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Africa Economy Swells, Fueled by Natural Resources Despite Global Stagnation

African Economic Outlook 2013, an annual report on the bill of health Africa’s economy produced by the African Development Bank (AfDB), the OECD Development Center, the Economic Commission for Africa (ECA) and the UN Development Program release on May 27, 2013 projects that the economic outlook for Africa for 2013 and 2014 is “promising, confirming its healthy resilience to internal and external shocks and its role as a growth pole in an ailing global economy”. The continent’s projected growth for 2013 is 4.8% and expected to further swell by 5.3% in 2014.

The report gives credit to the growth of the African economy in the face of global economic instability by the fuel of the continent’s huge natural resources with specific boost from the agriculture, mining, and energy resources.

The report however shows in spite of the growth insufficient poverty reduction, persisting unemployment, increased income inequalities and in some countries, deteriorating levels of health and education are projectiles that serve as dragnet to the impact of the growth.

Commenting on the report, the authors say “now is the time to step up the tempo of economic transformation, so that African economies become more competitive and create more gainful jobs and widening the sources of economic activity is fundamental to meeting this challenge.”

The report further admonished African countries to “tap into their natural resource wealth to accelerate the pace of growth and ensure the process can benefit ordinary Africans”.

The report catalogued four key elements needed to achieve their objective, namely, African countries should create the right conditions for such a transformation to take place, including infrastructure, education and the creation of larger and more competitive markets.

Emmanuel Nnadozie, Director, at the Macroeconomic Policy Division of the Economic Commission for Africa, ECA, says “access to markets is fundamental to structural transformation based on natural resources: regional integration and better access to the markets of large partners could open new opportunities for all”.

Other element is that primary sectors require sound land management, balanced and effective tax systems and the right mechanisms and incentives to cause an acceleration and diversification of the sources of growth.

The third element being the “agricultural, transport, fertilizers and more resistant seeds are required for an increase in productivity. Africa has 24 per cent of the world’s agricultural land, but accounts for only 9 per cent of its production”.

And finally, the fourth element according to the report, stresses that “African countries can foster change and economic diversification actively, for example through corridors of development around power, transport and communication lines. Stable and transparent use of budgets is key to achieving that goal”.

Mthuli Ncube, Chief Economist and Vice-President of the African Development Bank (AfDB), reacting to the report said, “Now is the time, after ten years of improved stability, sound macroeconomic policies and blossoming trade links, growth has made African nations freer than ever to choose their own development paths and implement active policies for economic transformation.”

Ultimately, transformation means opening opportunities so people can find jobs, create businesses, as well as invest in health, education and food security. In turn, higher levels of human development for all, including the most vulnerable, can accelerate the pace of economic transformation, leading to a virtuous cycle of growth and development.

“Among many other benefits, human development can help drive Africa’s structural transformation by speeding both the rate of innovation and uptake of new technologies,” said Pedro Conceição, Chief Economist at UNDP’s Regional Bureau for Africa. “But for this to happen, more attention should be paid to improving access to and quality of education and healthcare systems, transforming agriculture and fostering job creation in order to narrow income inequalities.”

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