Championing Inclusive Growth Across Africa
For the past decade, Africa has exhibited strong economic growth. A new economic growth momentum has been established. The continent weathered the financial crisis and has bounced back. But headline economic growth is not enough. Deliberate policies to reduce inequalities and promote inclusion are now needed more than ever before. It is time to focus on people’s expectations: decent work, a living wage, access to basic service, more democracy, and accountable governments. Africa and its people aim to be a pole for global growth in the decades ahead.
Promoting inclusive growth is now a matter of urgency. For Africa, the ingredients are well known: boosting agricultural production, helping small businesses, better quality and relevant education, encouraging the private sector, improving the investment climate, and addressing gender and regional disparities. Promoting inclusive growth will also help ensure political stability as equal distribution of wealth, increased social and productive sectors, spending leading to the creation of decent work, and adequate fiscal policies will reduce the risks of political uprisings. The recent events in North Africa, rooted by a “youthquake” and supported by revolutionary social media, are typical examples of extreme disparities in social sectors, high income inequalities, and lack of opportunities for improving welfare by disadvantaged groups such as youth and women.
The time to unlock Africa’s internal potential is now, and the African Development Bank (AfDB) continues to work steadfastly alongside its Regional Member Countries to ensure that this potential is indeed unlocked.
The Path to Inclusive Growth
The concept of “inclusive growth” is not new; it is more of a sustained and long-term growth that is shared by all societal strata, particularly those who are at the bottom rungs of the income distribution, deprived of both physical and human asset endowments, and unable to benefit from the growth process. The AfDB defines inclusive growth as economic growth that results in a wider access to sustainable socio-economic opportunities for a broader number of people, countries or regions, while protecting the vulnerable, all being done in an environment of fairness, equal justice, and political plurality .
In Africa, we have witnessed important successes in development with noticeable progress in health (e.g. average infant mortality has halved), education (e.g. the average ratio of female to male literacy has improved), and civil and political rights (the recent rise of more democratic and accountable governments). Yet some of the persistent inequalities of income, assets (both financial and human), and opportunities (notably adequate skills and employment) are constraining people from benefiting from the progress that is taking place on the African continent. The majority of Africa’s population (which grew at 2.4 per cent from 2005-2010) lives in rural areas and relies on agricultural activities, whereas growth in the agriculture sector has lagged compared to overall economic growth (growing at three per cent from 2005-2010, and contributing to 30 per cent of GDP). The low rate of GDP per capita (about two per cent, 2009-2013) will not be sufficient to significantly reduce the level of poverty in African countries. Inclusion also translates into building and scaling up women and young entrepreneurs by providing the necessary means to access finance, developing adequate business infrastructure, as well as networking and advocating for successful women and youth entrepreneurships.
Ultimately, improving the inclusiveness of growth should be broad-based across sectors, include productive employment, and the protection of disadvantaged and marginalized groups from adverse shocks. Policies for inclusive growth must focus on four interrelated dimensions: economic, social, political and spatial.
Economic – Creating Employment in the Agriculture Sector
The African labour market is characterized by an excess supply of young and unskilled labour with a dominance of agricultural and informal employment and a small share of private industrial employment. The limited or low quality of employment opportunities in many African countries are also at the source of low productivity and the poor and low-income households not reaping the benefits of economic growth. To increase and sustain per capita growth in agricultural production, African governments should increase their budgetary allocation to the agriculture sector, invest more in agriculture-related infrastructure (i.e. rural roads, access to electricity, water and sanitation programs), and promote agro-business and small/medium entrepreneurship (e.g. create an enabling environment for private sector development and investment).
Social – Promoting Social Protection Programs
Social protection programs such as cash transfers and expended public works are important measures to increase income and domestic demand as well as shield the poorest and most vulnerable from either internal and external shocks, such rising food prices, climate change, or sudden shock to the economy. By increasing poor people access to assets (purchasing power, basic infrastructure, and basic social services), social protection programs contribute to the reduction of inequality and the promotion of strong and inclusive growth.
Political – Voice and Accountability
The poor quality of institutions in some African countries has been a hindering factor for its economic performance and its efforts to tackle poverty. The continent as a whole performed very poorly on standard governance indicators (30 per cent and 60 per cent lower than Asian average and industrialized countries). Sound and open governance structures (institutions and mechanisms) can facilitate economic growth and ensure social cohesion. Reinforced property rights and institutions, equal access to effective justice, and citizen engagement in policy-making are panacea for inclusivity.
Spatial – Infrastructure Development and Integration
Providing wider equal access to basic infrastructure (transport, power, water and sanitation, and broadband and telephony), and enhancing economic integration of small and landlocked African countries will help accelerate growth and reinforce Africa’s capacity to ensure equal opportunities and benefits for all actors of society.