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BRIEFJune 21, 2022

Positioning Africa to Claim the Post-COVID 21st Century

In 2000, the World Bank published Can Africa Claim the 21st Century? which described Africa’s  development challenges and highlighted four areas of focus:

1.      Improve governance and resolve conflict
2.      Invest in people
3.      Increase competitiveness and diversify economies; and
4.      Reduce aid dependence and debt

After more than two decades, and especially the COVID-19 crisis, it is timely to reconsider commitments around Africa’s development policies. The proposed sequel report, Positioning Africa to Claim the Post-COVID 21st Century, to be released in 2023, will revisit the priorities in the 2000 report and analyze how they have evolved and been affected by the unanticipated mega trends; climate change, digital revolution, China in Africa, and the pan-African free trade area. It will discuss and assess how Africa can turn these megatrends to its advantage and attain quantum leaps in incomes and living standards.

Pre-Covid Progress, 2000-2019

Sub-Saharan Africa (SSA) created unprecedented growth at rates above 5% per annum in many countries. The median poverty rate fell by about 10 percentage points to around 43%.  This period, termed Africa Rising, attributed the region’s faster growth to external tailwinds, progress in macroeconomic management, robust public investment and buoyant domestic demand.

However, as the last frontier in global development, there are also formidable challenges. At 2%, Africa’s share of the global economy is little changed from 20 years ago (1%), yet it has grown to 12% of the world’s population. The region’s share of global merchandise exports has barely budged with 1.3% in 1998 and 1.8% in 2018.  Global poverty is concentrated in Africa as poverty falls more rapidly elsewhere.

Against this backdrop, the progress on the four priorities has been mixed:

  • Governance and conflict resolution: Of the six Worldwide Governance Indicators, only the indicator measuring voice and accountability has improved, implying expanding democratic rule.  Notable progress is observed in female participation in the parliament. However, political instability and violence remain problematic. Out of 58 states classified as fragile globally, 35 are in Sub-Saharan Africa (SSA).
  • Human capital: Investments in health have reduced mortality, contributing to rising life expectancy from 50.1 years in 1998 to 60.9 in 2017. Educational outcomes have improved substantially: the primary and secondary school gross enrolment rates increased, from 80% and 26%, respectively, in 1999 to 98% and 44% in 2018.  Nevertheless, Africa has the lowest levels of educational attainment and achievement with high learning poverty.
  • Economic diversification and competitiveness: SSA’s business environment is unfavorable to investors as the average ranking of SSA nations in Doing Business 2020 being was 140 among 190 countries. Furthermore, there has been insufficient diversification of economies, and the gap in output per worker compared with advanced economies remains wide. The structural transformation in the region also lags others.
  • Aid dependence and debt: SSA remains largest recipient of foreign aid. As of 2017, official development assistance as a share of gross national income ranged from 4.2% in Guinea, to 20% in the Central African Republic, Liberia, Malawi, Somalia and Gambia.

Unanticipated Developments, 2000-2020

The 2000 report did not foresee the importance of the following four megatrends:

  • Climate change: Africa accounts for 2-3% of the world’s carbon dioxide emissions, but it suffers from destructive impact of climate change. The increase of global mean temperatures of 1°C above the 20th-Century average has challenged African economies and communities (Figure 1). On a positive note, it is estimated that climate action could deliver 65 million additional jobs in 2030 as new markets develop, including on renewables.

Figure 1. Effect of a 1C Increase on Real per Capital Output

Effect of a 1C Increase on Real per Capital Output - final

  • Asia in Africa: China and other Asian countries are changing economic relations between African countries and their long-established Western partners. In 2000, China and India were Africa’s eighth and ninth largest trading partners whereas they are now first and second (Figure 2). Chinese lending to Africa increased from $121 million to $30.4 billion between 2000 and 2016, with a focus on infrastructure and production in contrast to aid from OECD-DAC partners primarily on social sectors (Figure 3).

Figure 2 Annual Trade Volume with Africa             

Annual Trade Volume with Africa

Figure 3 Composition and Type of Usage of Aid and Loans

Composition and Type of Usage of Aid and Loans

  • Digital revolution: The digital revolution is positively disrupting many sectors of African economies. Notably, mobile technology is allowing African countries to leapfrog technology in various industries. The deep cellular mobile coverage (Figure 4) has revolutionized financial inclusion: SSA has the greatest number of registered mobile money accounts with 160 million unbanked adults owning a mobile phone.

Figure 4 Registered Mobile Money Account

Registered Mobile Money Account

  • Continental integration: Africa is one of the least integrated regions. Intra-African exports made up less than 20% of total trade in 2019, compared to 60 percent and 70 percent for intra-Asian and intra-European trade. In July 2019, 54 African nations agreed on the pan-continental free trade zone, which could unite economies comprising 1.3 billion people to create a $3.4 trillion economic bloc, and boost internal and external trade.

Looking Ahead

COVID-19 will delay policy reforms, but it will not affect long-term growth prospects nor the nature of the policy reforms that promise great economic prospects. Positioning Africa to Claim the Post-COVID 21st Century will give a fresh look at African development after COVID-19 and is timely given the adoption of ambitious global and regional frameworks that will shape development priorities for African countries within the next decade. The report will identify solutions for closing the remaining development gaps, turning its disadvantages (e.g., high population growth) into dividends (e.g., youthful demography and entrepreneurship). This sequel report offers a comprehensive business plan based on the analytical results in the ten chapters:

Ten chapters report

In the process of delivering the report, the World Bank Group Chief Economist for the Africa Region has convened a panel of renowned experts to advise the work. The core team, with the support of the advisor panel, will synthesize and expand current research findings to develop a strong analytical foundation for policy options, analysis, and recommendations for post-COVID Africa.