Africa's economy remains robust - UN report

By Edward Kayiwa

KAMPALA - Economic activity in sub-Saharan Africa remained robust in 2014, achieving a 0.2% growth, underpinned by improved macroeconomic management, and diversified trade and investment ties with emerging economies around the world.

A United Nations (UN) Economic Commission for Africa report launched in Kampala indicated the continent’s prospects remain positive despite the hard economic times around the world.

The report indicated that trade continues to play a major role in Africa’s economic growth performance; with potential to promote trade-induced industrialization, provided it is deliberately directed.

“The goal of trade-induced industrialization should therefore include guiding the conduct, negotiations and implementation of trade and investment agreements and arrangements,” said Hopestone Chavula, an economics expert working for the UN Economic Commission for Africa.

While presenting the report at the Economic Policy Research Center, Chavula said Industrialization is responsive to the yearnings of the continent in promoting inclusive and transformative growth.

“Based on Africa’s abundant physical, natural and human resources, the continent has potential to significantly increase its share in the global exports, if it goes industrial,” he said.

He however noted that although a number of African countries are expected to remain stronger than many other developing countries worldwide, the continent is unable to promote structural transformation of the economies of the region.

His argument resonated with the views of Professor Julius Kiiza, a lecturer of political science at Makerere University, Kampala.

According to Kiiza, African countries such as Uganda quickly need to either adjust or put in place an industrialisation policy that promotes and protects domestic value addition and manufacturing.

“Industrialization with its capability to generate direct and indirect employment promises to transform African economies, but must also address the issue of pressure and competition from outside which often stifles our young industries,” he said.

Rudimentary agricultural practices and provision of services dominate the structure of African economies which can only support limited growth, said the lecturer.

Lindani Ndolvu, a private trade consultant, said the continent should exploit its comparative advantage in commodity-based industrialization, and add value to its resources using its abundant human capital.

He said the continent could look to itself as a primary market for its goods and services, instead of outsourcing – even for what is readily available.

“Africa’s trade to global GDP is less than 2% yet we are approaching two billion people. If we look to each other, through regional trading blocs, we could increase the figures and build our mother land,” he said.

A World Bank report released in August last year noted that  a sharper decline in commodity prices, political uncertainty and poor physical investment will continue to inhibit the continent’s growth potential.

The report pointed out political uncertainty, unreliable and expensive electricity supply and poor road conditions as major hindrances in business and intraregional trade that must be quickly addressed.

“In many African countries, deficiencies in infrastructure hold back per capita growth by at least 1% every year. Infrastructure limitations, particularly in power, depress productivity at least as much as red tape and corruption,” the report partly read.

Empirical evidence presented by the UN shows that newly industrialised countries were able to catch-up with the developed countries through highly selective trade policies.

It is with such evidence that Professor Kiiza believes that creating and adjusting trade policies by African countries is critical for effective trade-induced industrialization.