Amidst ongoing global challenges and fast-paced transformations, Africa is facing pressing issuessuch as climate effects, unsustainable debt burdens, systemic inequalities, and global financial imbalances.
For instance, annual losses from climate disasters are estimated to range between $290 billion and $440 billion, while the financing gap for Africa’s Sustainable Development Goals (SDGs) has surged to $1.3 trillion annually.
This happens at the time Africa’s external debt surpassed $1 trillion in 2023, and nearly 476 million Africans live in poverty, with 149 million falling into this bracket recently due to cascading climate and economic shocks.
At the African Economic Conference 2024 themed "Securing Africa’s Economic Future Amidst Rising Uncertainty,” Claver Gatete, Executive Secretary of the United Nations Economic Commission for Africa (UNECA), suggested five interlinked solutions that should guide governments’ efforts to transform the continent’s economy.
1. Harnessing value-addition
While Africa is home to majority of the globe’s resources, it is still lagging in industrial production and most countries are net importers of the very products whose raw materials they export.
Gatete emphasised that the continent’s future lies in its ability to transform resources into value-added products, hence, calling for building regional value chains across key sectors.
Currently, there are at least 94 value chains identified in 23 sectors across an estimated 240 Special Economic Zones in Africa.
He pointed to different models that can be replicated in other African countries including Botswana’s beef industry, Ethiopia’s leather production, and Ghana and Côte d’Ivoire’s cocoa sectors.
Additionally, the critical mineral industries could benefit from the expertise of DR Congo and Zambia’s battery and electric vehicle initiative, and become the lead in green technologies.
"Imagine the transformative potential of scaling Africa’s value chains. In addition, Africa’s renewable energy capacity, which is currently at less than 10 per cent utilization must be unlocked to power its industries and households,” he said.
"As we build these value chains, we will be able to secure livelihoods, create jobs and position Africa as a global economic force,” he added.
2. Attracting private investment
For the continent to move beyond dependency on aid, it must become a magnet for private investment by putting in place a de-risking instruments.
Through strengthened governance, transparent systems and innovative insurance mechanisms, we can mitigate investor risks, he said, giving an example of Rwanda’s vaccine manufacturing facility which demonstrates the power of local value creation in attracting global partnerships.
"We must endeavor to replicate such successes across sectors and regions on the continent,” Gatete remarked.
3. Boosting intra-African trade
The economist said that fast-tracking the implementation of the African Continental Free Trade Area (AfCFTA) is central to economic integration efforts.
According to him, there cannot be integration without the seamless movement of people, goods and services, something that governments have to address to remove barriers to intra-African collaboration.
4. Restructuring global financial structure
African leaders continue to push for reform of global financial architecture which is said to be unfit for purpose. This means that, within the current structure, Africa is marginalized in decision-making, trapped by unsustainable debt structures, and underserved by climate finance mechanisms.
Gatete notes that a suitable financial structure should prioritize SDG financing, climate adaptation, and equitable growth, however, this should be coupled with scaling up domestic resource mobilization and expanding concessional finance with innovative instruments like green bonds, blue bonds and sustainability-linked bonds to ensure Africa’s resilience and financial sovereignty.
5. Transforming tax systems
When it comes to taxation systems across the continent, he pointed out that Africa’s tax-to-GDP ratio is currently at 15.6 percent, far below the global average.
"Increasing this by even a few percentage points could generate billions in revenue. We must modernize our tax systems, broaden our tax bases to include the informal sector, harness digital technologies to ensure efficiency and seal the loopholes for illicit financial flows,” he said.