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African economies need to expand their efforts for productive transformation in order to generate economic growth and quality jobs in the aftermath of the COVID-19 crisis, according to a paper released today in the run-up to the Summit on Financing African Economies.
The African continent registered the world region’s second-fastest growth over the last decade. However, Africa’s per capita real GDP growth over the period 2009-2019 was 1.3% per year, which is half the global average of 2.5% and insufficient to achieve its development vision, the African Union’s Agenda 2063. A key factor hampering productive transformation and private sector development has been a persistent infrastructure investment gap estimated to range between USD 130 and USD 170 billion per year. The resulting poor logistics reduces firm-level productivity by as much as 40%, below their global competitors, stifling their capacity to generate quality, formal jobs.
According to the report, infrastructure projects yield significant development gains for Africa provided complementary policies, such as the provision of basic social services, are also in place. The report focuses on three actions that can help African policymakers mobilise investment to advance their development goals:
– First, deepening governments’ engagement with peers and the private sector will help them identify better policies to improve their public finances. This requires strengthening Pan-African policy dialogue on taxation, working with international partners to co-operate on the production of up-to-date and comparable statistics on domestic revenue mobilisation, and enhancing cross-border tax information sharing. And also providing assistance to efforts to build tax administration and auditing capacity.
– Second, governments can strengthen institutions to attract private investment and enhance the effectiveness of public investment and services. Conditional on solid economic governance systems, national investment promotion agencies can improve investor confidence by acting as interlocutors between governments and foreign businesses, and monitoring policy reforms. Co-ordinating policies more effectively at a regional level, notably through the African Continental Free Trade Area launched in January 2021, by identifying investment priorities and marketing African countries to investors, can generate substantial advantages of scale.
– Third, governments must create an African Infrastructure Ecosystem to accelerate and scale-up pipelines of bankable quality infrastructure projects. Rigorous standards of quality, such as applied by the AUDA-NEPAD’s PIDA Quality Label, can both enhance the quality of project preparation and reassure investors in support of the continental integration agenda. Improvements in infrastructure project design and implementation will also come from better capacity building by developing a community of practice of African infrastructure experts, such as through the African Infrastructure Knowledge and Learning Platform.