Unlocking Africa’s competitiveness

5 May 2011

African economies have made important strides in improving their economic environments in recent years, but much remains to be done to sustain recent strong growth, according to the Africa Competitiveness Report 2011.

The report, jointly produced by the World Bank, World Economic Forum and African Development Bank, was released at the start of the World Economic Forum on Africa in Cape Town on Wednesday.

It argues that African governments must better harness the region’s resources through stronger integration into international trade and finance, improved educational systems, enhanced entrepreneurial opportunities for women, and developing their tourism sectors.

“Africa must focus on the policies and strategies that are key for the sustained economic recovery and inclusive growth of the continent, such as higher education for skilled manpower and entrepreneurship development, and financial instruments that will support vibrant private sector development and regional integration and trade,” Mthuli Ncube, chief economist and vice-president of the African Development Bank, said in statement on the release of the report.

Four focus areas

The report highlights four areas on which Africa should focus “to ensure strong, sustained and shared growth”, namely: diversifying products and markets; upgrading managerial skills and higher education; expanding women’s entrepreneurship; and reaping the full benefits of tourism.

“African countries have much to gain by diversifying exports and by further opening up regional trade,” the World Bank says on its Africa Competitiveness Report web page.

Despite improving over recent decades, the report finds, Africa’s share in world trade remains low, being heavily concentrated in natural resources, while intra-African trade is limited.

Regional integration could also “help African countries become more competitive and resilient to external shocks”.

Not enough university students

On managerial skills and higher education, the report states, African higher education enrolment remains extremely low by international standards, while most African students avoid science, engineering technology and business. “The result is a skills mismatch – university graduates remain unemployed, while African countries continue to face shortages of skilled labour.”

The report finds the rate of women’s entrepreneurship to be higher in Africa than in any other region, without necessarily signaling economic empowerment. “This is because women are concentrated in the informal, micro, low-growth, and low-profit areas.”

The report shows that while women are less likely to be operating larger firms in higher-value-added sectors, those who do so in fact manage firms that perform equally well as those run by men. “What is critical is not to increase entrepreneurship per se, but rather to enable women to move into higher-value-added activities.”

Tourism riches unexploited

And when it comes to tourism, the report finds that Africa’s rich natural and cultural resources “represent a major unexploited endowment … The region has many advantages on which to build its tourism industry, including price competitiveness, a strong affinity for tourism, and rich natural resources supported by efforts toward environmental sustainability.

“However, a number of obstacles remain to developing the sector, notably improving safety and security, upgrading health and hygiene levels, developing infrastructure and access to African sites, and fostering the region’s human capital.”

In addition to assessments of competitiveness, trade performance and the ability to attract investment, the report includes an analysis of what is needed to upgrade higher education in Africa, how to best expand women’s economic opportunities on the continent, and the extent to which African countries have created environments attractive to travel and tourism.

Klaus Schwab, executive chairman of the World Economic Forum, said the report was “the third comprehensive effort by our three organisations to place the continent in a broader international context and to shed light on the important aspects of development in the region, which are so critical to ensure sustained and shared growth for Africa’s citizens.”

SAinfo reporter