This conference offers a unique opportunity to reflect—together—on the lessons learned from Africa’s success and the challenges ahead. There is still much to be done. The continent is very diverse, and some countries risk being left behind, especially those faced with recurring conflict. In others, the rapid growth is yet to be widely shared across the population, with many Africans failing to see the fruits of economic success.
In that spirit, I would like to share with you three perspectives:
(i) Where we stand— taking stock of Africa’s achievements;
(ii) What near-term and longer-term challenges are emerging; and
(iii) What are the key policy priorities to address these challenges and help deliver on the promise of Africa’s future.
1. Where We Stand—Africa’s Takeoff
Let me start with where we stand. Sub-Saharan Africa is clearly taking off—growing strongly and steadily for nearly two decades and showing a remarkable resilience in the face of the global financial crisis.
Economic stability has paid off. More than two-thirds of the countries in the region have enjoyed ten or more years of uninterrupted growth.
This growth has delivered a more educated population, with significant declines in infant mortality. In Benin and Madagascar, for example, primary school enrolment has increased by more than 50 percentage points. This may be from low levels, but it is still a huge improvement.
And for good reasons, Africa is now a growing investment destination for both advanced and emerging economies—with a record $80 billion inflow expected this year.
Indeed, it is no surprise that ‘frontier economies’ such as Kenya, Uganda, and Botswana are challenging old stereotypes and roaring loud as Africa’s lions.
And yet, the tide of growth has not lifted all boats.
Poverty remains stuck at unacceptably high levels—still afflicting about 45 percent of the region’s households. Inequality remains high. And some countries, still facing recurring internal conflict, are struggling to exit from fragility.
Africa’s success journey has been truly remarkable. But if the global crisis has taught us anything, it is the importance of making the benefits of growth more broadly shared. When everyone benefits, growth is more durable.
Over the years, the IMF has been a close partner in Africa’s journey—including during the crisis. We have listened, we have learned, and we have responded.
We have reformed our lending instruments to increase access and flexibility to countries in need; extended our zero-interest policy; and streamlined conditionality.
We have tailored our policy advice to better address the very specific challenges facing the region. And we have supported this advice with five regional technical assistance centers—in Gabon, Ghana, Côte d’Ivoire, Mauritius, and Tanzania. Today, the largest share of the IMF’s capacity development services is devoted to Africa.
We look forward to continuing—and strengthening—this fruitful partnership.
2. Challenges Ahead—Near-term Worries and Longer-term Challenges
Africa’s future lies with itself and its people. True—the outlook for the region is very positive. Africa is expected to grow by about 5.5 percent this year and next, and the poorest countries even faster—close to 7 percent.
But it must keep a firm eye on what’s going on beyond its horizons. Globally, even as the world turns the corner of the Great Recession, the recovery remains weak and uneven. What does this mean for Africa?
Near- term worries
In the near term, the region’s outlook could be clouded by three main worries:
(i) slower growth in advanced economies, and in particular emerging market economies which are major trading partners for Africa;
(ii) lower prices for some commodities; and
(iii) tightening external financial conditions and potentially increased market volatility as monetary policy is normalized.
Policymakers will no doubt have their hands full. But they know what to do. The IMF stands ready to help with its policy advice, its technical assistance, and if needed, financial support.
Longer-term challenges
Beyond these more immediate worries, there are a number of longer-term challenges that can dramatically affect the outlook for Africa. Some for the better; others—not so much.
Demographic challenges: Africa is the youngest continent in the world. By 2040, the continent is projected to boast the largest labor force in the world—1 billion workers strong—more than China and India combined. Channeling this increasing reservoir of human capital to productive sectors offers unrivalled economic and social opportunities. To take full advantage of them will require skillful management and vision.
Technological challenges: Technological innovation offers great possibilities. It can help support global integration, improve productivity, and foster inclusion. Harnessing its power effectively and efficiently is the challenge.
Environmental challenges: Climate change and sustained demand growth press on the sustainability of natural resources—further exacerbating inequality and exclusion. The challenge is to implement policies to foster growth that is, in turn, inclusive and environmentally sustainable.
3. Building to the Future—Three Policy Priorities
So what are the policy priorities to ensure that these challenges become opportunities?
I see three: build infrastructure, build institutions, and build people.
Build infrastructure
First, build infrastructure—energy, roads, and technology grids. These are the foundations of any strong and durable edifice.
What does this mean in practice? Closing Africa’s infrastructure gap.
Over the past three decades, per capita output of electricity in Sub-Saharan Africa remained virtually flat. Only 16 percent of all roads are paved, compared with 58 percent in South Asia. These shortfalls represent huge costs to businesses—and to people.
Many countries in the region are taking encouraging steps to close this infrastructure gap. In Ethiopia and Mozambique, for example, investments in the energy sector are being scaled up, including through projects that promote cross-border trade in electricity. Kenya and Côte d’Ivoire are also initiating regional infrastructure projects in electricity, and road and railroad networks.
These investments are critical for growth to be sustained—and broadened. High quality infrastructure can be a magnet for foreign investment.
Excerpts of speech presented at a recent conference on Africa held in Mozambique
Christine Lagarde
