International Monetary Fund (IMF) MD Christine Lagarde has reaffirmed that sub-Saharan Africa should grow by about 5.5% this year and attract a record $80-billion in investment. However, she warned in a recent speech delivered in Maputo, Mozambique, that there was an urgent need to “build infrastructure, build institutions and build people” not only to sustain the growth momentum but also to ensure that the benefits of that growth were more widely shared.

Although two-thirds of the countries in the region had enjoyed ten or more years of uninterrupted growth and the outlook was positive, “the tide of growth has not lifted all boats”. “Poverty remains stuck at unacceptably high levels – still afflicting about 45% of the region’s households.”

Speaking in South Africa ahead of the Maputo gathering, IMF chief economist Dr Olivier Blanchard cautioned that while the effects of the financial crisis were now less acute, the repair process would take a long time and the choices facing policymakers had become increasingly complex.

He said the average sensitivity of emerging-market economies to a one percentage point rise in US gross domestic product (GDP) was a positive 0.4 of a percentage point increase in growth in such economies. But the size of the benefit would depend heavily on how trade exposed a country’s economy to the world’s largest economy.

For many African economies, trade with China was even larger and Blanchard indicated that a one percentage point decline in GDP growth in China would translate into an average 0.2 of a percentage point decline in emerging-market economy growth.

The IMF expected China to grow at a slower pace of around 7.5% this year and is forecasting the US economy to expand by 2.8% in 2014.

Blanchard said that Africa’s growth performance has been the result of not only higher commodity prices and exports, but also the end of a number of civil conflicts, as well as improvements in governance and infrastructure playing an important role. However, he warned that mining remains a “poisoned gift” for many African countries, which needed to find a way of using the revenues derived from mining to take “the next step”.

Legarde argued that infrastructure provided the “foundations of any strong and durable edifice” and that Africa needed to focus on closing its energy, transport and technology infrastructure gaps.

“Over the past three decades, per capita output of electricity in sub- Saharan Africa remained virtually flat. Only 16% of all roads are paved, compared with 58% in South Asia. These shortfalls represent huge costs to businesses and to people.”

The second policy priority related to building institutions that ensured better governance and transparency, as well as sound economic frameworks. “We all know that Africa has tremendous potential – it is home to more than 30% of the world’s mineral reserves. Properly managed, these endowments offer unparalleled opportunity for economic growth and development.”

But Africa’s greatest potential lay with its people, Legarde argued, noting that Africa is the youngest continent in the world and that, by 2040, the continent was projected to boast the largest labour force in the world of one-billion workers.

“By some estimates, a one percentage point increase in the working age population can boost GDP growth by 0.5 percentage points. This is huge.”