As Africa grapples with mounting challenges, including the devastating effects of climate change, soaring debt levels, systemic inequalities, and an imbalanced global financial system, experts are urging immediate action to secure the continent’s economic future.
At the African Economic Conference 2024, titled “Securing Africa’s Economic Future Amidst Rising Uncertainty,” Claver Gatete, Executive Secretary of the United Nations Economic Commission for Africa (UNECA), outlined a series of five interconnected solutions aimed at addressing these crises and propelling Africa toward economic transformation.
Climate Crisis and Economic Losses
Africa is already facing severe economic repercussions from climate change. With estimated annual losses from climate disasters ranging between $290 billion and $440 billion, the continent’s future sustainability is under serious threat. In addition, the financing gap to achieve the United Nations’ Sustainable Development Goals (SDGs) for Africa has surged to a staggering $1.3 trillion annually.
“The need for urgent action has never been clearer,” Gatete emphasized. “The time to act is now if we are to turn these challenges into opportunities.”
Proposed Solutions for Economic Growth
- Value Addition: Key to Economic Diversification
Despite its abundance of natural resources, Africa continues to fall short in industrial production, remaining heavily reliant on imports of goods derived from its raw materials. Gatete argued that Africa’s future lies in transforming these raw resources into value-added products, fostering regional value chains to drive economic growth.
He pointed to successful examples such as Botswana’s beef industry, Ethiopia’s leather production, and the cocoa industries in Ghana and Côte d’Ivoire, calling for these models to be scaled across the continent. “Unlocking Africa’s renewable energy potential and building robust value chains can help create jobs and position the continent as a key global economic player,” Gatete said.
- Attracting Private Investment
To move beyond reliance on foreign aid, Gatete stressed the importance of attracting private investment to Africa. This can be achieved by de-risking investment opportunities through enhanced governance, transparency, and innovative financial mechanisms. He cited Rwanda’s vaccine manufacturing initiative as an example of how local value creation can attract international partnerships.
“Africa needs to replicate such success stories across other sectors,” Gatete urged.
- Boosting Intra-African Trade
Another crucial step in Africa’s economic integration is the accelerated implementation of the African Continental Free Trade Area (AfCFTA). Gatete emphasized that true regional integration cannot occur without the seamless movement of goods, services, and people. Governments must work together to eliminate trade barriers and foster stronger intra-African collaboration.
- Reforming Global Financial Systems
The UNECA Executive Secretary also called for a complete overhaul of the global financial system, which, according to Gatete, has systematically excluded Africa from key decision-making processes. He argued that Africa’s interests must be prioritized, particularly in securing funding for SDGs, climate adaptation, and equitable growth.
In addition, Gatete suggested scaling up domestic resource mobilization and introducing innovative financial instruments, such as green bonds, blue bonds, and sustainability-linked bonds, to help strengthen Africa’s financial resilience and sovereignty.
- Revamping Tax Systems
Africa’s tax-to-GDP ratio, which stands at just 15.6 percent, is far below the global average. Gatete proposed modernizing tax systems, broadening the tax base to include the informal sector, and utilizing digital technologies to improve efficiency in tax collection. “By boosting tax revenue, even by a small margin, Africa could generate billions in much-needed funds,” he said.
A Call for Immediate Action
As Africa’s economic challenges continue to escalate, the continent’s leaders must act decisively to create a more sustainable and resilient economic future. Gatete’s proposed solutions represent a comprehensive approach to addressing Africa’s pressing issues, but he warned that swift and coordinated efforts will be essential to avoid further setbacks.
“The transformative potential of Africa is immense,” he concluded. “But we must unlock its full potential by addressing these challenges head-on.”
