Africa’s much-trumpeted growth is a reality but not a quality growth — Dr. Calos Lopes

Kinshasa, DR Congo, Capital Markets in Africa — The most urgent challenge faced by Africa at the present time is how to eradicate poverty while promoting prosperity. While we seem to be doing well on the latter front, with average economic growth of 5 per cent over the past decade – well above the global average – the picture is much less encouraging with regard to the fight against poverty.

Africa’s much-trumpeted growth is a reality. The continent has succeeded in almost tripling its gross domestic profit in the space of 15 years, in itself a remarkable achievement. The business of attribution is always risky and this case is no exception. To say that this feat was achieved thanks to the Millennium Development Goals would be biased; to say that it was in spite of the Goals would be absurd. Africa’s growth has been made possible by a combination of factors, some internal, others external. Major trends, such as demographic, technological and environmental changes, have helped to shape the continent’s future. The policy space offered by the transition from an era of prescriptive structural adjustment to one in which the continent can increasingly do things its own way has also helped a great deal. Significant debt reduction, more than official development assistance per se, has changed the macroeconomic fundamentals of the continent. Lastly, Africa’s endeavours have benefited from the confidence brought by new partnerships with high-growth developing countries, and this new-found confidence has contributed to a change in attitude.

What we have seen so far, however, is not quality growth. Africans are celebrating potential rather than results. In order to achieve results, there needs to be a focus on job creation, inclusiveness and poverty reduction. Although the Millennium Development Goals remain unfinished business for Africa, there is no denying that the continent has made rapid progress on many of the goals and targets, in spite of unfavourable initial conditions.

Significant achievements include increasing the representation of women in national parliaments, enrolling more children in primary schools and bridging the gender gap at this level of education, reducing child and maternal mortality, and lowering the prevalence of deaths from HIV/AIDS and malaria. In addition, there have been significant technological advances: the number of mobile phone subscriptions in Africa exceeds the world average and the continent has the fastest annual average growth in the number of Internet users. Africa also ranks highly in many global indicators of female representation.

Rising inequality is partly attributable to the lack of attention given to economic and social disparities during efforts to achieve the Millennium Development Goals. Experiences from around the world have shown that inequality does not self-correct; on the contrary, inequality persists and is handed down to future generations. Efforts to end extreme poverty, promote socioeconomic development and protect the interests of future generations need, therefore, to address head-on the problem of inequality, not least because inequality diminishes people’s productive capacities, thereby depriving society of the valuable contributions that these people could make.  

Income inequality may be the most pronounced of all forms of inequality, and Africa – where income inequality is rising sharply – is no exception. With an average Gini coefficient of 43.9 per cent over the period 2000–2009, income inequality in Africa is second only to Latin America, which had an average coefficient of 52.2 per cent over the same period. . In 2010, six of the ten most unequal countries in the world were in Africa, and more specifically in southern Africa, which appears to be the most unequal subregion of the continent. However, inequality is declining in Africa, albeit to varying degrees in different countries. . Of the 35 African countries for which data are available, 13 (37.1 per cent) experienced an increase in income inequality, while 19 (54.3 per cent) saw a decrease in inequality over the period 1990–2012.

To reverse the situation, Africa must start doing things differently. Sticking with more of the same policies and practices is not going to work. It is now widely acknowledged that the continent must pursue aggressive industrial policies, because only investment can enable it to boost its agricultural productivity, benefit from its demographic and urban dividends, and modernize economies that have grown too dependent on the informal sector. Only then can we congratulate ourselves on our continent’s growth – quality growth!

Source: Excerpt from Opening address by Dr.. Carlos Lopes 10th African Economic Conference – Kinshasa, 2 November 2015. Mr Calos Lopes is Executive Secretary of the Economic Commission for Africa of the United Nation.