Every year, policymakers, investors, academics and civil society leaders gather in Paris, France, to discuss and debate the performance of African economies at the International Economic Forum on Africa hosted by the Organization for Economic Cooperation and Development. Its 14th edition, titled “By Africa, for Africa? Industrialization and Integration for Inclusive Growth,” was held Oct. 7 and, for the first time, the African Union Commission was invited by the OECD Development Center as co-organizer.
At the forum, which attracted more than 700 participants, OECD and the African Union Commission signed their first memorandum of understanding, committing to step up collaboration in support of Africa’s agenda of integration and transformation.
To that end, the OECD Development Center launched an Africa Action Plan, a coherent set of concrete projects in partnership with pan-African organizations and governments.
The forum aimed to foster frank conversation between high-level guest speakers and attendees. And that is just what the 2014 edition did. Here are some highlights:
1. Africa’s development challenge is unique.
Africa’s demographic boom will have consequences that the experience of other regions can seldom help address. From about 100 million at the outset of the 20th century, Africa’s population reached 1 billion in 2010. By 2050, it will rise to more than 2 billion people, representing some 25 percent of the world’s population, compared with today’s 15 percent.
This rise in manpower represents a huge opportunity: While the average economically active African had to support one inactive person in the mid-1980s, the coming decades will see this ratio improve dramatically. It is Africa’s turn to reap its “demographic dividend.” That will only be possible, however, if growth is made more inclusive and creates jobs that tomorrow’s ever more numerous generations need. While today some 20 million young Africans enter labor markets every year, they will be 30 million by 2030.
And there lies the challenge, according to Bruno Losch from the French agricultural research center CIRAD. Unlike East Asia a few decades ago, Africa is undergoing its demographic transition without a commensurate process of endogenous economic accumulation. Agriculture remains the principal economic activity of a predominantly rural population, with persistently low average productivity levels and low saving rates. In addition, urbanization progresses largely without industrialization, nor the required levels of investment in infrastructure. The challenge of providing future generations with adequate economic and social opportunities is thus considerable.
2. Urbanization is not the solution to that challenge.
If you believe that moving people from the countryside to cities will automatically lead to lower poverty and higher productivity levels, think again: Urbanization has not necessarily increased productivity in Africa. Cities can open opportunities for new, more productive rural farm and nonfarm activities in their surroundings, but only under certain conditions.
These include avoiding the “urban macrocephalia” — typically an overbloated capital city — by developing midsize conurbations connected to the largest possible rural populations and by making sure that those cities have the means to provide a decent level of public services. Otherwise, urban densification will only equate to pulling poor people together, which was never proven to be an effective way of making them richer.
3. Ignore Africa’s territorial dynamics at your peril.
If economic policies remain blind to Africa’s fast-changing territorial realities, they may fail to effectively implement the continent’s agenda of structural transformation, poverty alleviation and sound management of natural assets.
Public policies are too narrowly focused on sectors, ignoring the places where sectoral issues all come together. A case in point is the inability of policymakers to grasp the new territorial reality of Africa’s livelihoods. African rural dwellers are not only growing in numbers — in sub-Saharan Africa alone, the rural population will increase by 57 percent over the next 40 years, representing an addition of 310 million people — but their patterns of living, working and traveling are changing rapidly.
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Stark improvements in transportation and telecommunications, the emergence of new midsize urban centers and the gradual rise in living standards all create new opportunities for economic diversification in rural areas — where traditional agricultural activities are increasingly blended with handicraft, trade, transportation or processing, and new activities such as ICT-based services. Households also see their members increasingly involved in a variety of farm and nonfarm activities, with some of them commuting between urban and rural locations.
And yet these major changes have not been sufficient to produce any significant overall improvement in living standards by themselves, which questions the adequacy of existing public policies. The emerging demographic and territorial realities are not easily grasped by available conceptual and statistical tools, as they defy the traditional divides between urban and rural, and farm and nonfarm households when most rural households have diversified sources of income.
National policymakers, city planners, infrastructure builders, local governments, investors, farmers’ associations, environmentalists and other stakeholders need to work together and find new ways to face those challenges.
4. Growth will not solve Africa’s governance puzzles.
Quoting the latest delivery of the Mo Ibrahim Foundation index of governance in Africa, Mo Ibrahim stressed civic participation and human rights as the areas where recent progress was most notable, while economic growth had been the main driver of governance improvements in the past decade.
The end of several conflicts did help; the best performing countries include the Ivory Coast, Sierra Leone and Niger. Nevertheless, progress in the area of governance is relatively sluggish compared with those associated with higher economic growth in Africa. In general, the best performers in terms of governance — South Africa, Mauritius, Botswana, etc. — continue to perform better than other African countries, but have not made great strides over the past five years.
5. Effective industrial policies need to learn from past “mistakes.”
While a fairly large consensus emerged on the necessity to focus policies on the continent’s economic transformation and industrialization, several voices stressed that some “mistakes” must be avoided. Past attempts have largely failed due to a lack of coherence and continuity. But Senegal’s finance minister Amadou Ba warned against policy reversal and fragmentation. The best intentions — structural transformation, inclusive growth and better governance — have been known to trip over strategies that did not support each other, opposed each other or changed course before they could bear fruit.
6. African governments and public firms have a key role to play in fostering private sector development.
Mohamed el Kettani, president of the Attijariwafa Bank, defended the idea of a strong state with three major roles: First, as a regulator, creating the conditions for economic development, implementing effective public policies and asking the private sector to be socially responsible; second, as a strategist, with a long-term vision susceptible to create predictability and trust and attract foreign direct investment; finally, as a facilitator, guaranteeing a clear and stable business environment.
He gave the examples of large infrastructure investments in Morocco, such as ports, high-speed trains, tourism or phosphate extraction, which all helped catalyze considerable private investment in the face of stark constraints. He pointed out the extremely high rates of return that can be achieved by African public enterprises and the need to change international biases against the continent in general.
7. How relevant will the Sustainable Development Goals be for Africa’s agenda?
We got used to aid rapidly, leaving the center of discussions on Africa’s development agenda. But somewhat strikingly, the SDGs and the post-2015 agenda seemed to be somewhat peripheral to the forum’s discussions. Ayodele Odusola from the U.N. Development Program did remind participants that industrialization is not a goal in itself, but a requirement for development. Thoughts need to be paid on how this development can be made inclusive. Poor people are not only a factor of production in the industrialization process, but they are in fact the end of it and should be the first beneficiaries.
Devex was a proud media partner of the 14th International Economic Forum on Africa hosted by the OECD Development Center in partnership with the African Union. Stay tuned as we roll out news and interviews from the forum, have your say online via the forum’s online discussion or join the conversation on Twitter using the hashtag #AF14.
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