Rwanda leads Africa in productivity growth

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The economic transformation that has been seen in Africa has already added about 1 percent to productivity growth across the region since 2000 rising as high as 4 percent for Rwanda, and 2-3 percent for Nigeria, Tanzania and Uganda. While this progress is acknowledged, the choices that African leaders will make in the coming few years will have a critical effect on sustaining the gains made as well as moving forward to more progress.

According to the report Africa’s New Climate Economy that was published recently, economic transformation can revive Africa’s growth rates while promoting development and climate goals. The report states that in an effective economic transformation, productivity is boosted within sectors and there is some shift of workers from low-productivity sectors like agriculture to high-productivity sectors like industry and services.

The sub-Saharan region for example, is still at an early stage with around 60 percent of employment in agriculture and only 5 percent in manufacturing and this presents a huge opportunity, the report states.

Macroeconomic stability which is a basic precondition for strong investment and innovation, has also improved in the region. The manufacturing sector is smaller than it used to be, but it is more productive and has demonstrated its ability to operate in a more competitive post-liberalisation environment. The report puts Ethiopia and Tanzania as examples of significant successes in manufactured exports which are starting to appear, although from very small starting positions.

The International Monetary Fund (IMF) estimates that GDP growth in sub-Saharan Africa fell to 3.3 percent in 2015, and forecasts that it will drop to only 1.6 percent in 2016, implying a fall in per capita GDP.

In this situation, oil-exporting countries have been especially hard hit, and to some extent other natural resource-exporting countries as well. It points out that in countries such as Ethiopia and Zambia, climate shocks are playing a role and drought is expected to hold back growth. On the other hand countries such as Kenya, Rwanda and Tanzania will be in a better position expected to hold up growth rate well.

Looking into a future of sustainable, green growth, data shows that some 620 million people in sub-Saharan Africa lack access to electricity. The report points out countries in the region have an opportunity to leapfrog to modern, energy efficient technologies as it has a rich portfolio of clean energy assets that would be able to meet its current demand.