prospects do appear favourable in the medium-term driven
by continued prudent macroeconomic management and strong domestic demand,
underpinned by increasing public and private investment especially in
infrastructure in most countries. Growth is
expected to reach 3.6% in 2018 and 3.8% in 2019.
slow growth recovery in advanced and emerging economies and tightening of
financial markets in the developed economies may continue to negatively affect
export demand and curtail FDI inflows to Africa. Public
debt levels are sustainable, but remain high, calling for the need to invest
funds borrowed into productive sectors to generate returns that could allow
timely repayment and enhance the countries’ growth prospects. Some countries
may also face problems in repaying their debts as they are caught in an
environment of low growth prospects, widened fiscal deficits, weaker
currencies, and lower export revenues.
Given the above current
economic outlook on the continent, promoting industrialization in Africa should
continue to meet the requirements of private businesses, in particular, SMEs
that are the backbone of the private sector across the continent. The continent
undoubtedly needs to promote “Made in Africa” in which the private sector, in
particular SMEs, has a crucial role to play.
policies should be coherent with other policies including trade policies to
promote value addition and economic diversification. These policies could
include ‘smart protectionism’, of which nascent industrial sectors can develop
productivity through learning-by-doing, technology upgrade, support from
leading firms and reducing tariffs on imported inputs to industrial sectors, as
well as reducing barriers to imports of services that are inputs to the
industrial sector. The industrial policies should also pay attention to
developing producer services, such as design, marketing and branding that
promote the “Made in Africa”.
Mobilizing finance to
support the private sector in Africa cannot be overstated. Promoting financial
markets development, that harnesses domestic resources for long-term
development, is accessible in an inclusive way to the range of economic actors
would be a significant contribution to improving the capacity of Africa’s
private sector to participate in Africa’s industrialization and value chains
development. At the regional and continental levels, harnessing cross-border
financial flows from Africa’s Diaspora that remains a consistent source of
external inflows could be crucial for the continent’s development. Initiatives to
enhance the use of remittance channels, cutting the associated costs and
mobilizing remittances for investment purposes, could help channel the
Diaspora’s finance into industrialization process of African economies.
It is also important to
stress that our continent will have to actively promote all viable means of
domestic as well as foreign resource mobilization. This includes harnessing
excess liquidity at banking sector for development (particularly in long- term
development projects), stemming illicit financial flows out of Africa, tackling
tax evasion, and challenging transfer mispricing.