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Unlocking Africa's economic potential
Evidence shows that African countries with larger markets and fewer trade barriers already attract more FDI, indicating the potential of the AfCFTA to increase FDI inflows.
Africa is currently facing a worrisome decline. Economic indicators universally point towards a deteriorating performance.
Recent reports, including the World Bank's Poverty, Prosperity and Planet Report and The Economist's special feature, The Africa Gap, reveal an alarming trend of increasing poverty and economic lag.
Although the continent boasts a few promising areas within the creative economy, urgent measures are required to reverse this decline; otherwise, it is projected that 80 per cent of the world's impoverished will reside in Africa, inevitably leading to heightened conflict and instability.
Urbanisation on the continent is accelerating, without a corresponding industrial revolution to create jobs for the migrating rural populations. The most fertile lands are fragmented into small plots, severely affecting productivity.
Persistent political instability, inadequate infrastructure and poor governance obstruct economic progress.
African economies have struggled to keep pace with evolving global markets, resulting in slower growth and diminished international competitiveness.
High unemployment and underemployment remain critical concerns across Africa. With a rapidly expanding population, the job market cannot meet the overwhelming demand. Many young Africans are confined to low-wage, informal sector jobs, limiting their ability to enhance their living standards and significantly contribute to the economy.
While micro, small, and medium enterprises (MSMEs) are crucial to the economy, there is an urgent need for larger enterprises known for higher productivity and stable employment opportunities.
The Economist report should not be dismissed as another external critique grounded in factual, comparative data. Africa must earnestly reflect on and address the pervasive issue of poverty.
The continent possesses vast potential for growth and development, endowed with rich natural resources, a youthful and dynamic population, and growing recognition as a creative economy hub. Additionally, Africa's youth represent a significant portion of the global workforce, positioning the continent as a crucial labour source.
However, as highlighted in the report, capitalising on these opportunities requires exceptional measures – a departure from past practices and ineffective state-controlled policies. African leaders need to champion business, growth and free-market principles.
Enhancing productivity by shifting from subsistence farming to more commercially viable agricultural practices, is essential for improving food security and boosting agricultural output. It is crucial to leverage emerging technologies to aid the impoverished in increasing their productivity and developing value chains to minimise waste.
Technology can transform agriculture by providing farmers with real-time information, financial services, and modern farming techniques. Developing value chains can minimise waste, ensure efficient processing and enhance the competitiveness of African agricultural products. This approach unlocks the continent's potential and drives sustainable economic development.
Moreover, African governments should moderate their involvement in business and create incentives for the growth of large enterprises...
Efforts to combat corruption, enhance transparency and promote the rule of law will attract investment and foster sustainable development.
Incentives such as tax breaks, subsidies, and access to credit can attract investors and support business expansion. Additionally, implementing a regulatory framework that protects property rights and enforces contracts will build investor confidence and encourage long-term investments.
African countries must navigate the interests of more considerable powers without compromising their sovereignty or becoming entangled in conflicts. In adopting a non-aligned stance and prioritising regional cooperation, Africa can strengthen its position globally and work towards collective economic and political goals.
One promising initiative aimed at addressing these challenges is the African Continental Free Trade Area (AfCFTA). By promoting the free movement of people and goods across the continent, AfCFTA has the potential to significantly boost intra-African trade and economic expansion.
Further AfCFTA can boost economic growth by promoting competition, innovation and foreign investment, diversifying economies, and reducing dependency on external markets. Africa stands at a crucial crossroads. The continent has extraordinary potential for growth and development, with rich natural resources and a youthful population.
However, realising this potential requires a departure from past practices and an embrace of business-friendly, free-market principles.
Leveraging technology, enhancing agricultural productivity, developing value chains, and fostering a conducive environment for large enterprises, Africa can drive sustainable economic development.
A focused and strategic approach can ensure that Africa not only reverses its current economic decline but also emerges as a competitive player on the global stage.
The writer is Kenya’s Ambassador to Belgium, Mission to the European Union, Organization of African Caribbean and Pacific States and World Customs Organisation.
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