The Economic Commission for Africa’s Executive Secretary, Vera Songwe has warned about a demographic trap for African countries if appropriate policy measures are not put in place to help manage demographic bulge.
Ms. Songwe made the statement during a special, historic event hosted by the ECA, in which Christine Lagarde, Managing Director of the International Monetary Fund delivered a keynote address on The Foundations of Technological Transformation in Africa.
Ms. Lagarde’s official visit to the ECA is the first of its kind by a leader of the IMF. Ms. Songwe described the visit as historical in many ways, as it took place at a time the ECA and the IMF have the first female heads.
The two leaders echoed their concerns on the fall in GDP per capita in many countries, which they stated is alarming for inclusive growth. “The biggest challenge facing Africa is how to increase the standard of living of its populations”, said Ms. Songwe.
To accelerate development, she called for more ambitious growth numbers stating that double-digit growth rates are now needed to respond to these challenges.
“This is the only way to invest, while maintaining appropriate macro balances such as the debt to GDP. She that Africa will need to find ways of financing its development as interest rates rise in the west and threaten to reduce FDI flows.
She proposed the need to collect more taxes, broaden the base, make all savings more productive and invest resources efficiently and effectively.
On trade and investments, Ms. Songwe offered a silver lining, pointing out that the Continental Free Trade Area is set to boost intra-African trade by 52.3 percent. “It is Africa’s industrial exports that will enjoy the biggest gains,” she said, adding that by easing intra-African trade, the CFTA will help Africa to power its own, long overdue diversification agenda as markets open for business across the continent.
“Our Challenge will be to see how we ensure that the deal is implemented and helps to diversify our economies, add value by deepening and accelerating regional trade and most of all creating jobs,” she said.
For her part, Ms. Lagardestressed that governments can do more than just encourage innovation, they can also help lead the way themselves. Doing both – creating the right environment for technological innovation and leveraging digital tools leads to more transparency, stronger accountability and “delivery of a better life for every citizen,” she added.
“Technology does not hold all the answers. In fact, technology often raises new questions, including about the impact of automation. But there is no doubt technology is an important part of the story,” she said.
Prior to the event, which was attended by representatives from the private sector, academia, students and the diplomatic corps, a meeting was held between Ms. Lagarde, her team and the senior management of the ECA. Both leaders pledged to collaborate on areas of each institution’s comparative advantage in the interest of Africa’s long-term sustainable growth.