STORY: Report launch “Economic Development in Africa 2022” - UNCTAD
TRT: 3 mins 37s
SOURCE: UNTV CH
ASPECT RATIO: 16:9
DATELINE: 14 July 2022, GENEVA, SWITZERLAND
African countries are urged to diversify their exports to better survive economic shocks such as the current global crises which are the consequences of the COVID-19 pandemic and the war in Ukraine. This is one of the key findings of the Economic Development in Africa Report 2022 published today by the UN’s leading institution dealing with trade and development (UNCTAD) in Geneva.
“The report makes clear the great potential for African countries to transform their economies through services, supporting the continents long standing economic diversification goals, boosting productivity and development”, said Rebeca Grynspan, UNCTAD’s Secretary General while speaking at a press briefing at the United Nations.
Despite decades-long efforts to diversify, 45 out of the continent’s 54 countries remain dependent on exports of primary products in the agricultural, mining and extractive industries.
“In 2022 for the first time in more than 25 years, most of the African countries experienced a recession”, resumed Ms. Grynspan. “This fall in economic activity produced a disproportionate effect on the poorest and most vulnerable segments of the population”.
The report entitled "Rethinking the Foundations of Export Diversification in Africa: the Catalytic Role of Business and Financial Services" outlines how African countries can rethink efforts to diversify their economies. According to UNCTAD’s Secretary-General, the continent has enormous potential to break commodity dependance and ensure its effective integration into high-end global value chains.
“This is a continent with huge potential, the African Continental Free Trade Area is a huge opportunity”. Ms Grynspan said. “But to really make good use of that opportunity, countries have to take policies to diversify, they have to go on scale, they have to integrate, to be able to more successfully, you know, reap the opportunities and the value added that the international trade can give to the countries”.
The African Continental Free Trade Area aims to create a single market for the continent’s 1.4 billion people and can boost export diversification.
As the world faces a cost-of-living crisis, 58 million people are just living above the poverty line in Africa and are at risk of sliding into poverty due to the combined effects of the COVID-19 pandemic and the war in Ukraine.
According to Ms. Grynspan, “a recent analysis by the UN Global Crisis Response Group on Food, Energy and Finance which analyses the global economic shocks caused by the war in Ukraine, indicates that Africa, and especially sub-Saharan Africa, is now one of the worlds’ most exposed regions to the current crisis”.
The report said that information technology and financial services cold be a game changer for Africa. But at the moment they account for only 20% of the continent’s services exports.
“The analyses we are sharing today provides convincing evidence that high value services, especially high intensity ones in ICT and finance are often the missing link that explain why diversification has not been achieved in the continent”, saidthe UNCTAD chief.
The report outlined how technologies can improve access to diverse and competitive markets both within and outside the continent and underscores the critical role of the private sector. This includes small and medium enterprises (SME), which account for about 90% of firms on the continent and employ around 60% of its workforce.
UNCTAD’s Director for the Division for Africa and the Least Developed Countries, Paul Akiwumi, explained that “this report outlines how technology can contribute in two ways to the diversifying economy: One, to support the diversification of the commodity sector as we know the traditional sector, and the second is to support small and medium size enterprises (SME)”.
UNCTAD also calls on countries to tackle other hurdles facing African SMEs, such as poor integration to regional and global markets to compete with large public and private firms.