Growth Strategies for Africa in a Changing Global

EnvironmentShahid Yusuf

Growth DialogueWashington 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