The African Development Bank has just published its African Economic Outlook. The Pan-African institution based in Abidjan forecasts that Africa’s GDP will increase by 4% this year, up from 3.5% in 2018. This rate is expected to accelerate to 4.1% in 2020. While Africa’s macroeconomic outlook is undoubtedly improving after several difficult years, I would like to insist on the need to remain cautious.
First, because the figures are still well below the average of more than 5% that the continent experienced in the decade preceding the commodity crisis of 2015, and are insufficient to reduce poverty and create jobs, as the report rightly points out. Unfortunately, for years, GDP growth on the continent has not translated into economic development, due to a lack of structural reforms. The fact that Africa is still home to nearly 400 million people living in extreme poverty cannot be ignored. Nor the fact that its share in world GDP does not exceed 3%.
In addition, according to the 2018 Ibrahim Index of African Governance, economic opportunities for African citizens have improved by only 0.2% since 2008, despite a 40% increase in the continent’s GDP. Job creation increased by 1.8% per year between 2000 and 2014 according to AfDB forecasts, which is less than the growth of the working population, estimated at 3% per year. In a demographic context where 440 million young Africans will reach the age to seek employment in the next fifteen years, there is a pressing need for action.
However, it is worrying to note that Africa still has too few examples of determined policy makers on the path to structural reform. The need for reform is intensifying in a context of increasing risks related to trade tensions and debt vulnerability, topics I have already had the opportunity to discuss on this blog. I am even concerned that the favourable economic growth figures presented by the African Development Bank may make some policy makers complacent, as they can use these good performances to justify inaction.
As the saying too often goes in Africa: growth cannot be eaten. However, this should not be a curse: in many countries, growth is “eaten”. Indeed, Africa needs better growth, not just higher growth. To achieve this, the solutions are well known: structural reforms, regional integration, investment in education and infrastructure, which are currently far from sufficient if we want to train and give the next generation every opportunity. It is a collective responsibility that we must assume here.
Finally, it is also the responsibility of the political elites to create the economic wealth that will enable us to free ourselves from the development aid on which we are still dependent. Too many people are unaware of this, but 80% of our States could do without it today. I do not intend to place myself “against” this aid, but I would like to reiterate that it is by definition transitional. However, the nature of the growth we are creating in Africa risks keeping us in this state of dependence. There is now a real urgency to think together to create the conditions for a “growth that can be eaten”!