Green route to industrialisation: The best option for Africa

By Magreth Nunuhe

WINDHOEK – Africa launches the 2017 Economic Report on Africa in Dakar, Senegal, this week, with the continent looking back on a challenging 2016 marked by the worst economic performance in over two decades, especially for Sub-Saharan Africa.

The United Nations Economic Commission for Africa (UNECA) has noted that Sub-Saharan Africa has recorded its worst economic performance with the region’s aggregate GDP only increasing by 1.1 percent year-on-year in the last quarter of 2016, on the heels of an equally weak 1 percent expansion in the third quarter of 2016.

“Growth is expected to have fallen to 1.2 percent in 2016 from 3.2 percent in 2015, which marks the region’s worst economic performance since 1993. The combination of low commodity prices, weak external demand, severe weather conditions and security problems took a large toll on economic activity in the region last year,” says the Commission.

The Economic Report on Africa 2017, which will be launched 23-29 March, examines how the continent can accelerate industrialisation as a vehicle for Africa’s structural transformation by harnessing opportunities arising from rapid urbanisation.

It is also intended to help policymakers identify and analyse the drivers, enablers and policy levers that will strengthen linkages between urban growth and industrial growth.

Eleven African countries, namely Ethiopia, Madagascar, Morocco, Nigeria, Congo Brazzaville, Rwanda, Sudan, Mozambique, Cote d’Ivoire, South Africa and Cameroon have been studied in the 2017 edition titled; “Urbanization and Industrialization for Africa’s Transformation” on how they are managing rapid urbanisation.

According to the Acting ECA Executive Secretary, Abdalla Hamdok, it is important that Africans start looking at the opportunities being created by the rapid urbanisation that is currently going on.

Most of Africa is still predominantly rural but the situation is changing rapidly, according to the report, and it is estimated that by 2035 about 50 percent of Africa’s population will be living in urban areas.

The report, the annual flagship publication of UNECA, urges Africans to take the green route to industrialisation, that it is an opportunity for the continent to achieve sustainable growth.

For 2016, Brent crude oil prices averaged around US$44 per barrel, down by 16 percent from 2015, while prices for many agricultural and mineral commodities remained weak, affecting the terms of trade of commodity exporters in Sub-Saharan Africa.

To add to that, capital inflows fell due to adverse external developments, where many countries were subjected to negative shocks domestically, such as the severe drought in agricultural production, particularly in Ethiopia, Mozambique, South Africa and Uganda.

UNECA further states that political instability, such as the security situation in Nigeria deteriorated with militants’ attacks on oil pipelines causing a substantial disruption in the county’s crude oil supply.

Angola and Nigeria, which are the region’s two largest oil exporters contracted at 0.2 percent and 1.8 percent, respectively, as they faced severe financial and economic strains.

“In both countries, a decline in oil production due to lower investment in Angola and militants’ attacks in Nigeria, was exacerbated by lower prices. Domestic demand weakened as lower revenues, related to a fall in both crude oil production and prices, forced large cuts in government spending,” added the UNECA.

In South Africa, the region’s second-largest economy, growth is expected to have fallen to just 0.4 percent in 2016 from 1.3 percent in 2015, reflecting the impact of lower commodity prices and a severe drought that damaged the agricultural sector.

Furthermore, the country continued to face heightened governance concerns, which inhibited investment.

Other commodity exporters, such as the Democratic Republic of Congo and Mozambique, struggled to adjust to the decline in prices last year, with growth slowing notably.

Also, Cote d’Ivoire, Ethiopia, Tanzania, Ghana, Uganda and Zambia’s economies, that are mainly agricultural exporters, decelerated in 2016.

But 2017 paints a more optimistic picture, according to UNECA, with economic experts forecasting the region’s GDP to increase to 2.9 percent this year.

The 2018’s economy for the region is projected to accelerate to 3.7 percent.

March 2017
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