By Erastus J. O. Mwencha, Deputy Chairman of the African Union Commission, and Mario Pezzini, Director of the OECD Development Centre
This article first appeared in Deutsche Welle on September 8, 2015. Read it anew here:
As world leaders prepare to gather in New York to adopt the Sustainable Development Goals (SDGs), leaders and citizens across Africa already have outlined bold goals for the continent's economic and human development. Africa's Agenda 2063 sets out an ambitious vision. It reflects close coordination among the African Union Commission, the UN Commission for Africa, the African Development Bank and the New Partnership for Africa's Development, because Africa's solutions need to be homegrown. And it prioritizes the continent's economic and social transformation by catalyzing industrialization and modernization efforts, people-centered development that values gender equality, responsive and democratic governance as well as peace and security.
The tipping point for Agenda 2063's vision for sustainable prosperity may very well come as Africans focus on two intertwined drivers of economic growth: productive transformation and regional development. Regional development addresses the broader demographic and spatial dimensions of structural transformation. Development strategies that involve local actors and valorize local assets can unlock untapped potential by better valuing the diversity of African regions and by better connecting them, sowing the seeds for a more sustainable and faster structural transformation.
Africa's unprecedented demographic change is perhaps one of the best explanations for why productive transformation and regional development are increasingly interconnected in advancing long-term development solutions. As Africa's population increases—an additional 1.2 billion people will call Africa home over the next 35 years—the dependency rate between old and young decreases. This decrease is an opportunity, but it can also turn into a challenge: More than 29 million young people on average will be entering the labor force each year until 2030 in need of jobs.
Creating those jobs requires a plethora of strategies.
Natural resources need to be better exploited and in a more sustainable way. Botswana used its bargaining power as a major world diamond producer to promote forward linkages between diamond extraction by an international corporation and cutting and polishing by local manufacturing companies. Is this a model on which we can build?
Africa needs to be supported to tap in a greater share of global value chains. At present, Africa produces only 2.2% of the world's production of intermediary goods. While the opportunities offered by greater participation in global value chains are significant, the impact on job creation in formal enterprises has been limited so far.
Space needs to be created for private sector-led activities to spur greater entrepreneurship. The urban informal sector can have annual capital returns of up to 60 or 70 percent, but economic, institutional and social constraints need to be removed to enable entrepreneurs to enhance their competitiveness, expand their businesses and enter the formal sector.
The public sector needs to be strengthened and empowered to play the part of a policy driver. Given strong population growth and the need to maintain financial efficiency, the role of the public sector as an employer may expand but, in itself, is insufficient. African governments employ about 25 million people aged 30-64, about 10 percent of Africa's population in this age group, but only 14 million people aged 15-29 or about five percent of Africa's population in this age group.
In reality, no one strategy for job creation is enough. Rather, the 2015 African Economic Outlook argues that designing an appropriate mix of strategies that is tailor-made to each particular African context offers the greatest promise. Innovative development strategies maximize the diverse potential of different regions.
Realising both Agenda 2063 and the SDGs in the African landscape reaffirms a fundamental truth: Development solutions need to be created by Africans for Africans. At the same time, engaging in robust dialogues and constructive peer-to-peer exchanges of experiences with developed and developing economies—including Germany and other member–countries of the OECD Development Centre—may provide Africans with insights and information to make evidence-based choices that push innovation in development policies and practices.
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This article should not be reported as representing the official views of the OECD, the OECD Development Centre or of their member countries. The opinions expressed and arguments employed are those of the author.
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