African economy set for growth despite external shocks, says 2020 outlook

AEO 2020Africa’s economic growth remained stable in 2019 at 3.4 per cent and is on course to pick up to 3.9 per cent in 2020 and 4.1 per cent in 2021, according to the African Development Bank’s (AfDB) 2020 African Economic Outlook (AEO)

The slower-than-expected growth is partly due to the moderate expansion of the continent’s “big five” — Algeria, Egypt, Morocco, Nigeria, and South Africa – whose joint growth was an average rate of 3.1 per cent, compared with the average of four per cent for the rest of the continent.

Former Liberian president Ellen Johnson Sirleaf, who was present during the launch of the outlook in Abidjan, commended AfDB for upholding the confidence of the people of the continent. Referring to Africa’s fastest-growing economies, she said, “We want to see more, particularly for countries like mine, which have been left behind, so that more can be done to give them the support that they need.”

In 2019, for the first time in a decade, investment expenditure, rather than consumption, accounted for more than 50 per cent of GDP growth. This shift can help sustain and potentially accelerate future growth in Africa, increase the continent’s current and future productive base while improving the productivity of the workforce.

Growth fundamentals have improved, driven by investments and net exports

East Africa maintained its lead as the continent’s fastest-growing region, with average growth estimated at five per cent in 2019; North Africa was the second-fastest, at 4.1 per cent, while West Africa’s growth rose to 3.7 per cent in 2019, up from 3.4 per cent the year before.

Central Africa grew at 3.2 per cent in 2019, up from 2.7 per cent in 2018, while Southern Africa’s growth slowed considerably over the same period, from 1.2 per cent to 0.7 per cent, dragged down by the devastating cyclones Idai and Kenneth.

Urgent call to address Africa’s education, skills mismatch

The 2020 AEO, themed Developing Africa’s workforce for the future, calls for swift action to address human capital development in African countries, where the quantity and quality of human capital is much lower than in other regions of the world. 

“Africa needs to build skills in information and communication technology and in science, technology, engineering, and mathematics. The Fourth Industrial Revolution will place increasing demands on educational systems that are producing graduates versed in these skills,” the report noted.

To keep the current level of unemployment constant, Africa needs to create 12 million jobs every year, according to the report. With rapid technological change expected to disrupt labour markets further, it is urgent that countries address fundamental bottlenecks to creating human capital, the report said.

“Youth unemployment must be given top priority. With 12 million graduates entering the labour market each year and only 3 million of them getting jobs, the mountain of youth unemployment is rising annually,” said Akinwumi Adesina, president of AfDB, who unveiled the report.

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