Africa continues to grow at a moderately rapid pace, despite weaker global growth

Africa entered the twenty-first century with promising economic prospects. Over the past decade, most African countries have enjoyed good economic growth relative to the continent’s historical growth performance and the average growth rate for the global economy. The average annual growth rate of real output increased from 1.8 per cent between 1980 and 1989 to 2.6 per cent between 1990 and 2000 and 5.3 per cent between 2000 and 2010. Furthermore, 12 countries had an average growth rate above the developing-country average of 6.1 per cent from 2000-2010, and two countries (Angola and Equatorial Guinea) had double-digit growth rates. Unlike its performance in the 1980s and 1990s, Africa’s average growth rate since the turn of the millennium has also been higher than the average growth rate of the world economy. The continent experienced a significant slowdown in growth due to the global financial and economic crisis of 2008-2009. Nevertheless, its average growth rate in the post-crisis period (2008-2012) was about 2 percentage points higher than that of the world economy.

Responding to emerging sustainable development challenges

Despite Africa’s recent growth performance, there are indications that countries on the continent are experiencing the wrong type of growth in the sense that joblessness is still widespread and growth has not led to significant reductions in poverty. One of the reasons for jobless growth in Africa is that it has not gone through the normal process of structural transformation, involving a shift from low- to high-productivity activities both within and across sectors. In the normal process of economic transformation, economies begin with a high share of agriculture in GDP and as incomes rise, the share of agriculture declines, and that of manufacturing rises. This process continues until the economy reaches a relatively high level of development where both the shares of agriculture and manufacturing fall and that of services rise.

The structural change observed in Africa has not followed this process. Over the past three decades, the continent has moved from a state in which agriculture has had a very high share of output to one in which the service sector, particularly its low-productivity activities, dominates output. This transition has taken place without any significant manufacturing development, which is critical to creating employment. It is therefore not surprising that Africa has experienced jobless growth over the past decade.

Although Africa has enjoyed relatively strong economic growth over the past decade, many of its countries are grappling with several development challenges ranging from food insecurity, Ebola, high unemployment, poverty and inequality, to commodity dependence, lack of economic transformation, environmental degradation and low integration in the global economy. Since the dawn of the new millennium, African Governments and the international community have adopted various initiatives aimed at addressing these development challenges and improving living conditions.

At the continental level, African Heads of State and Government adopted the New Partnership for Africa’s Development, which emphasizes African ownership of the development process and outcome, and calls for interventions in the following priority areas: agriculture and food security, regional integration and infrastructure, climate change and the environment, human development, economic governance, capacity development and women’s empowerment. At the international level, world leaders adopted the Millennium Development Goals, which called for, among others, a halving of the proportion of people living in poverty by 2015. There are also ongoing efforts by the international community to delineate and finalize the broad contours of the post-2015 development agenda within the framework of sustainable development.

While Africa has made some progress in achieving the goals set out in existing development frameworks, overall it has yet to realize the broad vision set out in these initiatives. It is still wrestling with extreme hunger and poverty, and unemployment and inequality have increased over the past decade (Economic Commission for Africa and Organization for Economic Cooperation and Development, 2013). Reversing this trend is a challenge that African policymakers have to address effectively in the short to medium term to enhance the likelihood of achieving the African Union’s vision of an integrated, prosperous and peaceful Africa.

Finally, in 2015, the international community will convene in Addis Ababa for the third International Conference on Financing for Development to assess progress made in the implementation of the 2002 Monterrey Consensus and the 2008 Doha Declaration on Financing for Development, address new and emerging issues and reinvigorate and strengthen financing for development. For Africa, this will mean addressing three key interrelated issues: enhancing domestic resource mobilization, plugging leakages to tackle illicit financial flows and enhancing flows of ODA. At the international level, it will be necessary to consider more rigorous compliance criteria in meeting existing ODA commitments. Clearly, catalysing investment will be essential in reinvigorating and strengthening finance for development in Africa.

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The contents of this report are based on the Economic Development in Africa Report 2014: Catalysing Investment for Transformative Growth in Africa, launched on 3 July 2014. All references to “dollars” are United States dollars. Sub-Saharan Africa: unless otherwise stated, this includes South Africa. North Africa: Sudan is classified as part of sub-Saharan Africa, not North Africa.