A report published by the United Nations Economic Commission for Africa (UNECA) says despite the global economic slowdown, Africa’s long term economic growth outlook remains promising.
The 2017 Economic Report on Africa (ERA), drawing on a wide array of sources; including case studies from Cameroon, Republic of Congo, Côte d’Ivoire, Ethiopia, Madagascar, Morocco, Mozambique, Nigeria, Rwanda, South Africa and Sudan, outlines policy intervention areas essential for ensuring that Africa’s urbanization supports its industrialization.
One of the key conclusions is that under the right policy framework, anchored in national development planning, African countries can leverage the momentum of urbanization to accelerate industrialization for a more prosperous and equitable future.
The report entitled ‘Urbanization and Industrialization for Africa’s Transformation’ aims to help law makers on the continent identify areas of growth they need to concentrate on, in particular addressing the gaps between urban and industrial growth in a holistic manner in order to promote inclusive growth.
“Implementing urban and industrial policies in a coordinated manner requires a sound institutional framework matching the structure of the policies. Many African countries still face institutional constraints for coordinating the two strands – urban and industrial – and we hope the ERA2017 will address some of those issues,” said Adam El Hiraika, Director of the Macroeconomic Policy Division at the ECA.
The report shows that economic growth in Africa fell by more than half from 3.7 percent in 2015 to 1.7 percent in 2016 amid weak global economic conditions, low oil and commodity prices and adverse weather conditions such as droughts.
It further points out that the decline in commodity prices since 2014 affected current financial accounts and government revenue, bearing down on domestic currencies and creating inflationary pressures. It advises that African countries need to adopt a counter-cyclical fiscal stance, and those continuing to achieve high economic growth such as Côte d’Ivoire at 8 percent, Kenya at 6 percent and Ethiopia at 5.4 percent, should build up fiscal buffers.
In 2016 East African growth was the fastest on the continent, at a slightly decelerating 5.5 percent. The sub-region’s growth was driven by Ethiopia, Kenya, Rwanda and Tanzania. Public spending on infrastructure was the main contributor to Ethiopian growth, the report highlights.
The fiscal deficit in East Africa widened somewhat from 4.0 to 4.6 percent in 2016, reflecting expansionary fiscal policies, mainly in Ethiopia; notably spending on infrastructure and in Kenya with a new railway line and sharply increased government salaries as well as in Uganda with the hydropower projects.
Regarding inflation, the continent’s rate climbed to 10 percent from 7.5 percent and it is projected to stay at that rate throughout 2017.
The report shows that inflation picked up in all sub-regions except Central Africa and East Africa, where, respectively, it declined to 2.3 percent in 2016 from 2.8 percent and for East Africa to 5.3 percent from 5.9 percent, the latter largely on downward trends in Ethiopia, Kenya and Tanzania.
In Ethiopia despite the 2015/16 drought’s impact on local food prices, inflation fell owing partly to the decline in prices of imported food, fuel and industrial raw materials.
Looking at the rate of industrialization in Africa and the gender gap in the labor force, the report states that data on key indicators of labor markets, specifically for urban areas are rare.
It also states that Ethiopia is the only country in Africa with data based on standard labor force surveys publicly available through the International Labor Organization (ILO). Looking at Ethiopia’s data, it shows that in the urban areas, while similar numbers of men and women work in services, men are nearly twice as likely as women to be employed in industries.
It also shows that women in urban areas are particularly under represented in many sectors including professional employment, skilled agricultural jobs and managerial positions.