Forum Africain de la Finance
Africa’s post-independence leaders looked to state-led, import substituting industrialization as the key to rapid economic growth. But, the industries they created were frequently uncompetitive and unsustainable, and efforts to spur industrial development in Africa largely vanished with the economic collapses of the 1980’s and 1990’s. In contrast to most of the developing world Africa has “deindustrialized”.
Since the 1980s industrial production and exports in most African economies have declined in relative importance, diversity, and sophistication. Africa’s share of global manufacturing production (excluding South Africa) fell from 0.4 percent in 1980 to 0.3 percent in 2005, and its share of world manufactured exports from 0.3 to 0.2 percent. Africa's share of manufacturing in GDP is about one third of the average for developing countries, and in contrast with developing countries as a whole, it is declining. Per capita manufactured output and exports are less than 20 and 10 per cent of the developing country average, respectively. Today, Bangladesh alone produces as much manufacturing value added as the whole of sub-Saharan Africa, excluding South Africa.
The creation of a conducive economic environment for resilient pro-poor growth is one of the critical needs facing African economies today. In this context, the role of trade and investment as prerequisites of sustainable economic development and poverty reduction cannot be overemphasized.
Forecasting Africa’s economic growth prospects, Goldman Sachs, an investment firm, predicts that Africa’s real growth output for the continent as a whole could accelerate to 5% during the next ten years, decline to 4.6% for five years and then have close to a 4% growth rate until after 2030. If these predictions prove to be correct, this projected growth rate will have a major impact in reducing poverty and improving the quality of life for Africa’s citizenry.
On the one hand, trade can be a powerful tool for promoting sustainable economic growth and poverty reduction, if it contributes to a process of development through which a country’s resources are effectively used to create wealth and raise living standards. Bangladesh provides an example of “virtuous trade” whereby export expansion accompanied by growth in private consumption has translated into increases in living standards for over a decade (1990–2000).
Aid can effectively deliver pro-poor growth when properly targeted and administered. However, while donor countries should pursue practices that increase the impact of their official development assistance (ODA) such as untying aid, increasing transparency, and sourcing goods and services in recipient countries, LDCs should make concerted efforts to integrate ODA into their national planning frameworks and budgets as well as monitor its effective use.