Responsible Investment

Regional integration key to Africa’s future competitiveness

June 3, 2013
©  World Bank Group

The report, themed “Connecting Africa’s Markets in a Sustainable Way”, is jointly produced by the African Development Bank, the World Bank and the World Economic Forum. The report comes out at a time of growing international attention focused on Africa as an investment destination and mounting talk of an African economic renaissance. This increased optimism is being spurred on by a decade of historically strong growth, with many countries in Africa relatively unscathed by the global economic crisis, thanks to prudent macroeconomic management.

However, growth remains unevenly spread across the region and has not yet translated to a rise in living standards comparable to those observed in other rapidly growing developing regions. Further, the turbulence in North Africa has slowed growth in some of those countries. More generally, the question of how sustainable and inclusive Africa’s growth will be going forward remains. Regional integration is a key vehicle for helping Africa to raise competitiveness, diversify its economic base and create enough jobs for its young, fast-urbanizing population. The report maps out the key policy challenges in establishing closer regional integration:

  • Closing the competitiveness gap: Africa’s competitiveness as a whole trails other emerging regions— especially in quality of institutions, infrastructure, macroeconomic policies, education and technological adoption— while big gaps persist between its highest and lowest ranked economies. The report assesses Africa’s success in creating the social and environmental factors that are necessary to address or mediate these gaps.

  • Facilitating trade: Africa’s exports remain too heavily focused on commodities and its share of world trade remains low, despite numerous regional economic communities and domestic market liberalization. Intra-African trade is particularly limited. The report identifies cumbersome and non-transparent border administration, particularly import-export procedure, the limited use of information communication technologies (ICT) and persistent infrastructure deficit as major barriers to higher levels of regional integration. It also shows that these challenges are particularly pronounced for Africa’s landlocked economies.

  • Building better infrastructure: Africa’s infrastructure deficit presents a serious impediment to regional integration, a problem that is made more pronounced by growth in consumer markets and urbanization. Developing adequate and efficient infrastructure will assist African economies to increase productivity in manufacturing and service delivery, contribute to improvements in health and education and help deliver more equitable distribution of national wealth. The report examines how developments in energy, transportation and ICT can be deployed to maximize the benefits of regional integration.

  • Investing in growth poles: Defined as multi-year, generally public-private investments aimed at accelerating export facing-industries and their supporting infrastructure, growth poles represent important ways of building productive capacity and boosting regional integration through the attraction of investment. As the World Bank has invested in growth poles for a number of years, the report looks at how best practice can be deployed to deliver further benefits across the continent.

Also included in the report are detailed competitiveness profiles of 38 African economies. The profiles provide a comprehensive summary of the drivers of competitiveness in each of the countries covered by the report, and are used by for policy-makers, business strategists and other key stakeholders, as well as those with an interest in the region.

References

This article may be reproduced according to our terms of use with attribution (and link, if online) to www.tias.edu. To be cited as: “ Regional integration key to Africa’s future competitiveness ”, www.tias.edu, June 3, 2013.

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Africa Competitiveness Report 2013

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