Growth Strategies for Africa in a Changing Global Environment

1. Growth Strategies for Africa in a Changing Global Environment Shahid Yusuf Growth Dialogue Washington DC

2. This Time it is different • Africa has growth momentum sustained for a decade. • Many countries have achieved macroeconomic stability. • Demand for mineral wealth is strong and likely to remain so. • Chinese and other FDI helping to promote mineral sector and infrastructure development. • South –south trade on upward trend. • Advantages of a ‘late starter’ and technological catching-up buoyed by prospect of “second unbundling” and transfer of industry from East Asia.

3. But some pasttrends persist and there are new challenges • Gross savings have declined, investment shows only modest increase. • Industrial share ofGDP declining. Large urban centers are “consumer cities”. • Little progress with industrial and export diversification. “Resource curse” a threat to mineral exporters. • Agricultural yields low because fertilizer application is minimal, there is too little R&D and rural infrastructure underdeveloped. • Populations on the rise and migration to cities leading to sprawl and shanty towns. • Climate change looms ahead threatening desertification, water scarcity, extreme weather events, and coastal inundation.

4. Growth Prospects can be improved by promoting Global Public Goods • Strengthening institutions that underpin globalization esp. international and regional trade and FDI. • Reinforcing institutions vital to political stability. • Engaging with other nations and taking concrete steps to contain global warming.

5. Enhancing National and Regional Growth Drivers • Efficient natural resources exploitation and management of revenues. • Raising agricultural productivity. • Enlarging youth dividend by improving human capital quality and skill mix. • Stimulating export-oriented industrialization via FDI and participation in GVCs. • Narrowing technology gaps through market competition and incentives for technology absorption. • Increasing urban agglomeration economies by creating skilled/producer cities. • Leveraging demand from growing middle class to grow local firms and seed local innovation.

6. By adopting a strategic approach that augments and harnesses • Democratic institutions for better governance . • Organizational capacity of state to guide, coordinate and implementdevelopmental activities , including industrial and export diversification. • Financial institutions to mobilize/allocate resources and grow local firms, build logistics capabilities. • Learning and innovation system to support diversification and long run productivity growth. • Aid and FDI to supplement domestic resources, accelerate technology transfer and facilitate entry into GVCs.

7. Thank You