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Leveraging the continent’s growing working-age youth population, proactively engaging with large emerging economies such as India and China, and quashing myths about local industry are top priorities for Africa in 2014, according to experts.
The private sector has been growing across Africa, but not enough to keep pace with sub-Saharan Africa’s working-age population, which is projected to increase by 14 million people in 2014, leaving many workers stranded in an increasingly difficult labor market, according to John W. McArthur, a visiting fellow at Brookings.
“African policymakers should make the creation and implementation of strategies to improve employment outcomes for its enormous youth cohorts a major priority in 2014,” he said. “As a general rule, successful approaches will include people-centric investments that help match vocational skills to the jobs of the future.” These include efforts to ease access to startup capital, to promote business growth and, in some cases, to launch labor-intensive government projects, McArthur said.
He provided several examples of macro investment measures aimed at boosting:
Engaging with New Partners
Over the past 20 years emerging economies, such as Brazil, China, India and Russia, have ratcheted up trade, investment, and other types of commercial and strategic relations with Africa, significantly reducing the relative importance of traditional partnerships with the U.S. and Western Europe to Africa’s development agenda.
Developing partnerships have included trade and foreign direct investment in various sectors of several African economies, particularly natural resource exploitation, manufacturing, agriculture and construction. “Although these emerging partnerships have been very supportive of development efforts in African countries, there is concern that some of these new arrangements could actually be exploitative—in other words, they may not be mutually beneficial,” cautioned Mwangi Kimenyi, senior fellow and director of Brookings’ Africa Growth Initiative. “There are also many risks and challenges that come with these partnerships; in fact, if the challenges are not properly managed, the outcome could be exploitation and underdevelopment.”
According to Kimenyi, in recent years there has been a marked increase in foreign direct investment flows from emerging economies, indicating the growing importance of the continent to the global economy. Extractive industries, especially oil and natural gas, remain the most important for investments from both traditional and emerging partners, he said.
There has been an increased interest in land-for-agriculture deals, as well. “India and China are among the top 10 countries investing in the agricultural sectors of many African countries,” Kimenyi said, “and companies from both countries have significant investments in biofuels, soy and timber production at various stages of completion.”
He urged African leaders to understand the potential “negatives of Africa’s engagement with external actors”—traditional and emerging—and to demand clear strategies to confront them. “It is incumbent upon African policymakers and members of civil society to ensure that any engagement with external actors yields maximum possible benefits to the citizens of their countries.” He suggested actions including more openness and transparency in negotiations and contracting, especially in the natural resources sectors, as well as “significantly improving regulatory frameworks” to minimize activities that “degrade the environment, reduce opportunities for job creation and generally inhibit economic growth.”
There are numerous misconceptions about Africa, chiefly that the continent is too dangerous or unstable to invest in. Brookings Senior Fellow John Page addressed myths surrounding African industrial development. These are:
Steps that African nations should take in 2014 to boost their industrial output include investing in infrastructure; educating Africa’s young people, to increase the continent’s global competitiveness; and shifting support to businesses that are succeeding, instead of prioritizing all small and midsize enterprises. “Policies and programs that reduce constraints to the growth of all firms, regardless of size, must be developed,” Page said.
Roy Maurer is an online editor/manager for SHRM.
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