Continental Africa has been “resilient and gaining momentum,” according to Akinwumi A. Adesina, president of the African Development Bank Group in its ‘African Economic Outlook 2018’, which was published earlier today.
With real output growth recorded at 3.6% in 2017, the report indicates that continental growth is likely to reach 4.1% in 2018, with the non-resource-intensive economies showing the strongest rate of recovery over the past fiscal year.
The report suggested that challenges still existed for ‘structural transformations that would create more jobs and reduce poverty by deepening investment in agriculture and develop agricultural value chains to spur modern manufacturing and services.’
New statistics released by the report also found that the continental infrastructure requirements are significantly higher than previously thought, running between $130 - 170bn. Mr Adesina’s opinion was that countries should “focus on how best to use their scarce infrastructure budgets to achieve the highest economic and social returns.” Other fiscal highlights of the report included the estimated continental revenues which included $500bn in tax, $50bn in foreign aid, $60bn in remittances and $60bn in FDI inflows.
The resilience of the continent as a whole, in conjunction with above-average rates of growth, will make a number of countries more attractive to institutional investors and commercial banks, that hold an estimated $100tn at their disposal.
The report also highlighted the benefits of Africa’s industrialisation, which suggested that potential excess savings from reduced industrial costs could be ‘channel into financing profitable infrastructure projects in Africa.’
Increasing the share of manufacturing in GDP in Africa (and other LDCs) could boost investment in the G20 by about $485 billion and household consumption by about $1.4 trillion. The impact of African (and other LDC) industrialization on G20 economies would also be large. Direct exports of capital and consumption goods would increase by more than $92 billion. And the indirect effects associated with this increase in exports—given the domestic linkages between G20 exporters and other domestic producers—would increase G20 production by $132 billion. All that would generate 7.5 million jobs in the G20 economies. It would boost aggregate demand, create employment in poor and rich countries alike, and move the world toward peace and prosperity. That this mutually profitable global transaction is not taking place is one of the biggest paradoxes of current times.
For further information from the African Development Bank, or to read the African Economic Outlook report in full, please visit www.afdb.org.