected to remain moderate in 2019 and 2020, after a slight recovery in 2017 and 2018. This modest growth in the region is mainly due to the low level of development in South Africa which affects neighboring countries, “says the institution.
“Africa needs to create around 12 million jobs every year”
Although African growth is generally good, the ADB qualifies its optimism, noting that while it is “higher than that of other emerging and developing countries”, the fact remains that it remains insufficient to cope the structural challenges of unemployment and poverty. The challenge is indeed large in a continent that will house 2.5 billion by 2050, with a majority of young people under 20 years. According to the AfDB, “the African population of working age is projected to grow from 705 million people in 2018 to almost one billion by 2030”. With the arrival of millions of young people on the labor market, “the pressure to provide decent jobs will intensify,” warns the institution. To cope with this situation, at the current rate of labor force growth, “Africa needs to create about 12 million new jobs each year to stem the rise in unemployment,” says the AfDB.
“To meet its challenges, Africa must industrialize itself”
While in recent years, the continent has had one of the fastest and most sustained growth accelerations, it has not been conducive to employment, says the report. If this situation persists “3100 million people will join the ranks of the unemployed in Africa by 2030,” warns the ADB, pointing out that without significant structural change, “most jobs created will probably be in the informal sector, where productivity and wages are low and precarious work, making the goal of eradicating extreme poverty by 2030 difficult to achieve. “
The challenge of the continent is therefore twofold: We must not only improve growth but also find ways to generate more jobs. To achieve this goal, “Africa must industrialize and create added value for its abundant agricultural and mineral resources, and other natural resources,” the report highlights, stressing that “industrialization is a powerful vector of job opportunities creation “.
Nevertheless, all these objectives can only be fully achieved if Africa moves towards economic integration, the AfDB insists.
“An Africa without borders is not just a political ideal. It could also form the basis of a competitive continental market to accelerate growth and make the continent more competitive in global trade and value chains, “says the institution, adding that it” will stimulate competition between companies, increase their productivity, and facilitate the growth of small businesses, as well as the emergence of large African conglomerates “. The report goes even further, noting that “much more, regional integration can improve regional security, as the expansion of international trade is often accompanied by a decline in conflict.”
The unavoidable contribution of the diaspora
In the report, the AfDB also insists that Africa must diversify its economy still too dependent on a few commodities exported, highlighting “price volatility”, preventing most of the continent’s economies from maintaining high growth. According to the institution, “Africa therefore needs deep structural reforms to succeed in diversifying its economy.”
Like many other institutions, the AfDB also believes that the African diaspora could play a role in the development of African economies. “In addition to revenues from extractive industries and taxes, most African countries receive remittances that now exceed ODA and FDI, not counting remittances sent through informal channels, which could account for half of the total. remittances from formal channels, “says the institution. According to it, “policies to reduce the cost of remittances and improve diaspora investment platforms, as well as other incentives, can increase the availability of critical resources for finance development “.
The African diaspora, considered a full-fledged region of Africa, is now aware of its potential to contribute to building the continent. In recent years, it has increased investments in various sectors such as real estate, education or health. Africa also knows that it can count on its diaspora, which is undoubtedly one of the essential keys of its future.