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WEF report says Africa needs urgent competitiveness boost

04 May 2017
Financial Nigeria

Summary

If current policies remain unchanged, fewer than one-quarter of the 450 million new jobs needed in the next 20 years will be created.

A panel of World Economic Forum Africa 2017

The ability of sub-Saharan Africa’s economies to generate enough jobs for its young and growing population rests on the successful implementation of urgent reforms to boost productivity. This is the key finding of the World Economic Forum Africa Competitiveness Report 2017, released today.

Competitiveness is defined by the report as “the set of institutions, policies and factors that determine the level of productivity – and hence future prosperity – of a country.”

The biennial report comes at a time growth in most of the region’s economies has been slowing after a decade of sustained growth, and is likely to stagnate further in the absence of improvements in the core conditions for competitiveness.

Compounding the challenge to Africa’s leaders is a rapidly expanding population, which is set to add 450 million more to the labour force over the next two decades. With the existing policies, only 100 million jobs look set to be created over the next 20 years.

Africa’s young, dynamic population does, however, possess the potential to lead an economic revival in the region, backed by targeted long- and short-term reforms in key areas, the report finds.

The long-term priority action areas for improved competitiveness, according to the report, include strengthening institutions, improved infrastructure; greater adoption of technology; and developing the right skills.

The short-term action needed include prioritizing sector-specific reforms in labour-intensive sectors such as agri-business, construction and micro-enterprises; targeted support for vulnerable regions and/or populations in fragile countries; open trade policies to foster regional economic integration; developing value-chain links to extractive sectors to encourage diversification in resource-rich countries; and increase housing construction through investment, better urban planning and less bureaucracy.

“Removing the hurdles that prevent Africa from fulfilling its competitiveness potential is the first step required to achieve more sustained economic progress and shared prosperity,” said the World Economic Forum’s Richard Samans, Head of the Centre for the Global Agenda and Member of the Managing Board.

“To meet the aspirations of their growing youth populations, African governments are well-advised to enact polices that improve levels of productivity and the business environment for trade and investment,” said the World Bank Group’s Klaus Tilmes, Director of the Trade & Competitiveness Global Practice, which contributed to the report.

According to Abebe Shimeles, Acting Director of Macroeconomic Policy, Forecasting and Research Department at African Development Bank, “African cities have to update their urban plans, taking into account demographic and economic developments in the last decades. This is crucial to address the shortage of urban infrastructure and availability of land for residential housing. This is important as massive investment is needed for the continent to lower the housing backlog, thereby improving the lives of urban residents, and to create employment for the Youth.”

More than 1,000 participants are taking part in the 27th World Economic Forum on Africa in Durban, South Africa, from 3 to 5 May 2017, on the theme, Achieving Inclusive Growth through Responsive and Responsible Leadership.

The Africa Competitiveness Report combines data from the Forum’s Global Competitiveness Index (GCI) with studies on employment policies and city competitiveness. It is jointly produced by the African Development Bank, the World Bank and the World Economic Forum.


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