His Excellency Mr. Meles Zenawi, Prime Minister of the Federal Republic of Ethiopia,
His Excellency Mr. Jean-Ping, Chairperson of the African Union Commission,
His Excellency Mr. Abdoulie Janneh, United Nations Under-Secretary-General and Executive Secretary of the Economic Commission for Africa,
Allow me at the onset to thank the government and peoples of the Federal Republic of Ethiopia for their warm hospitality and all facilities made available to us since our arrival in Addis Ababa. I also wish to express my profound appreciation to the organizers of this conference, the African Union Commission and Economic Commission for Africa for inviting us to this meeting and for giving me the opportunity to participate in this panel discussion on “leveraging opportunities for accelerated growth: policies and prospects in the next decade, a subject which is very timely and relevant especially as the continent strives to build on the progress of the last decade.
The first decade of the new Millennium has been a season of progress across much of Africa. Growth accelerated, trade and investment expanded, macro-economic indicators improved, poverty declined, GDP per capita increased, school enrolment soared and health improved. By any measure and standard, this progress is remarkable and unprecedented. Sustaining this momentum and accelerating growth further over the next decade, I believe, will depend critically on how well Africa seizes opportunities to harness its potential and abundant resources and managed risks, including both short and long term challenges.
Africa is well endowed with natural resources and this presents enormous opportunities for growth and development. Increased international demand for natural resources, coupled with high commodity prices has been an important factor in Africa’s growth acceleration in recent years, with real GDP growth averaging 5% per annum over the period 2000-2008. Though growth decelerated with the outbreak of the global financial and economic crisis, the region recovered relatively faster.
African countries are increasingly managing their revenues from natural resources better as evidenced in increased domestic resource mobilization, which has been channeled towards investment in critical sectors for MDG acceleration. Some countries have even established stabilization funds, where some proceeds from high commodity prices are saved for any cyclical downturns.
However, despite improved performance, Africa’s growth remains vulnerable and fragile as it is based on a narrow production and trade base. Therefore, over the next decade, public policy must be oriented towards promoting greater value addition and retention in order to create the right incentives to stimulate new export sectors and catalyze structural transformation. This would reduce the continent’s vulnerability to exogenous shocks, including terms of trade shocks, and ensure that it benefits from the vast wealth beneath its surface, and potential human capital.
Policies undertaken by African countries over the last two decades, including macro-economic reforms, economic liberalization and deregulation and measures to energize the private sector are beginning to bear fruit. According to the IMF, these policies have made African economies relatively more resilient and helped in mitigating the impact of the global financial and economic crisis.
However, there is a need to consolidate and deepen macro-economic reforms further to support private sector development, while giving African policy-makers the policy space necessary to deal with short-term and long term economic exigencies. At the same time, more should be done to strengthen state institutions to allow it put in place a business friendly regulatory framework, but also build strong social safety nets to make the growth more inclusive and more sustainable.
Another opportunity for accelerated growth arises from emerging social and demographic trends, increased number of middle class consumers as well as rising population - of which more than half comprises the youth - energetic, creative and full of optimism. Africa’s youth bulge, in particular, presents enormous opportunities for development through increasing the share of the working-age population and increased productivity, which may attract industries and services from other countries, especially those whose population are rapidly aging. However, the youth bulge also presents significant challenges for development as recent events in North Africa starkly remind us. To turn the youth bulge into a boon, Africa must prioritize investment in human capital - the bedrock of progress, with greater focus on technical and vocational training so as to create the skilled workforce essential for advanced industries. But beyond this, steps must be taken to promote youth development, empowering them, enhancing their access to economic opportunities and employment.
In identifying opportunities for accelerated development in Africa, I will be remiss if I do not mention Africa’s strengthened cooperation with the People’s Republic of China, India, Brazil, Turkey and the Republic of Korea, and other new strategic partners. Though Africa has had a long bilateral relationship with China, the partnership between the two has deepened and widened in recent years, covering a wide range of sectors. While China’s impact has been significant, partnerships with other countries such as Brazil, India, Korea Republic, Russian Federation and Turkey have also helped in diversifying Africa’s export markets and broadened sources of development funding. These South-South relationships are providing important opportunities for deepening trade and investment ties, acquiring technology and peer learning on appropriate development strategies for development and poverty reduction. A study commissioned by my office on “Africa’s cooperation with emerging development partners: Option for Africa’s Development” shows that Africa’s trade relations with the new emerging development partners is contributing to the dominance of primary commodities in production and trade rather than facilitating new sectors of comparative advantage. To leverage the benefits of these partnerships for development, Africa must fashion a clear strategy to guide its cooperation with the new emerging partners.
An area of particular importance for Africa and with great prospects for development is agriculture. Thanks to the implementation of the AU’s CAADP, Africa is making some steady progress in agriculture. With 60% of uncultivated arable land, with the right policies and adoption of appropriate technology and skills, Africa could become the bread basket of the world, producing enough to feed itself and export to other countries. Investments policies in agriculture sector should make space for sustainable and equitable land and water resources management, protecting the rights of indigenous population to land ownership and their right to food.
Industrial development must be placed at the center of Africa’s development as it holds great prospects for accelerated growth and employment creation. African countries must focus on industrialization as a critical engine of economic growth and development. The African Union Action Plan for the Accelerated Industrial Development of Africa which was adopted in 2008 constitutes a good policy framework for supporting industrial development and must be fully implemented.
Information and communication technology is another area with great prospects for accelerated growth. Africa is also making steady progress in this area as evidenced in increased use of mobile telephony, with sub-Sahara Africa being the world’s fastest growing mobile telephony market over the period 2003 to 2008. This has had a significant impact on employment creation. African countries must harness the power of these technologies to provide innovative education solutions, deliver health care and connect remote farmers to markets.
Regional integration offers great opportunity for sustained growth and development through pooling of resources and exploiting economies of scale and scope for increased production competitiveness.Across the continent, there is increase regional cooperation and cross-border flows of trade and investment, which are supporting growth.
All of these gains can be consolidated and further accelerated if Africa tackles outstanding and emerging challenges, including governance, lack of infrastructure, endemic diseases and climate change. Whilst political governance has improved in recent years, thanks partly to the implementation of the African Peer Review Mechanism, elections-related violence is becoming a threat to governance and development at large. Steps must be taken to strengthen democratic governance. More specifically, efforts must be made to enhance the credibility of elections as they are central to durable peace and sustainable development. The role of regional organizations, particularly the AU and sub-regional organizations is key in this regard.
The lack of infrastructure development constitutes a serious obstacle to accelerated growth and development, and overcoming this deficit will be crucial in charting Africa’s future. Though investment in infrastructure has increased in recent years, including for development of regional infrastructure, Africa faces a huge funding gap for infrastructure estimated at over U$90 billion a year. African countries need to mobilize the private sector and international investors to support infrastructure development.
Furthermore, the specter of climate change looms large and threatens to reverse hard-won gains on the economic and social front. The international community must support African countries to adapt to climate change through increased and predictable funding and transfer of appropriate technology.
All these issues that I highlighted this morning are of particular relevance to the Least Developed Countries, most of whom are in Africa. That is why the United Nations will be organizing the fourth United Nations Conference on the LDCs in Istanbul, Turkey from 9 to 13 May 2011 in order to adopt a new Programme of Action for the Least Developed Countries for the decade 2011-2013. Since this will be the first major conference on the UN calendar for this decade, it would have a considerable impact in influencing international development cooperation over the next decade. I look forward to your participation in the conference at the highest political level as possible, as well as in the second Prepcom, in order to defend the priorities you identified during the preparatory process for the conference.
Africa stands at the cross-roads once again much the same way half a century ago. You should not let this moment, our season of progress slip away. We should seize the moment and lay the foundation for durable prosperity. I am confident that this generation of Africans will answer the call.
I thank you for your kind attention.