How can Africa be industrialized
Much in Africa - as in the rest of the world - will not be the same after the corona crisis as it was before the outbreak of the pandemic. Sub-Saharan Africa's economy will experience its first recession in a quarter of a century this year and is expected to shrink by two to five percentage points. The UN Development Program (UNDP) warns that almost half of all jobs in Africa could be lost. According to forecasts, the proportion of the population living in poverty in Africa will increase from 33 to 38 percent due to Corona. That makes one thing clear: we urgently need an economic recovery.
In the webinar series "The Future of Africa - Will the Corona virus change Africa's potential to prosper?", The BDI, the Hanns Seidel Foundation (HSS) and the Institute for Security Studies (ISS) in Pretoria, South Africa, are involved in discussions over 200 participants the consequences of the pandemic. The central question is: How can Africa succeed in sparking a growth revolution in spite of Corona in order to lead millions of people out of poverty into employment.
Jakkie Cilliers, CEO of the ISS, presents the results of his book “Africa First! - Igniting a Growth Revolution ”as well as the new study by ISS and HSS“ Impact of COVID-19 in Africa. A scenario analysis to 2030 ". In order to master the upcoming challenges for Africa, the question of debt relief for African states must be clarified, health expenditure must be increased and basic infrastructures expanded. In addition, Africa's priorities should be in the following four areas:
- Increasing the productivity of agriculture: Africa needs to focus on agriculture and the production of staple foods for its own consumption.
- Industrialization of the African economies ("Made in Africa"): Industrialization can create more jobs in the formal sector and achieve faster growth. This requires the establishment of special economic zones, an increase in government spending on research and development and the expansion of digitization.
- Leapfrogging – skipping development steps: In the 21st century, scientific knowledge is advancing at high speed, see mobile payment. So-called “leapfrogging” has a positive effect on poverty reduction. However, technology is not a silver bullet on its own. Countries need to invest in people and institutions.
- African Free Trade Area (AfCFTA): If properly implemented, the free trade area can, more than any other factor, fuel economic growth in Africa. By 2050, the AfCFTA could reduce extreme poverty by more than six percent.
Larger markets crucial for German companies
The BDI sees the African free trade zone as a long-term facilitation for investments and trade by German companies with over 50 African countries. Because most nations - with the exception of South Africa, Nigeria and Egypt - are still too small to offer an attractive market for German companies.
The EU-Africa strategy must set priorities
According to Peter Mathuki, chief executive of the East African industry association EABC, the European Union (EU) should focus on the following areas in its new Africa strategy: debt relief for African countries, expansion of the health and infrastructure sector, private sector promotion and innovation. Innovations, for example in the area of e-commerce, could be the key to getting out of the crisis.
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