Economic growth and development is an aspect that every nation around the world strives and attempts to attain, as it is defined in simple terms to mean the increase in the production of goods and services. Economic growth cannot be overlooked because of how important it is for a country’s sustainability. According to the OECD, economic growth is one of the most important and powerful tools for the improvement of life and reducing poverty in developing countries such as the different countries in Africa. Economic growth determinants are majorly divided into four namely natural resources, Human resources, capital formation, and technology.
Looking at the determinants of Economic growth and theState of the African Economy, it is evident that the African economy is diverse and consists of trade, agriculture, and it is a rich economy with abundantnatural resources, industry, and human capital resources that have not been fully tapped into, UNEP has shown that 40% of the world Gold is found in Africa. The continent also has the largest reserve of uranium, petroleum, platinum, and diamonds examples In Nigeria there is natural gas, limestone, etc In South Africanatural resources like coal, uranium, and titanium, etc can be found. Africa has 54 countries with approximately 1.3 billion people and according to the United Nations, 75% of Africa’s population is below 25 despite these resources, Africa has experienced various levels concerning economic growth across the different countries in some countries it has dwindled.
According to the World Bank on Africa, In 2022 Sub-Saharan Africa’s economic growth dropped to 3.6% from 4.1% in 2021, some of which have been caused by several challenges such as debt crises, corruption, unemployment, income inequality, poor infrastructure, trade blockades, backward technology, etc. According to USAID Nigeria, economic potential and growth areconstrained by different structural issues such as limited foreign exchange, inadequate infrastructures, barriers to trade, etc. Also in some other African countries, there isevidence of economic growth e.g. according to IMF Ethiopia is a fast-growing economy, also Libya at 17.5%, Senegal at 8.3%.
An important question that comes to mind is how can Africa’s potential be unlocked and tapped into to achieve Economic growth. To answer this question, There is a need for strategies to be put in place to unlock Africa’s potential for sustainable economic growth, that is the place where policy reforms, laws, regulatory frameworks and investment initiatives come into play. In different countries relating to the economy some of these policies and strategies can boost economic development. These policy reforms are different in each area and sector of the economy, there are policy and strategic reforms in the trade, agriculture, industry, human resources, education sector which this article will look at. It is important to note these policy reforms help to foster functioning institutions in the economy of different African economies through rules , laws and regulations which in turn addresses any problem and improves the chances of achieving economic growth.
An important aspect of most African economies is Agriculture. It plays a significant role in the economy of different countries in Africa, and it cannot be overlooked. A way that agricultural transformation can be achieved and as well aid economic growth is if the government boosts agricultural productivity, promotes sustainable farm practices, improves the value chain, as well as ensures proper irrigation systems are put in place. This would aid productivity, provide jobs and also boost the economy. This can be done through policies and strategies.
There has been economic growth in agriculture. In Africa 2021/2022, Africa cocoa beans production was estimated to be around 3.6 million tons and the top two producers were Cote d’Ivoire and Ghana. Globally the biggest processors of cocoa in 2021/2022 was Cote d’ivoire and the Netherlands. Looking at some examples from West Africa, In Ghana, Cocoa Industry has become very successful, According the Shahbandeh of Statista, in 2021/2022 Ghana produced an estimated 689 thousand metrics tons of cocoa beans, statistics has shown that it would be higher in 2022/2023, which is estimated to be 750 thousand metrics tons. In 2021, from January to September, the export value of cocoa beans and cocoa products from Ghana was estimated to amount 2.3 billion U.S. dollars etc. This shows the presence of economic growth and also the chances that the investor can invest in Ghana cocoa industry. Part of the growth has been attributed to the Ghanaian economic development policy, part of which aids to boost local economies, restore economic productivity, promote job creation , ensure good governance to mention a few.
Also, according to the Food and Agriculture organization, Cote D’ivoire is the second largest economy in West Africa, and agriculture is a main activity and an important aspect of the economy. The country is the net/top exporter of important cash crops such as cashew: sixth largest coffee producer, the world’s largest producer of cocoa, the world largest cashew producer, largest producer of rubber in Africa , palm oil is also produced etc. Cote D’ivoire and about two-thirds of its population are highly dependent on agriculture. There has been evidence of Agricultural expansion into other food crops and cash crops and agriculture remains the engine for economic growth and development. According to IFAD, in 2014 it generated more than 22 per cent of GDP. According to the African Development Bank group, the GDP of Cote D’ivoire in 2021 was 7.4% , this dropped to 6.7 % in 2022 due to covid, Russia Invasion etc. It is estimated that in 2023, GDP is projected to grow to 7.2% which would be fuelled by trade , Agriculture, agribusiness , telecommunication to mention a few. Cote D’ivoire in recent times has experienced an increase in foreign direct investment, and economic growth since 2011. Cote D’ivoire with regards to agriculture has an enormous potential; it also employs about 70% of the active population.
Additionally, East Africa agricultural sector is not left out and there have been records of progress looking at Kenya’s thriving horticulture, it is one subsector of agriculture that is thriving in Kenya, and is an important contributor to Kenya’s Gross Domestic Product, records has shown that it contributes 26% to the GDP and also is a source of employment for the population. According to the Horticultural Crops Development Authority, horticulture farming began in Kenya during British colonial rule and it has grown bigger even after independence. One of the policies that guide this sector focuses on the promotion, development and regulation of Kenya’s horticulture industry. The Horticulture industry boasts of the production of Tree fruits , medicinal and aromatic plants , vegetables, flowers and ornaments plants. according to statista, the Kenyan horticulture industry in 2021 earned an estimated 158 billion Kenyan shillings which is estimated to be 1.2 billion U.S. dollars .A major problem that has faced this industry is climate change, poor road network/transportation and poor storage and marketing system etc which the government and individuals in the society is attempting to address. What cannot be overlooked is that for over three decades, Kenya’s horticulture sector has shown records of steady growth and development, it has become a great commercial venture which is largely export oriented, and this has led to increased demands abroad.
Additionally, in Africa as a whole there have been Introduction of initiatives relating to agriculture. An example of an Initiatives in line with agriculture is the Alliance for a Green Revolution in Africa (AGRA) initiated the African Green Revolution, which aimed to promote innovation in agriculture and enhance income generation and food security. One of the challenges in agriculture is investment, if investment either from NGOs or governments can be put in place, then the different aspects of agriculture can be invested in, an example is agricultural research, farm mechanisation, and tools and agri-business . Also African agriculture is constrained by high marketing costs due to the high cost of transportation, so if the issue of transportation is tackled and a trade policy is introduced then it is a step in the right direction.
Some key strategies can unlock Africa’s potential for sustainable economic growth. One of which is Infrastructural development. To implement infrastructuredevelopment, certain infrastructures need to be developed such as transportation systems, water supply systems, sewage, energy, telecommunication networksetc can be effectively put in place. The potential benefit of this is that companies and individuals would invest in the economy because of the working infrastructures, then it would have an impact on Africa’s economic growth and development. Gap in Infrastructure development is a challenge facing different African countries, but this is being tackled through the creation of infrastructure projects and initiatives that are implemented. An example is the construction of roads, transportation system etc. There is the completed Kazunguka Bridge that connects Botswana and Zambia this was opened in May 2022, there is also a construction of Lamu Port-South Sudan-Ethiopia Transport corridor (LAPSSET).
Policies and strategies have been implemented in the infrastructure sector to aid economic growth, an example is East Africa where Ethiopia is located. Ethiopiainvestment in manufacturing and infrastructural projects is one to be looked at. Ethiopia has been recognised as one of the fastest growing economies in Africa, it takes a major interest in developing its infrastructure and an example is the Grand Ethiopian Renaissance Dam project (GER) in Ethiopia this is a $5 billion project, This project aims to promote industrial growth as well as provide a stable energy supply. Other projects relating to manufacturing and infrastructural development are evident in Namibia, Africa. According to CNN is the Namibia 40 hectares port terminal, the Kenyan standard Gauge railway which was completed in 2017 which journeys between 2 cities between Mombasa Kenya capital and Nairobi.
Furthermore, with regards to infrastructure, there is a need for the energy sector to be overhauled, as the current state is faced with the challenge of reliability and insufficient capacity for the generation of electricity. If real development and growth are to take place there is a need to improve infrastructure and tackle the challenges, according to the IMF these challenges include decline In partnership, lack of finances, changes in mismatch In demand and supply in infrastructure etc. Thus there is a need for infrastructure policy, investment and collaboration with private operators and firms.
An important Strategy that can drive sustainable economic growth is Human capital investment. This deals with investing in people and citizens which will aid the quality, lifestyle, and workforce of an individual. Investing in human capital would help to assist the potential earnings of the population which would in turn help to tackle poverty which is a challenge to economic development. Human capital investment is significant as an economic value of making humans become human resources. It is significant as it would lead to the development of abilities and qualities to influence an increase in productivity, improve social well-being, etc Thus to drive sustainable economic growth, Africa needs to invest in the intellectual, social, and emotional capital of the people focusing on education, healthcare services, vocational training, develop problem-solving skilled workforce. The potential benefit is the presence of a skilled workforce who has innovation at their sleeves anda high increase in the participation rate of their workforce.
Different Initiatives and programs have been introduced to aid human capital investment examples such as the World Bank’s African Human Capital Plan ( HCP) launched in 2019, In Rwanda, an education reform was put in place to educate and enhance productivity and digital literacy, this is the “One Laptop per Child” which has also improved access to education. In Nigeria attempts have been made to increase Human capital, this is seen in the introduction of the 1976 Universal Primary Education Scheme, the Implementation of the Education for All in 1999 and most recently in 2020 the National HCD programmer which focused on health, nutrition, education and labour force participation etc. The challenges faced by Africa to investing in human capital are lack of funds, corruption, and disinterest.
Improving and aiding technological advancement and fostering innovation is an important area to focus on as it can aid economic growth and situate Africa in a global scene as a tech hub. Technological advancement.The benefits of this are that the people would have high digital skills, and would have introduced different innovations and technologically driven solutions that would tackle challenges that would lead to economic growth. Several initiatives have been introduced in Africa and different African countries to Aid technology and innovation, an example is African Union’s Agenda 2023.
Also in some East African countries like Kenya, a new tech hub project is ongoing which is called the Konza Technological City which is part of the vision 2030, an important initiative in the technology and communication sector to push economic growth. Kenya ICT policy aims to improve operational efficiency and information exchange, the goal is also to provide Kenya access to information technology as well as including ICT in the education programmes in the country. According to Techpoint Africa, the Kenyan government in an attempt to aid the ICT sector through the National information, communication and Technology (ICT) policy only companies with at least 30% substantive Kenyan ownership can be licensed to provide ICT service; it has requested that foreign tech companies give 30% ownership to Kenyans. The Kenyan Tech ecosystem has been recorded to have grown exponentially and there is also a clear regulatory framework that makes provision for entrepreneurs and aid partnership and attracts investment.
Also, with regards technology, Nigeria has records of a blooming tech sector. There are figures showing the presence of advancement and how it has contributed to economic growth. There are records of increase of startups and development of tech hubs , most especially in the major cities like Abuja, Lagos, Port Harcourt etc. These hubs have provided job opportunities, attracted investors and partners like Facebook owner Mark Zugarburg, The Twitter founder Jack Dorsey. Governments have attempted to support the tech sector through the introduction of policies which has led to different governmental programs, an example is the 2013 Youth Enterprise with Innovation in Nigeria ( YouWIN ) program, which provided funding, training , mentorship etc. Other initiatives have been introduced that aimed to improve digital literacy , infrastructural development etc. This shows that in Nigeria, the future of the Tech sector and tech hubs has potential and it cannot be overlooked as investors are now interested in Nigeria startups in particular and Africa in general.
Furthermore, Rwanda has focused on technology and innovations , and has made progress in becoming a tech hub by implementing different policies that aim to attract investors. there is also the presence of E Commerce ,tech startups in other African countries that have contributed to economic growth in Africa example is the Takelot in South Africa, Tonaton in Ghana, Jumia, Jiji and Konga in Nigeria and across Africa, Kilimall , Twiga foods, Copia global to mention a few. According to Startuplist, E-commerce across Africa has received funding , deals and investors across Africa. Ecommerce has also been a provider of employment to the citizens of different African countries.
It is important to note that Sustainable resource management is a strategy to consider for economic growth as Africa is blessed with different natural resources such as oil, gas, minerals, and agricultural produce but there has been the challenge in utilizing them, carrying out sustainable practices, and also a lack of funds. If the African government invests In renewable energy, creating a good structure that aids the practice of mining responsibly and efforts towards conservation. The significance is that when there is a structure and a possible way to sustain and manage Natural resources, this would create businesses and also attract foreign investors and private investment.
In Southern Africa and Africa generally, South Africa is the largest mining industry, introducing and implementing policies that services and aids South Africa’s mining industry, this is because the mining industry is very important as it looks at how the company in 2007 represented 18% of South Africa GDP. In 2021 it contributed an estimated 219.5 billion rand which is about 12.8 billion US dollars. In South Africa, over 10 minerals and natural resources are mined, examples include coal, diamonds, Lithium , copper , ire ore ,gold, platinum etc. South Africa is the third largest coal exporter in the world and contains the largest manganese and platinum reserves . The demand for the resource and commodities in the mining sector is high and it has attracted investors from far and wide. There are regulations put in place to regulate mining in which the Mining regulation branch is in charge of, it ensures that minerals and the mining sector is regulated and most especially to promote economic growth and sustainable development.
Additionally,other African countries whose mining sector is important and aids economic growth is that of Botswana diamond export and they have a very important strategies and regulatory framework present . Namibia is also recognised for its renewable energy which has contributed to economic growth and also attracted investors like Europe interest In Africa’s Renewable energy and resources
There is also a need to diversify the economy in different African countries in order to access different resources to aid economic growth. The utilisation of natural resources can thus contribute to economic growth through exports, eg. As seen in OEC yearly trade South Africa exports is something to take note of, it changed by $44.6 billion from $98.8billion in 2016 to $143 billion in 2021 with platinum at $ 24.5 billion, gold at $ 20.1 billion, Iron Ore at 7.68 billion, Diamonds at $7.02 billion and Coal Briquette at $ 6.72 billion. Also, when resource management is in place, there would be revenue generation and job creation.
Economic growth is measured majorly by the growth rate of a country’s Gross Domestic Product (GDP) and there are several factors which contribute to economic growth one of which is investment in skills development, entrepreneurship and small business. These strategies and policies related to economic growth are important as it would have potential impact on Africa’s economic development and it would help aid economic growth which will lead to high standard of living, infrastructure development, foreign direct investment, poverty reduction, enhance global competitiveness to mention a few. Additionally, African countries have had an increase in trade and investment which is beneficial to global partners. There is evidence of China’s infrastructure projects across the continents. Africa can become a major player and with the presence ofeconomic growth, it can contribute to economic stability , once there economic stability more investors, partners and multinational companies would be attracted.
Once the economy of each country is stable and there is consistent economic growth, it would be easier to attain regional integration, as there is a need for Regional cooperation and integration between the different countries to boost trade and economic growth. The implementation of Regional integration can be carried out through intra – African trade as well as collaborative initiatives. An example of this is the African Continental Free Trade Area agreement, it came into effect In January 2021.
Furthermore, there are several challenges and obstacles that have hindered economic in Africa, there is the issue of corruption which has affected NIgeria’s economy,Inadequate infrastructure, Political instability and governance as seen in most recently Senegal, Mismanagement eg due to mismanagement, Zimbabwe has been faced with difficulties, Lack of access to financing etc.
Possible ways in which the challenges can be effectively addressed is that first the continent and regions should have a unifying and codified means to address certain issues like war. also all countries need to look inward and tackle these challenges. Some countries have attempted to tackle these challenges for example to tackle corruption, Anti- corruption measures have been put in place, example is the EFCC in Nigeria. There is a need for the implementation of a transparent policy framework. There is a need for the presence of successful governance and institutional reforms and policy. Some of these solutions have been implemented by some African countries , which has led to the improvement of the business environment , attracted foreign investment and has fostered economic growth in the specific African country.
Conclusion
Several strategies have been mentioned in this article, these strategies are important and are related,infrastructures development plays a role in agricultural Transformation for example if infrastructure development is considered and infrastructures such as transportation systems, energy, etc can be put in place and effective, then it would have an impact on Africa’seconomic growth and development there a little evidenceof the fastest African growing economy in Africa as of2023 is Libya at 17.5%, Senegal at 8.3% etc this is because some of these strategies are implemented despite the challenges of high Inflation which is predicted that in 2023 Inflation might remain high at 7.3%, Low investment growth, debt etc. Africa has important potential, natural resources, minerals, human capital that if utilised well will aid economic growth and situate Africa Countries as part of the industrialised countries of the world.
Credit: “this article was first written for ‘Insight Africa in 2023,’
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