At the African Economic Conference, which took place this past November in Gaborone, Botswana, policymakers and experts highlighted the pressing need for African leaders to take substantial actions to reform their economies and enhance resilience in an increasingly challenging global environment. Organized by the African Development Bank, the United Nations Development Program, and the UN Economic Commission for Africa, the conference brought together thinkers and specialists from across the continent and beyond to discuss strategies for safeguarding Africa’s economic future amid rising uncertainties.
Responsible Leadership
President Duma Boko of Botswana (as shown in the image), who recently ascended to office advocating for economic revitalization and youth employment, urged African leaders to face the harsh realities confronting the continent and take ownership of policy failures that may have exacerbated current issues.
“We need to move beyond self-congratulation and acknowledge the repercussions of our actions on our citizens. If we fail to challenge each other, we risk becoming our own worst enemies,” he expressed.
He urged fellow leaders to intensify efforts for economic diversification, emphasizing initiatives his administration has launched to reduce Botswana’s reliance on diamonds while fostering industries such as infrastructure, agriculture, and tourism.
Boko stated that Africa’s abundant natural resources offer a solid foundation for economic diversification and the development of regional value chains.
“Africa still boasts rich natural resources, and it is crucial to develop and enhance value chain systems that add value to these resources, prioritizing their use within Africa. This approach not only significantly diversifies African economies but also creates more job opportunities within our nations,” he said.
He also raised concerns about the escalating conflicts across the continent, noting that they jeopardize hard-earned progress in poverty alleviation and development. According to the Geneva Academy of International Humanitarian Law and Human Rights, there are currently more than 45 armed conflicts underway across the continent.
“The ongoing and needless conflicts must end, as they inflict immeasurable human suffering, loss of life, and displacement, while leaving lasting scars on societies,” Boko asserted.
He emphasized Africa’s demographic dividend as its most significant advantage. However, he pointed out that high unemployment rates, skill shortages, and non-inclusive policies mean this potential remains largely untapped.
“Africa has a vibrant and youthful population, a valuable asset if wisely invested in. Our youth are the innovators, entrepreneurs, and future leaders who will drive our economic progress and create inclusive, resilient societies that leave no one behind,” he added.
Development Cannot Be Outsourced
Kevin Urama, chief economist and vice president for economic governance and knowledge management at the AfDB, stressed the importance of a mindset shift across Africa. He noted that leaders and policymakers often lean on global institutions for solutions, while local responses to Africa’s challenges could be found within the continent itself.
“Countries must understand that national development cannot be outsourced. Development is fundamentally a self-driven process,” he commented, adding that “Africa needs home-grown solutions grounded in local realities.”
He highlighted the urgent requirement for pro-industrial policies to diversify African economies and promote inclusive growth. However, he cautioned that such policies must avoid rigidity and allow for innovation; without this adaptability, they will not suffice to create the millions of jobs required for Africa’s burgeoning youth population.
“It’s vital to recognize that industrial policy alone won’t address slow growth, employment challenges, and poverty alleviation. Instead, a blend of pro-innovation policies prioritizing strategic value chain development in competitive sectors can greatly enhance inclusive economic growth and sustainable development,” he argued.
Urama also criticized inadequate governance, which leads to revenue losses and inefficiencies, highlighting that Africa loses approximately $1.6 billion every day due to corruption, rent-seeking practices, and illicit financial outflows.
Ahunna Eziakonwa, regional director for Africa at UNDP, noted that escalating global conflicts are redirecting resources away from development expenditure towards increased military spending. This transition poses significant obstacles for Africa, which has considerable development financing needs.
“Conflicts in Ukraine and Palestine have pushed annual global military expenditures beyond $2.4 trillion, the highest level since 2009, diverting much-needed resources from investments in Sustainable Development Goals,” she remarked.
Eziakonwa criticized the high borrowing costs that African nations face, largely due to “inaccurate” credit ratings from global agencies that misrepresent the continent’s risk realities. UNDP reports that inaccuracies in credit ratings have cost African countries $75 billion in excessive interest and lost lending opportunities.
“We also provide tailored technical assistance and capacity-building programs for countries preparing for credit ratings or evaluations,” she added.
Key to Domestic Resource Mobilization
Claver Gatete, executive secretary of the UN Economic Commission for Africa, emphasized that in a world with dwindling development finance and rising debt costs, Africa must improve its tax systems and prioritize domestic resource mobilization to enhance its economic outlook.
He argued that boosting revenues doesn’t necessarily require raising taxes. Digitizing tax administration and improving compliance could secure billions more in tax income. Rethinking tax incentives to attract private investors can also bolster national finances. He emphasized that only private investors who demonstrate their operations yield employment, income, and growth should benefit from such incentives.
Gatete further highlighted that Africa’s potential lies in transforming resources into value-added products. “It’s essential to establish regional value chains across key sectors. With 94 value chains identified in 23 sectors among roughly 240 Special Economic Zones, there’s no reason Africa cannot succeed in this area,” he noted.
He urged African leaders to intensify efforts to attract private investors by mitigating investment risks, asserting that this is the only way to decrease reliance on foreign aid. By enhancing governance, implementing transparent systems, and developing innovative insurance mechanisms, Africa can lower investor risks, he emphasized.
He also stressed the need for leaders to do everything possible to ensure the success of the African Continental Free Trade Area (AfCFTA). This would enable the scale necessary not only to attract private investments but also to develop the regional value chains essential for Africa’s industrial growth and high-income job creation.
Climate Finance Must Be Concessional
Eziakonwa acknowledged the devastating impact of climate change on the continent’s most vulnerable populations and criticized the slow pace of financing intended to tackle this issue. She remarked that the costs associated with climate financing are becoming unbearable.
Urama agreed on the critical need for more concessional financing and grants to support climate finance efforts.
However, Gatete remarked that while concessional funding and grants are more appropriate for climate finance, Africa lacks control over the amounts and timing of funds pledged by wealthier countries. The solution, he claimed, lies in Africa accurately valuing its natural capital to attract further resources for mitigation and adaptation efforts. He cited the case of carbon credits in Africa, which are significantly undervalued in comparison to other parts of the world.
