United Nations – The green sector can improve Africa’s trade balance by reducing energy imports, and raise foreign exchange, says a report by the UN Economic Commission for Africa (UNECA).
According to the report: “Economic Report on Africa 2016: Greening Africa’s Industrialisation’’ released on Monday in New York, the `greening’ Africa’s industrialisation can also lead to job creation and spur economic growth.
It said that greening industrialisation was an opportunity for Africa to achieve the type of structural transformation that would yield sustainable and inclusive growth, create jobs, while safeguarding the productivity of natural resource assets.
Structural transformation through industrialisation, it added, would inevitably and justifiably increase the uptake of resources.
The report noted that most African economies share common environmental challenges and that greening could promote regional integration and cooperation and the growth of continent-wide innovation capabilities.
It said that structural transformation in Africa’s economies remained the highest priority, and industrialisation was the top strategy for achieving it in practice.
Achieving the African Union’s Agenda 2063 and fulfilling the Sustainable Development Goals (SDGs), it added, would demand a major re-design of growth strategies across the continent.
The big opportunity for Africa in 2016, as a latecomer to industrialisation, it added, was in adopting alternative economic pathways to industrialisation, it added.
It showed that African countries had made notable gains in the regional business environment.
“With greater economic and political stability across most sub regions, these advances have supported growth through higher consumption and increased public and private investment,’’ it said.
It stated that recent commodity price developments have, however, highlighted many economies’ persistent structural weaknesses, particularly in government revenues, exchange rates and current account balances.
It said stronger emphasis was required on strategic non-oil sectors such as electricity, construction and technology, particularly in economies heavily dependent on oil revenue, such as Nigeria.
The global economic environment, it added, underlined the need for prudent, counter-cyclical macroeconomic management.
It said continued low commodity prices offered an opportunity for improved fiscal management and consolidation through further cutting of subsidies to utilities.
It explained that spending should instead target high-priority sectors for accelerated structural transformation.
It said that countries should also focus on mobilising domestic resources to fund public investment, by issuing Eurobonds for example.
It also showed that African countries still had high international reserves that could be used for investment.
Exchange rate depreciation, it added, could also enhance exports, particularly in oil-dependent countries.
Overall, it added, Africa continued to grow in and after the global financial crisis, while traditional markets had seen very slow recoveries, limiting Africa’s export opportunities.
The report called on African countries to seek to enhance intra-African trade by strengthening regional integration, lowering trade costs and the nonphysical barriers to trade and pledging stronger commitments to the Continental Free Trade Area under negotiation.
It also suggested that governments should take on-board the drivers, challenges, and trade-offs in pushing for a greening of industrialisation and to build them into the vision and route-map for action.
Seizing the momentum of the Paris Climate Agreement and the SDGs, it added, provided the ideal timing for such a shift in economic strategy.
It called for collective commitment from across the African Union to strengthen the speed and effectiveness of such a strategic shift.
The report said governments were central in mapping out the pathway to green industrialisation. (NAN)
