African countries need to harness the brain power of Africa ’ s young , dynamic population to spur a technological revolution , economic transformation , and competitiveness of the continent for shared prosperity . past decade towards industrialisation but its performance remains below the minimum requirement for Africa ’ s structural transformation . Africa ’ s share of manufacturing in GDP has remained at around 10 percent over the past 10 years ( 2009-2018 ), with production typically biased towards resource-based and low technology light manufacturing , such as food and beverages , wood products , textile articles , and construction materials .
SPECIAL REPORT
Tax collection is low in Africa due to significant discretionary tax exemptions and rebates , weak capacity of tax administration and a high level of informality , leading to a reduced tax base .
Supporting African countries to design innovative means of taxation , and investing in improved tax administration can play an important role in boosting revenue and reducing the need for debt in financing development . This requires the strengthening of tax administration systems and the improvement of compliance .
Finally , the potential for debt in unlocking long-term growth depends on the ability of countries to improve the efficiency of debt-financed investments . This requires strengthening the absorptive capacity of African economies . Estimates suggest that about 40 percent of the potential value of public investment in low-income countries is lost to inefficiencies in the investment process due to time delays , cost overruns , and inadequate maintenance . Countries should be supported in standardising project quality rankings and implementing best practices in project and private partner evaluations before and after completion .
There is no general debt crisis across Africa , but the only thing to worry about is the ratio in some African countries between domestic debt and GDP , which needs careful attention when the debt has been used to support , for example , domestic consumption .
There needs to be greater prudence in recent debt applications to sovereign funds as the interest rate is higher than it could be , for example , than if the application was made more often to the African Development Bank . If the debt is entered into for the purpose of enhancing infrastructure then this , in my view , is “ good ” debt , as it can be repaid as a factor of the economic improvements that enhanced infrastructure can bring .
While Africa has enjoyed strong economic growth for almost two decades , the continent has not seen a commensurate rise in industrialisation . What would you say ?
Africa has made encouraging progress over the
African countries need to harness the brain power of Africa ’ s young , dynamic population to spur a technological revolution , economic transformation , and competitiveness of the continent for shared prosperity . past decade towards industrialisation but its performance remains below the minimum requirement for Africa ’ s structural transformation . Africa ’ s share of manufacturing in GDP has remained at around 10 percent over the past 10 years ( 2009-2018 ), with production typically biased towards resource-based and low technology light manufacturing , such as food and beverages , wood products , textile articles , and construction materials .
However , the potential opportunities for accelerated industrialisation are real . Africa must leverage its primary sector for resource-based industrialisation , given its huge natural resource wealth .
Increasing agricultural productivity , in particular , will be essential for the transition towards agro-industrialisation . There is also growing demand for manufactured goods in Africa thanks to an emerging middle-income class . Manufactured imports amounted to about $ 269 billion in 2015 and a majority of countries still import large quantities of even basic products easily made or manufactured in Africa , ranging from food to clothing to electronics .
Unfortunately , African countries are spending $ 35 $ 35 billion in foreign currency annually on food imports a figure that is set to rise to over $ 110 billion per year by 2030 . In so doing , Africa is importing the food that it should be growing itself , and exporting the jobs it needs to keep for its unemployed youth , often to developed countries . It also has to pay inflated prices resulting from global commodity supply and currency fluctuations .
There is , therefore , considerable room to develop local production , which will not only help to create more and better jobs but also save valuable foreign exchange . With deeper regional integration , in particular , the African Continental Free Trade Agreement , domestic producers that have not yet integrated global value chains can still benefit from economies of scale necessary for the emergence of internationally competitive industries .
To further promote industrial development , African countries will need to address binding constraints related to deficits of infrastructure , lack of skilled labour , inefficient
16 • COMESA • 2018