The right African policy framework, including industrial policies that will generate the skilled jobs and productivity gains needed for the structural transformation of economies, could harness the continent’s rapid urban transition to drive industrial development, the UN said.
“African urbanisation has not been driven by improving agricultural productivity or increased industrial output, as has been the case elsewhere,” said Giovanie Biha, the Deputy Executive Secretary of the UN Economic Commission for Africa (ECA).
Biha made her comments on Thursday during the launch of the 2017 Economic Report on Africa by the ECA Sub-Regional Office for Eastern Africa (SRO-EA) in Kigali, Rwanda.
“On the contrary,” she added, “it has been dominated by the expansion of the informal sector – often services”.
Pointing out that by 2035, half of the continent’s population will be urban, compared to just one third in 1990, she said industrialisation and urbanisation provide an opportunity to discuss related challenges on the continent, Eastern Africa in particular.
In most of the 14 countries covered by the SRO-EA, the share of the manufacturing sector has been stagnant or declining over the past ten years while the services sector has expanded rapidly.
Despite a weak structural transformation process, the long-term growth outlook remains promising in Eastern Africa.
The ECA report says the gross domestic product growth rate in 2017 is estimated to remain at the 2016 level of 5.6% – down from the exceptional performance of the past five years.
Ethiopia’s average annual growth rate of 9.5% and Rwanda’s 7.2%, between 2012 and 2016, remain well above the African continent average of 3.1% in 2017.
Andrew Mold, acting director of the SRO-EA, highlighted that some growth catalysts, such as massive investment in infrastructure or the service sector, have started to stretch budgets amid weakening structural constraints, such as exchange rate volatility.