Managing Director, International Monetary Fund IMF, Ms Christine Lagarde has said that by 2030, Africa will be the centre point of labour as over half of new workers entering the global labour force will come from Africa. This she said is as a result of the youthful nature of Africa demography.
Her position was made known in her address to the Economic Commission for Africa’s hosted by the commission in Addis Ababa, Ethiopia themed: Economic challenges and opportunities facing the African continent; the role of technology in supporting the region’s achieve – more inclusive growth.
Lagarde in her position paper said that youths in Africa comprise 75 per cent of the working population. “With the right strategy, this incredible surge could translate into a virtuous cycle of economic growth and development”. She, however, cautioned that hundreds of millions of people would need better healthcare, more educational opportunities and jobs, especially in career paths that had not yet been invented. She said “when I travel in Africa, I never worry that the dreams of the next generation are not big enough. “The only question is whether we can create an environment where those dreams will have the chance to be realised.” Lagarde expressed concern over uneven growth and slowdown in some countries due to lower commodity prices. She lamented that on a Gross Domestic Product (GDP) per capita basis, 15 countries in the continent were expected to experience a decline this year.
“Achieving growth that is stronger, lasting and more inclusive – one that leads to benefits and higher living standards – will require diversification. And the right balance between investment and debt sustainability and harnessing technology to accelerate economic and social development. Technology does not hold all the answers in fact, technology often raises new questions, including the impact of automation. However, there is no doubt that technology is an important part of the story,” she said.
Lagarde said that governments could do more than just encourage innovation, they could also help lead the way themselves. She said that governments could create a foundation for innovation by streamlining regulations “so that everyone plays by the same rules and entrepreneurs are rewarded for their ingenuity. Doing both – creating the right environment for technological innovation and leveraging digital tools leads to more transparency, stronger accountability and delivery of a better life for every citizen,” she said. Citing an example, she indicated that updating payment systems from cash to digital could lead to savings of about one per cent of GDP, adding that in some places in Africa the potential was even higher.
The Executive Secretary, ECA, Ms Vera Songwe said that the fall in GDP per capita in many countries was alarming for inclusive growth, adding that the biggest challenge facing Africa was how to increase the standard of living of its populations. “With the huge demographic bulge Africa is facing, can Africa dream of moving more countries into middle-income status? Do we have to start working on a world where with the current population dynamics, Africa is caught up in a demographic trap where growth does not lead to increases in GDP per capita?”
To accelerate development, she called for more ambitious growth numbers, stating that double-digit growth rates were now needed to respond to these challenges. “This is the only way to invest while maintaining appropriate macro balances such as the debt to GDP. As interest rates rise in the West and threaten to reduce Foreign Direct Investments (FDIs) flows to Africa, we have to find ways of financing our development.”
She proposed the need to collect more taxes, broadening the base, making all savings more productive and investing resources efficiently and effectively. Lagarde’s official visit to the ECA is the first of its kind by a leader of the IMF, the statement said. Present at the event are representatives from the private sector, academia, university students, UN staff and the diplomatic corps.
