Africa needs policies to protect its economies from vulnerabilities

African countries need policies that can help build resilience, raise potential growth and inclusiveness if the continent is to achieve the sustainable development goals and aspirations of Africa’s Agenda 2063.

This was said Wednesday by Adam Elhiraika, Director of the Macroeconomics and Governance Division of the Economic Commission for Africa (ECA) in his presentation to the 38th meeting of the Committee of Experts of the Conference of African Ministers of Finance, Planning and Economic Development in Marrakesh.

Mr. Elhiraika, who gave an overview of Africa’s recent economic and social development performance, said the continent also badly needs policies to diversify and structurally transform to better support its industrialization and enhance intra-African trade through the game-changing African Continental Free Trade Agreement (AfCFTA).

“To reduce vulnerabilities from global economic conditions, such as the tightening of global financial markets, currency fluctuations, capital outflows and volatility of commodity process, African countries need to enhance resilience through the appropriate combination of fiscal, monetary, exchange rate and prudential policies to maintain their growth momentum,” said Mr. Elhiraika.

“There is also a need for policies that can help improve debt management on the continent and to harness urbanisation as a strong vehicle for generating fiscal revenues to finance sustainable development.”

Mr. Elhiraika said Africa’s growth is projected to remain strong, moderating around 3.2% in 2018, but expected to recover to 3.4% in 2019 and 3.8% in 2020.

The continent’s fiscal and current account balance narrowed though still relatively high while high debt levels continue to pose a concern to long-term development.

The ECA Director said the AfCFTA is expected to enhance intra-African trade and growth with marginal losses in revenues.

“Africa has made good progress in social outcomes, but inclusion especially in areas of health and education remains elusive,” he told the meeting of experts that opened ahead of the Conference of African Ministers of Finance, Planning and Economic Development.

He said socio-economic conditions were improving though at a slow pace. He reported that under-five mortality ratio fell by 42% between 1990 and 2017; income inequality has declined though still relatively high (at 0.44 – Gini coef.); the number of working poor declined 52.8% in 2000 to 33.5% in 2015 and projected to further decline to 30.4% in 2019; with steady progress being recorded towards gender parity.

The conference is being held under the theme; “Fiscal policy, trade and the private sector: A strategy for Africa.”