The Economic Development in Africa Report 2012, subtitled Structural Transformation and Sustainable Development in Africa, was released today. It focuses on the dilemma of accomplishing much-needed economic growth while protecting the environment.
While the rest of the world is flocking to the continent for resources that are increasingly scarce elsewhere, the report notes that Africa, with its abundant supplies, had a per capita domestic material consumption of 5.3 tons in 2008 - about half the global average. The 13.4 per cent of the world's population living in Africa in 2008 used only about 5.5 per cent of globally consumed resources. As domestic material consumption on the continent inevitably increases, the report says, careful domestic planning and enhanced international financial support and technology transfer will be required for what it terms "sustainable structural transformation".
The challenge is to modernize the continent's economies - including expanding industrial capacity - through the efficient use and consumption of domestic natural resources, thereby avoiding the mistakes made by early industrializers elsewhere. Past experience has shown that industrialization and structural transformation - that is, the shift in economic production towards higher-value goods and goods of greater variety and complexity - was often achieved at the expense of the environment and through intensive use of natural resources, the report says.
The report is based on a comprehensive analysis of resource use and productivity in Africa. It shows that Africa remains a small player on the global stage in terms of total resource extraction and domestic material consumption, even though Africa's resource use is rising fast.
The fact that intensive energy and material consumption on the continent has not yet occurred provides an opportunity, the study contends. Given current levels of technology and know-how, and given that the world's advanced economies also must make the difficult shift to "green" production, it should be possible, and it will be best, if African countries start the process that way.
Africa accounted for only 7.2 per cent of total global material consumption in 2008, compared to 6.8 per cent in 1980. However, domestic material use increased by 92 per cent between 1980 and 2008. Energy use remained low, increasing by only 16.3 per cent over that same period. Since Africa - as a latecomer to industrialization due to various domestic and external constraints - has not yet been able to use its abundant natural resources and harness its energy sources to build modern industrial economies, it should embark on the process now armed with the best knowledge, strategies and technologies possible, the report says.
The report contends that Africa should not follow the same "grow now, clean up later" approach that was adopted by currently industrialized countries. The continent should instead pursue a different path which reconciles economic growth with environmental sustainability.
Implementing sustainable structural transformation in Africa will not be easy, and there is no "one size fits all" approach. Each African country will have to design strategies and policies based on its own sectoral and resource priorities, environmental challenges, initial conditions and domestic capabilities. Among other areas, focus should be placed on efficient, sustainable resource use in energy, industry and agriculture. Countries that are well embarked on that path include Kenya, Mauritius and South Africa (in Africa), and China (among large developing countries).
The report urges African Governments to shift from traditional to modern, less polluting energy sources, by increasingly powering their economies by renewable energy such as wind, solar and hydro power, wherever these energy sources are economically and environmentally viable. In addition, it says that expanding the use of organic agriculture has proved to be an environmentally sustainable way of increasing harvests, bringing higher prices to farmers, and keeping rural populations engaged in farming rather than joining the vast migrations of population to Africa's cities.
For Africa to successfully transform its economies in a sustainable way, it will need to build capacities to obtain, use, and adapt existing environmentally sound technologies to local conditions, the report says. Indigenous technological innovation will be critical, as such ideas and adaptations work best for local conditions.
Overall, the process will require significant support from the international community, the report notes. Developed countries will have to increase financial assistance to Africa, particularly to productive sectors such as energy. Equally important will be greater technology transfer from developed and emerging countries to Africa, increased "South-South" cooperation in green technology use and adaptation, and greater flexibilities in the design of the global intellectual property rights regime. In addition, more "policy space" will be needed for African Governments so that they have the ability to use incoming funds and technology in the most efficient way for their specific circumstances.
The report calls for greater coherence between trade, environmental and investment policies at the international level to help rather than hinder this sustainable structural transformation.