WEF calls for double digit growth in Africa

Any economic growth below 10 percent is okay but not good enough to deliver what Africa needs most: sustainable development. The World Economic Forum on Africa, which opened, yesterday, in Cape Town, South Africa, says nothing short of double digit growth can help achieve that feat. More than 1,000 participants that include economists, policymakers and scholars from more than 75 countries and 600 organisations across the world are in South Africa to brainstorm on how Africa can achieve double digit growth levels. The challenge particularly resonates with Rwanda’s second Economic Development and Poverty Reduction Strategy (EDPRS II), which targets 11.5 per cent annual growth and middle income status by 2020. But the country’s ambitions faced a major setback after the 2013 economic slump although it started recovering last year. Rwanda’s real GDP growth slowed to 4.6 per cent in 2013 from 7.3 per cent in 2012 due to the lower-than-projected performance in agriculture and aid-related delays in the implementation of strategic public investments. The country’s economic outlook is brighter with government, World Bank and the African Development Bank (AfDB) all expecting growth in 2015 to be closer to 7.4 per cent from the 7 per cent projection last year, with services and better agriculture productivity at the vanguard of that renaissance. Although Rwanda’s projected growth this year is well above the continent’s average of 5 per cent, it’s not strong enough to support the country’s set growth targets. Finance and Economic Planning minister Claver Gatete and central bank governor John Rwangombwa, who are attending the summit, are expected to take tips from their counterparts on how to better accelerate growth back home. Challenges The onus of attaining middle-income growth has been bestowed upon African leaders with experts urging them to address systemic structural challenges in order to boost investment, enhance competitiveness, strengthen risk resilience and harness opportunities arising from technology adoption in all sectors. Investment to enhance job creation is particularly a top priority for the continent, a subject to which an entire session was dedicated yesterday, with panelists discussing how Africa’s youth can take ownership of their future by creating their own jobs. There couldn’t have been a better place than South Africa to discuss youth and jobs since Africa’s second largest economy has been rocked by xenophobic attacks in previous weeks as jobless youth turned their frustration on African migrants. During discussions on investment in Africa, attention was drawn to a new study that found that 80 per cent of the top brands in the continent are actually not African, calling for more efforts to develop Africa’s private sector to enhance indigenous brands. Oxfam executive director Winnie Byanyima said Africa’s economic rise could leave too many behind unless the continent tackled inequality and poverty. Poverty levels on the continent remain high even as countries register impressive growth levels. A take-home quote from yesterday’s sessions was made by a participant about the irony of a wealthy continent but with high poverty levels; because while the continent is rich in natural resources, it is poor in human resources, hence need for more investments in the area. More than 2.2 billion people worldwide were either near or living in poverty, according to a 2014 report by the United Nations. The majority are in Africa. The argument is that faster growth of double digits can help Africa attain sustainable development levels to liberate millions of Africans currently trapped in poverty. Double digit growth is also tipped to help keep up with its investment levels to support job creation efforts on a continent that boasts the world’s largest youth demographic with its working-age population expected to double to one billion in the next 25 years. Benefits of double digit growth With double digit growth, experts also argue that it will help to diminish Africa’s vulnerability to price fluctuations, capital market volatility, mounting public debt, climate change and persistent development challenges. Ministers Gatete, Geraldine Mukeshimana (Agriculture) and Jean-Philibert Nsengimana (Youth and ICT) and central bank governor Rwangombwa are among the delegates participating at the WEF-Africa summit to put all that is discussed in context for Rwanda’s benefit. Rwangombwa was listed as one of the speakers at yesterday’s session on the future of African capital markets aimed at discussing ways of deepening and broadening African capital markets that currently attract about 1 per cent of global private equity flows. Today, Minister Gatete is expected to be among the expert speakers on the subject of closing the economic equality gap in Africa where he will share Rwanda’s experience of poverty reduction through inclusive economic policies in the past decade. Other Rwandans speaking at the forum include Donald Kaberuka, the outgoing president of African Development Bank (AfDB), who will speak about meeting Africa’s infrastructure financing gap that currently requires $93 billion every year. However, only half of the money is available, leaving the continent with a staggering annual deficit of $42 billion.Africa50, a new effort by the AfDB to raise money to finance Africa’s infrastructure, will be highlighted during the summit where it will enjoy the attention of many potential investors. The fund’s founding shareholders have so far raised $700 million and there are plans of hitting the market to generate more money from private investors. editorial@newtimes.co.rw

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WEF calls for double digit growth in Africa