Four Measures for Fostering Growth in Africa
- Industrialization. Many African countries export resource products with limited local processing. This is not just unsustainable, but it also adds little value to the continent. Many countries have begun implementing strategies to create local manufacturing industries related to the resource sectors, cars and equipment, and food products, for example. These strategies are important for increasing local employment and optimizing Africa’s trade balance, by importing less and exporting items that bring in greater value.
- Intra-African trade. Currently in Africa it is often easier to export products to Europe or Asia than it is to export it to a neighboring country. Africa needs to embark on a continental free trade initiative to increase intra-African trade and ensure that value remains in Africa. This will require monetary measures to stabilize currency fluctuations between countries, as well as efforts to make the travel of people between African countries much easier.
- Infrastructure investments. Most African infrastructure is focused on bringing resources to the nearest port. What is needed is north-south infrastructure investments in roads, rail, and ports to facilitate the flow of goods on the continent.
- Capital liquidity. South Africa is the most liquid capital market in Africa. What is needed now is increased liquidity in other key African markets, and improved flows of capital across the continent.
These four areas offer a simple recipe for keeping Africa rising.
By Wim Plaizier
