To reduce poverty and create jobs, Africa must become economically competitive.
Dar es Salaam, Tanzania; and Copenhagen, Denmark
African countries are still a long way from achieving the full benefits of globalization, despite solid economic growth.
In recent years, African economies on the whole have grown at an average of more than 6 percent per year. But a look below the surface reveals that much of the growth has come from higher commodity prices. The trouble for Africa's economies is that prices are now falling. And growth based on commodities alone is not enough to create jobs and reduce poverty.
A new approach to development is therefore needed. We must have a renewed international emphasis on improving the competitiveness of the African private sector. Pouring aid money into the continent is not sustainable or helpful in itself. Africa and its partners should focus on reducing the costs of doing business by combating corruption, adding more and better post-primary education and skills training based on private sector demand, providing access to investment capital, better energy supply as well as basic infrastructure.
These may look like steep demands, but together we have created the Africa Commission to identify concrete initiatives that can facilitate this type of change. The commission brings together major stakeholders at the highest level: governments, researchers, civil society, the private sector, and international partners. We are committed to finding new ways to bring Africa up to speed and make it competitive with the rest of the world.
But where do we start?
Africa's numerous small- and medium- sized enterprises (SMEs) offer the best opportunities for growth and employment. They are the backbone of prosperous economies. A good place to begin is to address the constraints that SMEs face in accessing finance for investment. Banks are often unwilling to provide investment loans as they perceive risks to be too high. By developing an initiative for the financial markets in Africa we can enable banks to supply growth-oriented SMEs with longer-term finance.