Will Africa keep booming or collapse again? Here’s how to create our own future

Next week, over 2,000 people from around the world will gather in Kigali for the African Development Bank’s Annual Meeting. Among those attending will be finance ministers and central bank governors from the Bank’s 54 regional member countries, along with representatives of development agencies, the private sector, non-governmental organisations, civil society and the media.

I will be there too, with my colleague Yaw Ansu, chief economist of the African Centre for Economic Transformation, the think tank I founded six years ago in Ghana. Together with the assembled delegates, we shall consider the meeting’s official theme: “The next 50 years: The Africa we want”.

This is a timely question. This year, the African Development Bank will be marking its 50th anniversary, while Malawi and Zambia will celebrate 50 years of Independence.

Many other African countries have recently celebrated their half-century of freedom from colonial rule, including Kenya (2013), Uganda and Rwanda (2012), Nigeria (2010) and my native Ghana (2007).

Indeed, by the mid-1960s, most African states were independent, making 2014 a good moment to look back and think about what we have achieved since then. And to look ahead and ask where we’re going.

At first glance, the picture looks positive. African countries are growing at a record rate, with six of the world’s 10 fastest growing economies in the past decade being in sub-Saharan Africa.

Apart from a relatively small handful of states where conflict is affecting development, the economic signs are good, and in some cases exceptional.

In 2012, Sierra Leone had an impressive 17.2 per cent growth spurt, and Angola, Nigeria, Ethiopia and Rwanda have all consistently exceeded 7 per cent for the past few years.

Buoyed by reforms in macroeconomic management, high commodity prices, and expanding exports of extractives, this growth has created a spirit of optimism, encouraged foreign investment, and provided an incentive for young Africans to return home after being educated abroad.

Rising incomes among some sectors of society have also supported the emergence of an African middle class. The narrative peddled by many is that of “Africa Rising.”

However, while this growth and its attendant advances are welcome, the headline picture disguises both residual problems and inherent vulnerabilities.

Recent economic growth has not eliminated inequalities between or within countries, and has done little to reduce hunger (a quarter of Africans are malnourished).

While the proportion of Africa’s people living in extreme poverty is falling, the total number of extremely poor people rose by more than 20 million between 2002 and 2012. Youth unemployment threatens instability, and while access to education has improved significantly, standards are still low.

This is not the first time that the continent has experienced growth of an unequal or unstable nature. Indeed, in the years after Independence, the region’s economy was booming.

But then GDP growth fell in the mid-1970s following the first oil price shock, and the 1980s and the first half of the 1990s saw incomes fall and poverty increase.

As we embark upon the next 50 years of post-colonial rule, it would be prudent to ask how we can prevent the pattern repeating itself.

This is what my organisation’s inaugural Africa Transformation Report aims to do. In a nutshell, the report argues that while recent economic growth is welcome, there is a danger that in its current form it will not sustain development on the continent.

The report finds that African economies are still narrowly based on the production and export of unprocessed agricultural products, minerals, and crude oil.

There is little manufacturing — indeed, in many countries, the share of manufacturing in GDP is lower now than in the 1970s.

Competitiveness in global markets, apart from crude extractive products, is low due to poor productivity and underdeveloped technology. And in most countries, more than 80 per cent of the labour force is employed in low-yield agriculture or informal activities in towns and cities.

To ensure growth is sustainable and improves the lives of the many, governments need to address these structural weaknesses, and deliberately and vigorously promote economic transformation, or growth with DEPTH.

This acronym stands for diversification of production and exports; export competitiveness; productivity increases; technological advances; and human wellbeing — brought about in particular by expanding formal employment and raising incomes.

To achieve this, African governments will need to devise and implement creative strategies, unique to each of their country’s circumstances.

Investment in education and skills training, and infrastructure will be key for most, as will financial reforms, and the creation of a business-friendly environment. Strategic support for sectors that have a comparative advantage either regionally or internationally will pay dividends.

There are four areas where “low-hanging fruit” can be harvested. One is making the most of a growing youth population, abundant labour, and low wages by promoting labour-intensive manufacturing.

A second is adding value to agriculture by processing traditional crops such as coffee, cocoa, and cotton, and scaling up exports of higher-value items like fruit. A third is improving governance and management of the extractives sector. And fourth is boosting tourism.

To achieve this and to sustain growth with DEPTH, governments will also need to invest in their own capacity to manage transformation.

They will need to devise national plans, and allow themselves to be held to account for implementing them. As Jomo Kenyatta said 50 years ago, we must “make ourselves the architects of the future.”

The same remains true today and I look forward to discussing how we do this with my fellow delegates in Kigali next week.

KY Amoako is president of the African Centre for Economic Transformation