Industrialisation and Trade Corner
Harnessing productive sectors’ through value chains to enhance intra-African trade and regional integration
Integrating Africa is the AfDB Group’s blog on regional integration in Africa. It chronicles the issues arising from African countries’ efforts as they work to pool resources and integrate their economies for the development of their regional and individual economies. Read More
For many developing countries, building a skilled workforce can be a major challenge. In a digital age where an increasing number of traditional jobs are being replaced with technology, it is crucial for emerging markets to build a knowledge economy where their citizens can contribute to their nations’ sustainable development. However, history shows that in many countries, international companies and expatriates have often gone in, done the work, reaped the rewards and left.
As African resource-rich countries battle with the macroeconomic impact of the dip in global commodity prices, many look back at the 2004-2013 upswing in the commodity cycle and consider whether African countries, and their citizens, made the best out of them. Asymmetric information between governments and private investors, as well as weaknesses in designing fiscal frameworks are among the reasons why the benefits of extraction might have fallen short of expectations. How can African governments equip themselves to reap a larger slice of rewards when commodity prices start climbing again?
Closer economic integration is a prescription frequently advocated for the African continent, and enthusiastically endorsed by politicians and business alike. Accordingly, the continent does not lack integration schemes, generally dubbed ‘Regional Economic Communities’ (RECs) – 14 in all.
Turning extractive resources (mining, oil and gas) into development outcomes has proven to be a challenge for African governments and developing countries in general. The channels linking minerals in the ground with higher living standards are complex. This article sets out some thoughts that the authors would like to share and also, initiatives taken by the African Development Bank and the Collaborative African Budget Reform Initiative (CABRI) to help African governments on the issue.
The discovery and exploitation of oil, gas and mining usually brings in its wake high expectations of employment opportunities for countries where the resource extraction is taking place. However, there is often a mismatch between these expectations and the actual jobs that the oil, gas and mining sectors can offer. In practice, oil and gas, and to a lesser extent, mining projects in Africa often do not generate much employment locally. This is partly as a result of the capital intensive nature of extractives and, especially oil and gas projects.
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