The African Development Bank (AfDB), on Monday began its 2017 annual meetings, with a note of optimism, assuring that the continent remains resilient, despite the slow 2.2% growth from previous year’s 3.4%, owing to low commodity prices, weak global recovery.
These, along with adverse weather conditions, impacted on agriculture production in some regions, according to the bank’s African Economic Outlook (AEO) 2017, expressing optimism for a rebound to 3.4% this year and then 4.3% in 2018.
The forecast, the bank said in the statement, assumes that commodity prices would recover and the world economy strengthened, while domestic macroeconomic reforms become entrenched.
The statement quoted stated Abebe Shimeles, Acting Director, Macroeconomic Policy, Forecasting and Research Department, at the AfDB as noting that “although economic headwinds experienced in the last two years appear to have altered the ‘Africa rising’ narrative’, we firmly believe the continent remains resilient, with non-resource dependent economies sustaining higher growth for much longer spell. With dynamic private sectors, entrepreneurial spirit and vast resources, Africa has the potential to grow even faster and more inclusively.”
The bank also noted promising developments across the continent, with growth increasingly relying on domestic sources, as shown by dynamic private and government consumption which combined, accounted for 60% of growth in 2016. This growth also coincides with progress in human development: 18 African countries had achieved medium to high levels of human development by 2015.
The AfDB report also resilience is rather from non-resource dependent economies sustaining higher growth for much longer spell, calling for deliberate policies by governments across the continent to unlock the potential of African entrepreneurs to accelerate industrial transformation.
The report also estimated that Africa’s foreign direct investment attracted by its emerging markets and fast urbanisation, would be experience a flat growth, rising $57bn, from last year’s $56.5bn.
“Such investment has diversified away from the natural resources sector to construction, financial services, manufacturing, transport, electricity, and information and communication technology.
Progress on the continent, the bank said, remains uneven, following which African governments need to push their agenda for job creation with more ambitious and tailored policies.
With a scary forecast that the size of Africa’s workforce would likely rise by 910m between 2010 and 2050, creating more and better jobs will remain the core challenge for African policy-makers, lamenting that despite its decade of progress, 54% of the “population across 46 African countries are still trapped in poverty across multiple dimensions – health, education and living standards.”
The situation, it stressed, calls for better employment opportunities, which is the main reason behind continued public protests, responsible largely for a third of all public demonstrations between 2014 and 2016 – albeit in a context of decreasing levels of civil unrest.
“The key to successful development in Africa is to nurture the emerging culture of entrepreneurship, to use the famous words of Hernando De Soto, “el otro sendero” (the other path) for development; a path that can unleash high-octane creativity and transform opportunities into phenomenal realisations,” said Abdoulaye Mar Dieye, Regional Director for Africa at the United Nations Development Programme.

To turn the challenge of higher population growth into an opportunity, making Africa’s new industrial revolution successful is paramount. Twenty-six African countries today have an industrialisation strategy in place. But most of these strategies tend to emphasise the role of large manufacturing companies at the expense of entrepreneurs in sectors with the potential for high growth and employment creation, including start-ups and small and medium-sized firms. Businesses with fewer than 20 employees and less than five years’ experience provide the bulk of jobs in Africa’s formal sector. Additionally, the advent of digital technologies and new business models is blurring the boundaries between manufacturing – which is now bouncing back at 11% of Africa’s GDP – and the services sector. Industrialisation strategies thus need to support other sectors where African economies have comparative advantage, such as agri-businesses, tradable services and renewable energy. New strategies need to avoid dependence on businesses that are not environmentally friendly.

“African economies cannot miss out on their next production transformation. Entrepreneurs should be lead actors in Africa’s journey into the fourth industrial revolution,” said Mario Pezzini, Director of the OECD Development Centre and Special Advisor to the OECD Secretary-General on Development.

According to the Outlook, Africa has high untapped potential for entrepreneurship. In 18 African countries for which statistics are available, 11% of the working-age population set up their own firms to tap specific business opportunities. This level is higher than in developing countries in Latin America (8%) and in Asia (5%). However, few of them invest in high-growth sectors, grow to employ more workers or introduce innovations to markets. To turn their dynamism into an engine of industrialisation, African governments can improve the skills of workers enhance the efficiency of business clusters – such as industrial parks and special economic zones – and increase access to finance, with more affordable credit and more innovative instruments, for small and young firms.