São Paulo – African countries need to invest in strategic sectors such as infrastructure, agriculture and industry to foster change and sustainable growth of the continent. So it says the report disclosed this Thursday (3rd) by the United Nations Conference on Trade and Development (Unctad) on the economic development of Africa.
According to the document, Africa experienced a relatively large growth during the last decade, but the nature of the growth did not create jobs or reduced poverty, as it was driven mainly by consumption. According to the report, a strategy based on consumption cannot be sustained in the medium to long term and it should proceed alongside an increase of investments capable of boosting the production of tradable goods.
The report claims that consumption-based growth leads to economic problems such as overdependence on imports, which affects the survival of local industries, the increase of production and employment creation. The Unctad calls on countries to enforce drastic reductions in consumption so it does not have a negative impact on growth.
According to the organ, investments in the continent are still too low in relation to the needs. The Unctad recommends that countries diversify their sources of income and claims that many countries have yet to go through the normal process of structural transformation, characterized by a shift from low-productivity activities, such as agriculture, to higher-productivity, such as industry and modern services.
The share of manufacturing in total value added has declined over the past two decades, showing an average fall from 14% in 1990–1999 to 11% in 2000–2011. The services sector is now dominant in Africa’s economies, according to Unctad, accounting for 47%, compared to 37% for industry and 16% for agriculture. According to Unctad, It is unusual for the services sector to play such a dominant role in an economy in the early stages of its development.
The organization suggests that countries make infrastructure, agriculture and industry sectors a priority and points out boosting investments in the area as a challenge. According to the Unctad, financial institutions and banks generally prefer to aim their services at non-production sectors. The document, however, asks for central banks to encourage lending to strategic sectors through adopting financing policies that favour lending to these sectors.
*Translated by Rodrigo Mendonça
