Challenges facing Africa's growth

Source：Al Ahram Weekly 2012 Release Date：2012-06-25 462

Metalworking

In Congo, copper transported from the copper belt region takes an average of two to three weeks to reach the port of Durban. The same distance in Europe would be covered in two days. This is one of the main challenges facing Africa's growth, according to Omnia Helmy, lead economist at the Egyptian Centre for Economic Studies.

In fact, according to Helmy, road density in Africa is less than seven kilometres per 100 square kilometres of land, the lowest in the world. Speaking at a seminar organised by ECES on "Unleashing Africa's potential as a pole of global growth," Helmy used the example to show that physical infrastructure is one of the main challenges facing the black continent, according to the 2012 Economic Report on Africa prepared by the UN Economic Commission for Africa (UNECA). This challenge, along with a hoard of other challenges, keeps Africa from achieving its full potential.

According to UNECA's 2012 report, out of the top 15 fastest growing economies in the world today, 10 are African. And the continent's contribution to world GDP is projected to increase from 2.4 per cent in 2012 to 5.1 per cent in 2034. According to Adam Elhiraika, chief macroeconomic analyst at UNECA, Africa managed to weather the global economic crisis quite well. And despite existing challenges in the global economy, Sub-Saharan Africa grew by 4.7 per cent in 2011. Further, Elhiraika said, more than four per cent in growth is expected in 2012 and 2013.

Elhiraika added that growth has not translated into meaningful social development. Elhiraika said that for Africa to achieve its full potential in terms of meeting the hopes and aspirations of its people and contributing meaningfully to global growth, certain reforms are needed.

To start with, he advocated for an active role of the state; the state should have an industrial policy to address the constraints of the private sector, otherwise the latter alone cannot achieve the growth it desires. He also underlined the importance of investing in human capital and technology and in physical infrastructure. Elhiraika pointed to the huge potential for agricultural production and regional economic integration in Africa.

Helmy too acknowledged that Africa faces obstacles to its structural transformation. Foremost among these is Africa's young population. Africa is expected to represent 15 per cent of world population by 2050 compared to 10.8 per cent in 1980. And Africa's share of the world's youth, between the ages of 15 and 24, is projected to grow to 31.3 per cent. Currently this share is 17.5 per cent.

Another obstacle is growing income inequality, poverty and unemployment. Helmy showed that despite growth in recent years, income inequality has not declined. Six out of the 10 most unequal countries are in Africa. And more than half of the population of 500 million people still lives in poverty.

Helmy agreed that agriculture is important to Africa's wellbeing. She said that most African countries are agricultural, and despite the fact that agricultural labour comprises 59 per cent of the total labour force and contributes 13 per cent of value added to GDP, the lives of more than 13 million people were affected by high food and fuel prices and drought in 2011.

Political conflict is another setback to Africa's growth. Helmy illustrated that between 1990 and 2005, the cost of conflict in Africa was equivalent to international aid to the continent over the same period. The cost of conflicts and aid from 1990 to 2005 amounted to $284 billion.

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