Launch of the Economic Development in Africa Report 2023
16 August 2023
Ladies and gentlemen,
It is my first official visit to Kenya as UNCTAD’s Secretary-General.
Kenya is an example of a vibrant economy emphasizing Africa’s potential in global trade and world economic future, that is exactly the point that we want to make in the report.
That is what we say not only that it was important to come here to Africa to launch the report not to do it in our headquarters but to do the global launch here in Kenya.
Nairobi is Africa’s business hub, home to our robust stock exchange symbolizes economic dynamism.
Kenya’s resilience during COVID-19 was impressive; the GDP growth in 2021 and also GDP growth in 2022 where important signals of resilience and progress.
Let me say this without you know obviously forgetting how hard all the developing countries have been hit but what we call the cascading crisis; COVID-19, climate change, here the drought obviously that has hit the country very severely as it has the whole Horn of Africa and the war in Ukraine with the food prices going up and inflation coming in the developing world because of that and obviously has hit very severely the most vulnerable but this report tries to understand the incredible potential of this continent so we will center our attention on that part and on the main message of the report but obviously we can talk about all the other issues say if that is safe needed.
So, as I said I will report underlines the higher Africa can become a major actor in the global supply chains by harnessing the vast resources and materials needed by high technology sectors and growing consumer market.
Trade is not just goods as we know, it is ideas and capacities that reflect the adaptability of countries to the global economy, so diversification to pay is key for all the continent’s economies reliance on a better future. So, if we are dependent only on one or few commodities, we know that is risky and so we have to get away from that part.
Diversifying trade builds resilience and enhances innovation because our wide based economy is key for private sector development and employment opportunities and that is what the demographic bonus of Africa really requires.
Our framework highlights three exports tiers that we all know about. We have the raw commodities, the intermediate products, and the complex finished goods.
So as nations export higher tier goods, productivity and wages fries reshaping economies.
Integration into complex global supply chains is the part that we are advocating.
Three reasons that we consider drive what we call this huge opportunity for the continent.
One geopolitics and trade dynamics including the African Continental Free Trade Area, renewables, and demographics.
Let me go through these three, geopolitics and trade dynamic, renewables, and demographics.
Politically countries and businesses are seeking the diversification of suppliers, and this is because reliance on one supplier is as risky as commodity dependence on one raw material.
So, diversification and diversification of risks is something that is happening in the trade dynamics at the global level right now.
Renewables and that is a great opportunity for Africa and this together with the African Continental Free Trade area has incredible synergies really participating in higher and more supply chains at the global level.
The second reason is renewables, and we all know that this is a mineral rich continent basic to the supply chain in renewables; been batteries or energy renewables, we know that Africa is centered peace for the raw material. So, the question here is how we can go up the value addition ladder with this great possibility.
And the third reason is demographics, and it is Africa’s youthful population and growing consumer markets that propel Tech innovation.
So, Africa’s ecosystem growth is impressive, hubs in artificial intelligence, 3D printing, and global chain are fostering innovation and redefining supply chains. FinTech and e-Commerce are thriving, and Kenya is a very good example showcasing Africa’s entrepreneurship.
This transformation is important for African economies but more importantly for African population for its men and women.
The report highlights that creating an environment conducive to technology intensive industries would help raise wages on the continent. Currently, the minimum wages in Africa are around on average USD 220 per month in the Americas, not only the US but the continent is 670 around USD 670 per month, so there is an important part to follow.
Our report is especially on the potential of the continent, it analyzes indent untapped potential in automobiles in several sectors and we choose automobiles, solar energy, and pharmaceuticals.
Paul Akiwumi that is the director of the African and LDCs division in UNCTAD will get into much more detail on those areas and elaborate further in the report.
Africa’s priorities must guide this journey towards High Tech potential.
However, we know that investment is needed, financial investment as much as human capital investment, and we know that this is a bottleneck. So, according to the report the value of the African supply chain finance market grows by 40 per cent between 2021 and 2022, reaching USD 41 billion but we know that this is not enough.
You know, micro and small medium enterprises are still battling and having important obstacles for the financing to be part of this supply chains and the continent can mobilize more funds by removing barriers to supply chain finance including regulatory challenges, high risk perception and insufficient credit information.
At UNCTAD we also underline the current context that is extremely challenging, and we advocate for relief for African countries fiscal space to invest in strengthening their supply chains.
And we know that fiscal space is needed and here we join the voice of the president of Kenya that UNCTAD has advocated for the international community to really respond to the developing countries and the African countries in terms of their need to have more fiscal space and be able to have a better part or financing liquidity, investment and obviously the issue of debt.
On average and this is something that we highlight in a report that we launched with the Secretary General of the United Nations on the challenge of debt worldwide, we called the report “A world of debt” - on global debt.
This is an important number that we should remember that African countries pay four times more for borrowing than the US and eight times more than the European countries.
So, for the same risk profile, African countries pay much more for their loans and for their debt than the rest of the developed world. And this must change if Africa is really to achieve its full economic potential and be a major actor in global supply chains.
The United Nations stand committed to supporting Africa in this part and I hope that this report and the work that UNCTAD has done in more detail in sectors and enablers for Africa to be able to take on this opportunity that is in front of us, will help support countries in this part.
So now, I leave you with Paul Akiwumi and I thank you again for being here with us and we will be happy to take any questions that you have.
Asanteni sana. Thank you very much.