gvA Update

A vibrant domestic consumer market has emerged in Africa as the African middle class has widened and raised household incomes. Consequently, Africaâs spectacular economic prosperity over the last two decades cannot be merely attributable to the boom in commodity prices it experienced not too long ago. As a result of increased per capita income from the robust middle class expansion and supportive demographic factors, Africaâs trade in both primary commodities and manufactured products should expand. However, Africa does not trade alone in the global market place. Stiff global competition from around the world, in particular China and much of East Asia combined with weak and fragile power and energy infrastructure is negatively impacting efforts by Africa to compete. Unfortunately, Africa also faces many other infrastructure challenges apart from energy and power. According to a study by the Dubai Chamber of Commerce it is estimated that by 2030 Africa would need about USD 2.6 trillion in infrastructure investments in highways, ports, water, telecommunications, energy and even in the extractive industries. According to the Dubai study, over the years, Africaâs trade ties have shifted more towards developing economies. For example, in 2013, developing economies accounted for about 55% of Africaâs total merchandize imports compared to 37% share in 1995. While developed economies accounted for 43% of Africaâs total imports in 2013 compared to 64% share in 1995. The same trend is observed for developing economies in their shares in Africaâs total exports which have increased from 25.7% in 1995 to about 49% in 2013, while the share among developed economies in the continentâs total exports has declined from 72.8% in 1995 to about 50.1% in 2013. Even so African exports still account for a very low share of global exports at about 2.4 percent in 2015, compared to the global average across all countries of about 30 percent, and down from about 3.2 percent in 2013. What appears to be happening is this. Global manufacturing and processing competition is hurting Africa. However, African countries that have sustained robust economic growth over the last decade because they have implemented major regulatory and structural economic reforms, tend to be more successful in driving higher levels of exports than others. Africa has to encourage and motivate its people with improvements in infrastructure and capacity building to export more. As we have noted, Africa can not lean exclusively on mining and raw agricultural exports for global success. It won't work. African policy makers must know that global competition is really a contest among national policy makers. The countries that can better prepare their citizens for global competitiveness will win. The ones that don't will not. I am Magnus Kpakol and that's my view.


Posted: May 24th, 2017 @ 02:19:25 AM