Johannesburg – The African continent’s economy is projected to grow by 4.8% in 2013 and 5.3% in 2014; but that could improve if countries enhance the management of their mineral resources.
The West Africa economic region, also known as the Economic Community of West African States (Ecowas), remains the fastest growing economy on the continent, with Sierra Leone, Ivory Coast and Ghana being amongst the countries with the highest real Growth Domestic Product (GDP) growth for 2013/14.
Announcing the continent’s economic outlook at the Hilton Hotel in Sandton on Wednesday, Mthuli Ncube, a chief economist for the African Development Bank, said regional integration, in terms of infrastructure investment and maximising revenue from mineral resources, was the best way for Africa’s economies to improve growth.
He said the African Development Bank was happy that sub-Saharan Africa, despite being amongst the economies that record slower growth compared to other regions, and said there was a lot more to be gained in terms of the movement of people and investment.
“There are some long-term challenges, and the first one is infrastructure investment. As a bank, 60% of our portfolio focuses on infrastructure investment,” he said, saying that alone could help the region to grow by 3% more and reduce the trade deficit gap.
Ncube also said promoting the private sector to encourage entrepreneurship was key to reducing inequalities.
“The other thing is harnessing natural resource revenues… creating sector industries around mining.”
At a recent Infrastructure Africa Conference held in Sandton, Public Enterprises Minister Malusi Gigaba said African countries should work towards eliminating regulatory red-tape that restricts intra-investment amongst African countries.
On Wednesday, Ncube said doing away with visa requirements between African states would promote the movement of people, which would in turn improve intra-investment opportunities that would fast-track regional integration.
“I am certain that we can make progress on regional integration. It is very important. Regional integration has three pillars – movement of people, movement of capital and trade in goods and services,” he said.
“There is more to be gained in movement of people and in intra-African investment, like the MTN investment in the rest of Africa, Equity Bank investing in other parts of East Africa…”
Ncube said the African continent also needed to ensure that it introduces better tax systems on mineral resources to avoid losing mining royalties through illicit transfers.
Illicit transfers or theft – where revenue made by mining houses leaves the continent due to under-invoicing on mineral resources – has seen Africa losing about $1.4 trillion in revenue.
Former President Thabo Mbeki was recently tasked with investigating the theft, which has also been seen to have impacted negatively on the continent’s GDP.
While other economies, like the Eurozone, are struggling to recover following the 2008 global economic meltdown, Ncube said Africa continued to record good growth.
Despite South Africa being ranked amongst the countries with high inequalities, Ncube hinted that the country, which has anchored its job creation drive on infrastructure investment, was on the right track as far as achieving inclusive growth was concerned.
“Let’s take South Africa for example. I think one way that it can assist is to target the issue of job creation as we can see that inequality is a big issue. Not having jobs contributes to inequalities.” – SAnews.gov.za