Global Advocacy for African Affairs
Business/Economy

Africa’s Economy Forecast to Grow despite External Shocks

Africa’s economic growth remained stable in 2019 at 3.4 per cent and is
on course to pick up to 3.9 per cent in 2020 and 4.1 per cent in 2021, the
African Development Bank’s 2020 African Economic Outlook (AEO) has revealed.

The slower than expected growth is partly due to the moderate expansion
of the continent’s “big five” — Algeria, Egypt, Morocco, Nigeria, and South
Africa – whose joint growth was an average rate of 3.1 per cent, compared with
the average of 4.0 per cent for the rest of the continent.

The Bank’s flagship publication, published annually since 2003, provides
headline numbers on Africa’s economic performance and outlook.

The 2020 edition, launched at the Bank’s Abidjan headquarters, was
attended by former Liberian president Ellen Johnson Sirleaf, African ministers,
diplomats, researchers, and representatives of various international bodies.

Johnson Sirleaf commended the Bank for upholding the confidence of the
people of the continent “… because we trust you. As simple as that. Because we
trust you to share our vision. We trust you to understand our limitations.”

Referring to Africa’s fastest-growing economies, she said, “There are
stars among us…and we want to applaud them. We want to see more, particularly
for countries like mine, which have been left behind, so that more can be done
to give them the support that they need.”

In 2019, for the first time in a decade, investment expenditure, rather
than consumption, accounted for over 50% of GDP growth.

This shift can help sustain and potentially accelerate future growth in
Africa, increase the continent’s current and future productive base while
improving the productivity of the workforce.

Overall, the forecast described the continent’s growth fundamentals as
improved, driven by a gradual shift toward investments and net exports, and
away from private consumption.

East Africa maintained its lead as the continent’s fastest-growing
region, with average growth estimated at 5.0 per cent in 2019; North Africa was
the second-fastest, at 4.1 per cent, while West Africa’s growth rose to 3.7 per
cent in 2019, up from 3.4 per cent the year before.

Central Africa grew at 3.2 per cent in 2019, up from 2.7 per cent in
2018, while Southern Africa’s growth slowed considerably over the same period,
from 1.2 per cent to 0.7 per cent, dragged down by the devastating cyclones
Idai and Kenneth.

Urgent call to address Africa’s education, skills
mismatch

The 2020 AEO, themed Developing Africa’s workforce for the future, calls
for swift action to address human capital development in African countries,
where the quantity and quality of human capital are much lower than in other
regions of the world.

The report also noted the urgent need for capacity building and offers
several policy recommendations, which include that states invest more in
education and infrastructure to reap the highest returns in long-term GDP
growth.

Developing a demand-driven productive workforce to meet industry needs,
is another essential requirement.

“Africa needs to build skills in information and communication
technology and in science, technology, engineering, and mathematics. The Fourth
Industrial Revolution will place increasing demands on educational systems that
are producing graduates versed in these skills,” the report noted.

To keep the current level of unemployment constant, Africa needs to
create 12 million jobs every year, according to the report. With rapid
technological change expected to disrupt labour markets further, it is urgent
that countries address fundamental bottlenecks to creating human capital, the
report said.

“Youth unemployment must be given top priority. With 12 million
graduates entering the labour market each year and only 3 million of them
getting jobs, the mountain of youth unemployment is rising annually,” said
Akinwumi Adesina, African Development Bank President, who unveiled the report.

“Let’s look at the real lives beyond the statistics. Let’s hear their
voices, let’s feel their aspirations.”

Although many countries experienced strong growth indicators, relatively
few posted significant declines in extreme poverty and inequality, which remain
higher than in other regions of the world.

Essentially, inclusive growth — registering faster average consumption
for the poor and lower inequality between different population segments —
occurred in only 18 of 48 African countries with data.

“As we enter a new decade, the African Development Bank looks to our
people. Africa is blessed with resources but its future lies in its
people…education is the great equaliser. Only by developing our workforce will
we make a dent in poverty, close the income gap between rich and poor, and
adopt new technologies to create jobs in knowledge-intensive sectors,” said
Hanan Morsy, Director of the Macroeconomic Policy, Forecasting and Research Department
at the Bank.

The African Economic Outlook provides compelling up-to-date evidence and
analytics to inform and support African decision-makers. The publication has
built a strong profile as a tool for economic intelligence, policy dialogue and
operational effectiveness.

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