Agenda 2063 Draft Framework

Transcription

1 Agenda 2063 Draft Framework Introduction As Africa commemorates the 50 th Anniversary of the OAU/AU in 2013, it does so with pride in the core achievements of the past, pragmatic assessment of the challenges still faced, and renewed acknowledgement of the vital importance of Pan African solidarity towards the achievement of a brighter future for all the peoples of the continent. Today, at the beginning of the second decade of the 21 st century, there is an invigorating mood of confidence in the future of the region, similar to that which marked the 1960s when the majority of African countries became independent. Once again, Africans are proudly asserting their independent voice within the international community and setting the agenda, direction and pace of change in the region. Internationally, Africa is also once again cogently spoken of as a region of great untapped potential that is poised to play a more significant role in the global arena. Several facts and trends certainly support the astuteness of these perspectives. Two decades ago, Africa celebrated success in its battle to free every corner of its landmass from colonial domination and racial oppression. With that long struggle over, a bold change was made to the regional institutional architecture that was epitomized by the transformation from the OAU to the African Union at the turn of the century. As part of this process new frameworks were established to improve the management of conflicts, and improve political governance and economic management. Building on this foundation, regional economic performance saw a marked and sustained improvement throughout the early 2000s, albeit from a very low base. The region s economic growth has now averaged 5% per year for more than a decade, higher than at any other period since the early 1970s. Between 2000 and 2011, six of the world s fastest growing economies were in Africa Angola, Chad, Ethiopia, Mozambique, Nigeria, and Rwanda. 1

2 While this turn around in economic performance is laudable, it lags behind the pace and length of change that was experienced in regions of the world that have successfully transformed their socioeconomic conditions and livelihoods of their populations in the past 50 years e.g. in Asia. It thus can not be disputed that significantly more action is still required on a number of fronts in order to achieve the African Union s vision of An Integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena. Africans have not been short of ideas over the past 50 years. There has been substantial thinking and vigorous debate at various periods from the 1960s onwards regarding development planning approaches and the most viable frameworks to promote the effective mobilizing of Africa s human, financial and natural resources that is critical to the achievement of the continent s liberation from poverty, ignorance and disease. While various African countries may have been at differing times under the sway of different externally inspired approaches, a consensus vision and framework for the structural transformation and the socioeconomic development of the continent was first elaborated in the Lagos Plan of Action in This vision was then further developed in the following decades, as the regional and global context changed, and projected through the Abuja Treaty in 1990 and later the New Partnership for Africa s Development (NEPAD) at the start of the new millennium. Aiming to encourage discussion among all stakeholders, this Agenda 2063 framework document outlines an approach to how the continent should effectively learn from the lessons of the past, build on the progress now underway and strategically exploit all possible opportunities available in the immediate and medium term, so as to ensure positive socioeconomic transformation within the next 50 years. 2

3 Changing dynamics within the region, and between Africa and the world (globalization), as well as the urgency of propelling the continent forward at much faster economic growth rates undeniably necessitate a stepping up of the pace. The first section of the document thus focuses on situating the current moment within the context of the experience of the past and analyzing how the lessons from that journey now inform the way forward. This includes a discussion of the measurements/yardsticks of success. Notably, while faster GDP growth is crucial, and is often held up by observers as proof that Africa is rising, this paper stresses that a focus on growth alone is insufficient. It argues instead that the impact of the positive growth rates must be more widely felt. Africa s economic growth needs to promote greater equity, inclusiveness, the preservation of natural capital and creation of decent jobs, especially for the youth and women. The next section elaborates this line of reasoning further by placing a strong onus on investigating the core changes that are required in how things are done (and should be done) to enable Africa to strategically respond to the rapidly evolving contemporary global landscape. It provides comparative analysis of the effect of critical global mega-trends (e.g. climate, environmental, demographic, governance/political economy, technological innovation) on Africa and other global regions, with a view to highlighting possible long term impacts that must be envisaged now, the essential challenges to address, as well as the opportunities the region must seek to exploit if it is to make significant progress and not be left behind the rest of the world. In light of the complex task ahead, it makes the case that a paradigm shift of approach and a change in mindset is now absolutely essential towards realizing the continental vision. Thereafter, the main elements of Agenda 2063 at the operational level are outlined. At its heart, this new roadmap, emphasizes the importance to success of rekindling the passion for Pan-Africanism, a sense of unity, selfreliance, integration and solidarity that was a highlight of the triumphs of the 20 th 3

4 century. It elucidates how a change in mindsets on how to get things done, based on the above, can best advance implementation on the ground. Africa is encouraged to take advantage of the failure of opposing externally inspired paradigms (socialist planning and the neo-liberal Washington consensus) to promote a new approach to development planning firmly embedded in its own experience, culture, capabilities and institutions. In that regard, concrete milestones to gauge success or failure along the way are specified. Finally, at the operational level the possible major risks/ threats and critical success factors are discussed in more detail. These include regional political, institutional renewal and financing/resource mobilization issues, as well as the changing nature of Africa s relationships with the rest of the world. 1. Learning from the Past Africa in 2013 is faced with a myriad of fruitful opportunities to effectively take charge of its own destiny and propel itself forward into a prosperous and peaceful future. Success in this quest will nonetheless rest on the continent s dynamic positioning of its engagement with the rest of the world within a rapidly changing global context. A recommitment, in both word and deed, to the values of Pan-Africanism, solidarity and self-reliance, which in the past guided and inspired the pioneers of the movement for the physical and mental emancipation of Africans worldwide, will also be critical. In several African cultures the importance of examining the experience of the past is stressed as highly important to guiding the way forward. In that regard, fifty years on from the foundation of the Organization of African Unity (OAU) and more latterly the African Union (AU), it is important to ground the presentation of the Agenda 2063 framework first on an assessment of past experiences in order to highlight issues which if addressed correctly within the current changed global context can guide the way forward. 4

5 1.1 The Evolution of the Pan-Africanist and Regional Integration Agenda The foundation of the Organization of African Unity (OAU) on 25 May, 1963, in many ways marked the end of the beginning of the modern Pan- Africanist journey, which from its start has had the freedom, unity and dignity of the peoples of Africa and of African descent as its core objectives. Through signing the founding act of the OAU, the thirty three 1 Heads of African States and Governments assembled in Addis Ababa, Ethiopia, on that historic day, created a framework for cooperation and solidarity that sought to consolidate the hard-won independence, sovereignty and territorial integrity of all African countries, as well as provide a united front in the fight for the total liberation of the continent. At the same time, it was acknowledged that the struggle against foreign domination, and for dignity, did not end simply with the attainment of national independence, but was intimately connected with the significant improvement of the socio economic welfare and wellbeing of all Africans. The creation of the OAU thus also reflected the conviction that the unity of African States was necessary to ensure their long term economic independence and the socioeconomic advancement and transformation of the continent. A retrospective overview of the past half century shows that the establishment of the OAU/ AU, and related regional frameworks, has been fundamental to providing platforms for deepened and wider co-operation among African countries, yet progress has been slow due to numerous internal and external factors. Building on the significant successes in achieving liberation and political independence across the continent throughout the 1960s and 1970s, 1 Algeria, Burundi, Cameroon, Central African Republic, Chad, Congo (Brazzaville), Congo (DRC), Dahomey, Egypt, Ethiopia, Gabon, Ghana, Guinea, Côte d Ivoire, Liberia, Libya, Madagascar, Mali, Mauritania, Morocco, Niger, Nigeria, Rwanda, Senegal, Sierra Leone, Somalia, The Sudan, Tanganyika, Togo, Tunisia, Uganda, Haute Volta (Burkina) and Zanzibar. 5

6 African Heads of State and Government took several measures from the end of the 1970s onwards to focus more on promoting national and collective selfreliance in social and economic development 2. In a number of key summit declarations and decisions they stressed the need for their continental organization to focus more on economic issues and the need for African countries to individually and collectively restructure their development strategies and programmes so as to achieve rapid socio-economic change. With the Monrovia Declaration, African leaders expressed their resolution to address the economic challenges the continent was facing more effectively. Their adoption in April, 1980 of the Lagos Plan of Action for the economic development of Africa then paved the way for enhanced economic cooperation among African countries, setting common goals in thirteen areas, including: Food and agriculture; Industry; Natural resources; Human Resources Development and Utilization; Science and Technology; Transport and Communication; Trade and Finance; Energy; Women and Development; Development Planning, Statistics and Population. The bold plan was essentially still born, however, because shortly after it was adopted, African countries were pressured by the Bretton Woods Institutions to focus on implementing individually-negotiated Washington Consensus structural adjustment programmes (SAPs). With their attention focused mainly on internal economic dynamics and responding to an agenda set by outsiders, they failed to stick to the commitments they had made to integrate (through the LPA framework). The SAPs worsened the social and economic crises faced by the majority of African countries in the 1980s. With many countries enduring serious balance of payments and external debt problems, the collapse of their internal production systems and the weakening of the social fabric, the 1980s was termed the Lost Decade for Africa. During that 2 Monrovia Declaration of commitment of the Heads of State and Government of the Organization of African Unity on guidelines and measures for national and collective self-reliance in social and economic development for the establishment of a new international economic order July,

7 period, the advancement of the African integration agenda was given very little prominence in the national and regional discourse. Things began to change in the early 1990s, an era marked by fundamental changes in the global alignment of power and international relations following the collapse of the Soviet Union. The Abuja Treaty of 1991, establishing the African Economic Community carried forward some of the commitments made in the Lagos Plan of Action and the Final Act of Lagos (1980), and represented the first major step towards injecting new life into the African unification and integration project, since the foundation of the OAU. With the Regional Economic Communities (RECs) identified as the building blocks of the Economic Community, the Treaty was designed to serve four objectives, namely: promote economic, social and cultural development and the integration of African economies; mobilise the utilization of the human and material resources of Africa; raise the standard of living of African peoples; and coordinate and harmonize policies among existing and future economic communities in order to foster the gradual establishment of the Community. The global context, now increasingly dominated by the neo-liberal agenda, again, however, put several obstacles in the way of progress for Africa s integration project. Internally, progress was also hampered by several factors including inadequate political will to implement integration decisions; apprehension on the part of States to cede some of their competencies; and, poor coordination and coherence among the RECs, as well as between them and other regional institutions, including the OAU. By the end of the 1990s, it was acknowledged that Africa needed to adopt a much more strategic approach to accelerating the regional socio-economic integration agenda than was possible within the framework of the OAU. This new approach and a revival of emphasis on the themes of unity, self-reliance and collective solidarity was given life through the 1999 Sirte Declaration that paved the way for the Constitutive Act of 2000 and the launching of the AU as the 7

8 successor to the OAU in 2002 in Durban, South Africa. Concomitantly, New Partnership for Africa s Development (NEPAD), was adopted in 2001 as a programme for the socioeconomic transformation of the continent. 1.2 Macroeconomic and Economic Policy Trends The evolutions within the regional integration agenda outlined above were also linked to major macro economic and economic policy trends during the period under review, which impacted on Africa. In that regard, the continent has broadly passed through three major phases since the independence era. The first phase was the period 1960 to During this period, African countries experienced moderate growth. In this phase, the continent pursued Import Substitution Industrialisation (ISI) policies and there was the expectation that the replacement of imported goods with domestically produced ones would over time, enhance self-reliance and help prevent balance of payments problems 3. African countries grew by an average of 4% of GDP. However, over time, ISI proved inefficient although some industries did grow over this period. The second phase from 1970s to 1980s was characterized and dominated by the oil crisis and Africa s growth slackened. Growth fell from around 4.5% to 2.4%. This resulted in African countries embarking on Structural Adjustment Programmes (SAPs) to align macroeconomic fundamentals and enhance market forces and liberalisation. The third phase began in the 1990s and focused on Poverty Reduction Strategies, promoted by the Bretton Woods Institutions, which were implemented within the context of obtaining debt relief. Growth remained low. At the start of the new millennium, Africa entered a fourth phase at the time of the creation of the African Union and the New Partnership for Africa s Development (NEPAD), which ushered in an era of innovative regional initiatives to enhance integration, maintain peace and security, and promote good governance and shared values. During this phase, over the past decade and more, Africa has experienced positive growth in various sectors. Between UNCTAD/UNIDO Economic Development In Africa Report

9 and 2008 African countries grew at an average of 5.6% of GDP. In 2008 this growth was interrupted by the global financial crisis and fell to 3.1%. African economies weathered the crisis and their economies rebounded in This growth was due to pro-growth macroeconomic policies which the continent pursued and continues to pursue. Africa s growth during this period was also due to a boom in commodity exports as well as domestic demand arising from increased public investment on the continent. The reduction and end of conflicts on the continent also contributed to the growth. Africa was the second-fastest growing region in the World after Asia from 2000 to In 2010, ten of the 15 fastest growing economies in the world were from Africa. It is projected that seven out of the 10 fastest growing economies in the world in the next five years will be African. It is also projected that the continent s combined GDP of US $ 1.5 trillion is set to double by According to the African Development Bank, African economies grew by 3.4% in and are expected to grow at an average of 5% over the coming years. African exports are increasing and African markets are diversifying. African trade has increased and trade with BRICS has increased from $10bn in 2000 to 160bn in However, essential challenges remain. First and foremost, growth to date has not created jobs and has not been inclusive. Large numbers of the populace have been left out of the new growth trend, and there is persistent inequality in terms of income, access to education and health services, limited job opportunities, especially for the youth and women. For example, data from shows that only 28% of Africa s population had access to electricity compared to 70% of other parts of the developing world; 69% of the population had access to improved water facilities compared to 88% of other developing world populations 6. The income gap between Africa and other regions has also been getting wider. This is essentially due to the fact that while Africa has been growing, others have been growing faster and hence widening the gap. Further, 4 ERA 5 ERA 6 Briefing note 6: AfDB s Long-Term Strategy for Inclusive Growth Agenda,

10 while growth in the economies of other regions has been driven by structural changes to their productive bases marked by increases in value addition to products and the share of manufacturing in GDP, in Africa it has been driven predominately by a commodity exports boom, which is prone to external price shocks. Given the historic volatile nature of the commodity price swings, reliance on primary product exports clearly does not provide a basis for sustainable growth and socioeconomic transformation over the long term. In order to place the economies of the region on a sounder footing, greater efforts must now be made to diversify more into manufacturing (using the comparative advantages offered by Africa s commodities sector) so that Africa can be transformed into the world s newest industrial frontier over the next 50 years. The continent has embarked on promoting private sector development in recognition of the role that the private sector needs to play in economic development and transformation. This has already led to a degree of success in private sector development and the efforts must be continued and intensified. Africa s private sector presently accounts for over 80% of total production, 67% of total investment, 75% of total credit to the economy, and 90% of the labour force 7. But there is a need to go further still in order for the private sector to play its role in creating jobs and economic opportunities for the majority, including the poor. The national and regional policy environment has to be more targeted and strategic in promoting the private sector to enable it to effectively drive the process of economic transformation on the continent. 1.3 The Importance of Effective Institutions The extent to which Africa can achieve its development aspirations and vision will very much depend on the capacity of its institutions. To date, Africa s ability to deliver on its programmes has been seriously undermined by its institutions. While the continent s plans and programmes have been of good intentions, the structures created to implement these programmes have not performed well. In most cases, these institutions have been bedevilled by political 7 MGI African Futures

11 considerations and interferences. This has led them to focus on activities not related to their mandates. On the whole, institutional related implementation challenges have slowed down progress and have at times derailed economies. A lot needs to be done in terms of professionalizing the civil service across Africa through inculcating the appropriate ethics and value systems and establishing independent and neutral bureaucracies. At national level inadequate funding of state institutions has also hurt programme implementation on the continent resulting in mediocre performance. In many cases governments have paid lip service to funding such institutions while at the same time expecting good results. Such institutions have in most cases operated on very limited budgets spreading their resources too thinly and hence have had limited impact. At the continental level, Africa has created many institutions including the AUC and RECs. Despite creating these Pan African institutions African governments have not adequately resourced them but have relied on international partners. For example, the AUC s Programme budget is funded by international partners to the tune of 90 percent with African countries contributing a mere 10 percent 8. Furthermore, collaboration between these Pan African institutions has been poor resulting in duplication and hence inefficient use of resources. Human capacity in these institutions has also been an issue. Higher education in science and technology and vocational training and skills development are critical to development. Africa s tertiary education systems must address the challenges of access, quality and relevance. Inadequate connectivity within the continent has also significantly contributed to the continent s less than expected growth. Inter- state transport infrastructure is poor because of narrow national approaches and other problems. In many cases infrastructure projects have not gone beyond boundaries resulting in uncompetitive cost structures. In summary, Africa has to transform its institutions if it is to claim the 21 st century. Africa needs strong institutions with the necessary capacity and 8 AUC 2013 Budget Framework Paper 11

12 resources to effectively establish and maintain a sound macroeconomic framework, through good public financial management. Africa also needs a conducive environment with a legal and regulatory framework that facilitates contract enforcement, property rights encourages jobs and helps create a more stable and secure society. Political commitment in this regard is paramount. 1.4 Implementation, Implementation, Implementation Another key factor which has hindered Africa s growth and transformation has been inadequate commitment to implement what has been agreed upon. Although the continent has made strides in governance and accountability over the past half century, there has been an inadequate emphasis on implementation of the continent s agreed plans and programmes. This has also been coupled with inadequate Monitoring and Evaluation mechanisms including indicators to determine progress. At the continental level numerous decisions have been made which have not been implemented. For example, while countries have committed to advance the regional integration process in clearly defined steps, progress has not been as expected. This is not least due to nationalistic tendencies and the emotive issue of sovereignty, which countries are unwilling to reduce in preference for Africa s greater good. Tariffs are still high and the envisaged Free Trade Area is non-existent. In contrast, the Asian continent succeeded in its integration agenda because countries were willing to make all efforts to downplay sovereignty issues in favour of promoting regional integration and intra-asian trade. With regard to the free movement of people, very little has changed on the continent. With the exception of ECOWAS the rest of Africa still remains closed to intra-african movement. This trend runs contrary to the ideals of creating a union of the people and rather only creates a union of states. Africa s poor implementation has also been due to lack of focus on its own development plans. The region s limited policy space in the international arena and lack of voice globally has also in the recent past affected its ability to move 12

13 forward fast. Furthermore, unfulfilled financial pledges from international partners have also had a negative effect on Africa s capacity to deliver on development. Additionally, while it is recognised that governments have the mandate to propel development, the civil society, and the populace at large also share that responsibility. Nonetheless, governments have in most cases ignored this section of society thereby rendering their developmental efforts inadequate because people were not carried along in the developmental process. Overall, the numerous experiences and trends highlighted in this section which has sought to draw out the lessons of the past, have shown that Africa has failed to fulfil its full potential. It is well known that in the early 1960s, at the time of the establishment of the OAU, there was high optimism that the continent would perform very well given that several African countries were at par or had even higher GDP rates than their counterparts in Asian. For example, the GDP per capita of Ghana and South Korea were the same in Up until 1975 the fastest growing developing country was Gabon, and Botswana s growth rate exceeded that of Hong Kong, Taiwan, Malaysia, and Thailand. Despite this optimism, Africa failed to complete the transformation journey which Asian has to a large degree now traversed. So what lie s behind this? An effective response to this question will entail Africa embracing a paradigm shift in the way it does things in order to promote sustained socioeconomic transformation over the next 50 years. Africa must do things very differently to take advantage of the current momentum towards Towards a paradigm shift The challenges that face African countries are many but not insurmountable. Africa should draw inspiration from its rich history, from its successes and failures, to chart the way forward and address its challenges. As 13

14 the success in the liberation struggles against colonialism showed, the ethos of Pan Africanism inspired countries to express solidarity and unity with those countries that were still under the yoke of oppression, often at the expense of their own national and regional development. This spirit was dominant for much of the last century, underlining Africa s engagement with the world and influencing its positions in international forums such as the United Nations, the global peace movement and as a founder of the Non-Aligned Movement. Moreover, the global financial crisis has put to rest the confidence in neoliberalism as the sole answer to growth and development. Africans are therefore adding their voices to the view that the best solutions are not necessarily those of returning to rampant free market policies and externally driven and prescribed policy frameworks. 9 As already noted, Africa is on an upward growth trajectory, and future trends are also in its favour. Conditions are therefore ripe for a decisive break from the practices and approaches (internal and external) that have inhibited the continent from reaching its potential. Charting the way forward over the next fifty years Africans must address the following questions: How can the current African growth trajectory be sustained for another 2-3 decades to ensure that it transforms the structure of economies and addresses unemployment? How to ensure inclusive growth that leads to poverty eradication, shared development and social inclusion? Does the growth trajectory meet the medium to long term development needs of Africa, or is it simply based on external demand for our raw materials? Is Africa making optimal use of its comparative advantages especially in natural resources, and how should it achieve this? 9 For example, see Desta (2012), Adedeji (2002) etc. 14

15 Are we addressing the underlying causes of conflict (resources and identity issues)? Is the state of democracy and inclusion on the continent conducive to development? Do we have an endogenous African development agenda that will lead to prosperity and peace? The answers to these questions are not all positive. At the same time, we have a window of opportunity which is not infinite to make sure that we address all these questions. This, we argue requires a paradigm shift, a shift in thinking and doing, that will enable us to respond to the above and move with resolution. The areas in which we need new ways of doing and thinking, building on the foundations and learning from the past, include our approaches to leadership, resource mobilization, implementation and execution of plans, integration, role of national states and pooled sovereignity, shared values, attitudes and behaviour, solidarity and people-centred approaches, the importance of identity issues and inclusion, and, Africa s relationship with the world. Without a doubt the transition from the OAU to the AU is an important milestone that we hope will be acknowledged by future generations, having positioned Africa to be in a better place to address its various challenges.there is now a need to build on the AU and its NEPAD programme by emphasising strong political leadership and effective institutional frameworks, adopting growth promoting macroeconomic policies, diversifying the structure of economies, deepening intra-african trade and investment, increasing investments in highquality education, health and infrastructure, and providing social protection for vulnerable groups. 10 There is now a renewed sense of optimism about the fortunes of the African continent based on a number of developments on the economic and political front. There is also a clear sense of continuity between 10 See also UNECA (2012), UNCTAD (2007) 15

16 previous initiatives by generations of African leaders, aimed at crafting frameworks for Africa s development, and what is entailed in various AU continental policy frameworks and strategies. Most important among these are the emphasis on self-reliance, regional integration and greater intra-african trade, and enhanced partnerships with the South and with the developed world. Over the next 50 years the ability to fully utilize these platforms will determine how successful Africa is in realizing its vision for a united, prosperous continent at peace with itself. 3. Agenda The Foundations There is a remarkable continuity between the current vision and those depicted by African leaders in all major, past and present, political and economic development frameworks of the continent. While the fundamental beliefs that have constituted the foundation of Africa s vision over the years, and now form the core of Agenda 2063, have virtually remained unchanged, the ambition of the continent in terms of the political and/or economic heights to be attained has been reshaped by prevailing circumstances. Generally, there has been an upward trend in the targets of successive vision statements, although they are all anchored on the same principles of self-reliance, solidarity and regional integration. Thus while the Lagos Plan of Action aimed to pull Africa out of the economic crisis of the 1980s, the Abuja Treaty, crafted in 1991, was bolder and targeted the economic integration of the continent. The AU Constitutive Act and NEPAD, meanwhile, were adopted at a time (the early 2000s) when African countries had started experiencing renewed economic growth following two decades of structural adjustment. This explains why both frameworks aim at eradicating poverty and achieving sustained growth. Agenda 2063 is more ambitious. It aims at the establishment of Africa as a global growth pole and achievement of, at least, middle income status for the economies of all the 16

17 countries of the continent. This is objective is realistic given the current trend of sustained two-digit economic growth rates in many African countries 3.2 Unpacking the Vision for 2063 In the context of Agenda 2063, an integrated Africa alludes to a continent that has completed all the stages for establishing the African Economic Community, as stipulated by the Abuja Treaty signed in Hence, by 2063, the African common market will be fully functional, with the free movement of people, goods, capital and services, as well as the rights of residence and establishment. Africa will also have an established single domestic market, Pan- African Economic and Monetary Union, single African Central Bank, Single African Currency, and a Pan-African Parliament. A prosperous Africa by 2063 means that countries on the continent will have graduated from being predominantly in the group of low income countries, that is, having a Gross National Income (GNI) per capita of $1,025 or less to becoming middle income countries with per capita GNI ranging between $1,026 and $12,195. By 2063, Africa will also be a transformed continent where economic growth is translated in wealth and employment creation, guided by sustainable environmental policies. Through their dynamism and size, African economies, by 2063, will even be in the position to drive growth elsewhere on the planet. Global experience indicates that there are multiple pathways to structural transformation. However, once set in motion the process proceeds along the following well-established path. First, there is an increase in the share of manufacturing coupled with a sustained decline in that of agriculture. Second, the share of agriculture employment falls while that of the total labor force in other sectors of the economy increases. Third, economic activity shifts from rural areas to the cities leading to an increase in the degree of urbanization. Successful transformation of African economies will entail the unlocking of the continent s potential in a range of areas, including matching the skills mix of the large and 17

18 youthful population to the needs of transforming economies and societies, better health and nutrition and improved access to basic services. Such a transformation must create conditions that remove gender barriers and allow for the full participation of African women in politics and economics, and eliminate all constraints to ownership of property, including land. Additionally, it requires strategies for a process of industrialization that is dynamic and selfreinforcing. Africa s development agenda will need to harness the continent s human and natural resources in a sustainable manner. Its strategies and policies must be crafted and driven by its own citizens. In order to become a global growth pole, the continent will have to sustain its recent impressive growth momentum for at least two more decades. Africa will also have to vigorously address the challenges of structural transformation of its output and trade, broaden and strengthen its weak infrastructural and human resource base, as well as significantly strengthen and modernize its science and technology capability. There is also a need to strategically manage the opportunities and risks presented by the newly forming multi-polar world that is being shaped by a significant redistribution of political and economic power between the advanced economies and the major emerging economies (e.g. China, Brazil, Russia and India). 3.3 Key Drivers of Change The factors listed below are critical to achieving the change needed to make the Agenda 2063 vision a reality. Promoting science, technology and innovation: Africa s sustained growth, competitiveness and economic transformation will require investments in new technologies and innovations including in the areas of education, health and biosciences, agriculture, and clean energy. To bring African science and technology to the frontier, attention should be given to initiatives such as the Pan African 18

19 University, the African Science and Technology Observatory and the African Space Programme, as well as the Pharmaceutical Manufacturing Plan for Africa. African countries should also put in place incentives to retain high calibre individuals who excel in science, research and technology to contribute to Africa s development. Investing in human development: The continent s population of one billion people, most of whom are youth, continues to grow. It will necessarily become an economic and social burden if they are not empowered to take part in the development process. In 1980, only 28 percent of Africans lived in cities. Presently, it is estimated that 40 percent do which is a share close to China s and larger than India s and the share is projected to increase. Africa has more than 500 million people of working age (15 to 64 years). By 2040, Africa s labour force is projected to reach 1.1 billion, overtaking China s or India s. Converting this population bulge into a demographic dividend will require aggressive job creation, with corresponding innovative investments in health and education (particularly education in science, technology and skills development). In the same way, advancing and protecting the rights of women, children, and vulnerable groups must assume a more elevated policy role in Africa. Managing the natural resource endowment: Africa is endowed with approximately 12 percent of the world s oil reserves, 40 percent of its gold and vast arable land, water and forest resources. The natural resource sector is expected to generate, in net present terms, more than US$ 600 billion (US$30 billion per annum) in government revenue over the next 20 years. Proper management, including value addition and beneficiation of these resources will translate into substantially improved fiscal positions for governments, the private sector and households that can be used to create other forms of wealth and accelerate poverty reduction. Pursuing climate-conscious development: Growing climate change concerns imply that Africa may need to take a different development path from that 19

20 followed by other regions of the world. This being a global public good, African leaders must engage other global partners to ensure that the continent has resources and sufficient capacity to pursue a green path to industrial development, based on low-energy intensity, low-carbon, and clean technologies. Creating capable developmental states: In all cases where structural transformation has succeeded, the state has played a crucial role in the process. African countries must thus build developmental states that are able to mobilize the population and build national consensus around a common development agenda, and ensure that adequate resources are committed to achieve it. Above all, the African developmental state must be accountable and responsive to the needs of its population. The continent is already making progress in this regard. Today, Africa s governments have improved the continent s macroeconomic stability significantly. The continent reduced its collective inflation rate from 22 per cent in the 1990s to 2.6 in the 2000s. Governments cut their combined foreign debt from 82 percent of GDP to 59 per cent. And they shrunk their budget deficit from 4.6 percent of GDP to 1.8 percent. Harnessing Regional Integration: Regional integration is critical in promoting peace and security. Furthermore, regional cooperation in the development of infrastructure will lower transaction costs, enhance the development of regional markets, and make manufacturing production and exports more competitive. Regional integration can also contribute to reducing the regulatory burden facing African firms and boost intra-african trade. 3.4 Long-term trends, external and internal For it to be meaningful, the vision for Africa 2063 must take into account several incipient long-term trends that will continue to shape tomorrow s socioeconomic situation, and which will not only open new opportunities, but also confront policy-makers with new challenges. 20

21 At a global level, the future decades will be characterized by the already apparent emergence as systemically relevant growth poles of several developing and transition countries most notably the BRICS. The ensuing recalibration of the world economic and political power opens the way for Africa to also become a more prominent player in the global arena. Yet, in order to seize this opportunity the continent needs to forge a proactive engagement strategy with these emerging partners, harnessing the growing economic relations with them to advance its long-term development objectives. 11 Secondly, strong global demand for primary resources can be expected to prevail over the medium- long-term. 12 For most African countries (though not net importers) this will improve the terms of trade, boost export and government revenues, and result in buoyant economic growth. The sustainability of these trends, however, will hinge on the capacity of African countries to articulate a more transparent and development-oriented policy framework for the minerals sector, to retain a higher portion of natural resource rents, and to utilize the proceeds towards achieving economic diversification and structural transformation. Thirdly, the continuation of unsustainable consumption patterns in rich countries, the unrelenting expansion of world demand for natural resources, and effects of climate change are set to pose considerable environmental challenges, whose socio-economic effects could be far-reaching. In Africa and elsewhere, countries may soon be confronted with resource scarcities, and huge costs for adaptation and mitigation, and will have no choice but to factor in environmental concerns in their long-term development strategies. Fourthly, the growing sophistication of markets and value chains will plausibly continue in the coming decades. Hence, successfully diversifying its production structure and undertaking high value-added activities will require 11 AfDB, OECD, UNDP, UNECA; (2011); African Economic Outlook 2011: Africa and its Emerging Partners. 12 Kaplinsky and Farooki; (2010); What are the implications for global value chains when the market shifts from the North to the South? Policy Research Working Paper no. 5205, World Bank. 21

22 Africa to invest massively in science, technologies and innovations, thereby fostering human capital accumulation and technological upgrading. Fifthly, against the background of the increasing importance of finance in the world economy, it is crucial for African countries to strengthen both domestic and regional financial markets, boosting resource mobilization and broadening access to financial services. In this regard, the continent is already moving in the right direction. For instance, the largest share of Africa s infrastructure funding (65 per cent) comes from the continent s governments, followed by private investors (25 per cent). Funding from non-oecd countries, of which China is the largest, provides an additional 6 percent. Official development assistance from multilateral agencies funds the remaining 4 per-cent. On top of the above global (and to a large extent exogenous) trends, the vision has to factor in regional long-term phenomena, which will unavoidably shape its development challenges. In that respect, four key elements are worth stressing. 1. First, as a result of demographic dynamics, Africa will face a significant growth of its population, particularly in the young cohorts. This will be accompanied by rapid urbanization and possibly increasing migration flows, including climate-induced population movements.. 2. Second, it is expected that the private sector will have to play a more prominent role in mobilizing resources for structural transformation. This will likely be the result of the already apparent aid fatigue plaguing Africa s traditional development partners, as well as of the emerging new approaches to development cooperation Third, regional integration will go hand in hand with a growing interdependence of African economies, both in the real and financial sphere, and with a transfer of monetary and fiscal autonomy from single countries 13 UNECA; (2012); Partnerships and Financing for Development in the post-2015 Development Agenda ; Issues Paper prepared for the Third Meeting of the High Level Panel of Eminent Persons on post-2015 Development Agenda. 22

23 to continental institutions. Successfully managing these processes will require devising effective ways to (i) deal with idiosyncratic shocks affecting only one or few countries in the region; and (ii) address in a sustainable way the likely presence of structurally-surplus and structurallydeficit countries within the future African Monetary Union Fourth, the compound effect of population growth, climate change, and rising appetite for primary commodities, will likely translate into mounting pressure on Africa s natural resources, including land and water. National and regional institutions will thus have to find ways to achieve sustainable and inclusive development, while diffusing the potential scope for conflicts over natural resources, and ensuring greater social and political participation. 3.5 Milestones on the way The vision for Africa 2063 builds on pre-existing strategic frameworks towards an integrated, prosperous, and peaceful continent, including most notably the Abuja Treaty, the New Partnership for Africa's Development NEPAD, the Comprehensive Africa Agriculture Development Programme CAADP, the plan of action for Accelerated Industrial Development in Africa AIDA, the Minimum Integration Programme, the Programme for Infrastructure Development in Africa PIDA, and Africa s Agro-industry and Agribusiness Development Initiative - 3ADI. These strategic frameworks define critical milestones that will guide the process ahead, supported by others that will provide additional guidance. Milestones related to integration Complete removal of barriers to the movement of Africans within the continent by 2015 and possibly introduction of an African Union passport by A similar situation could pose considerable problems for a monetary union, as evidenced by the current difficulties of the Euro area. 23

24 Establishment of the Continental Free Trade Area (CFTA) by 2017, as per January 2012 AU Summit Agreement Establishment of the Continental Customs Union by 2019, as per Abuja Treaty Establishment of the Continental Common Market by 2023, as per Abuja Treaty Establishment of the Pan-African Economic and Monetary Union by 2028, as per Abuja Treaty Attainment of an African share of world trade of % and an intra- African trade of all African trade of % (from current baselines of respectively 2% and 11-12%) by Milestones related to prosperity Agricultural sector in African LDCs to be constituted by highly-productive and profitable agricultural value chains by 2020, as per 3ADI Half of Africa s 34 LDCs to meet the graduation criteria by 2020, as per the Istanbul Programme of Action African agriculture modernized and transformed into a highly diversified and productive sector by 2023 Modernization of Africa s infrastructure to attain world-class standard by 2028, using revenue from the extractive industries and funds raised through innovative financing mechanisms (Presently, only 30% of Africans have access to electricity compared to percent for Asians; telecommunication penetration rate is about 6 per cent in Africa compared to an average of 40 per cent for other regions; internet penetration is the lowest in the world at 3 per cent; the road access rate is 34 per cent compared to 55 per cent for other regions; and access to water and 24

25 sanitation is 65 per cent for urban and 38 per cent rural areas compared to per cent for other regions in the world.) Achievement by each African country of an income status at least one step higher than its level in 2013 by 2033 Achievement of an economic growth rate of at least 6% a year for African countries from 2010 to 2040, resulting in a GDP per capita of at least USD for all African countries by 2040, as per PIDA 15 Achievement of electricity access of 70% by 2040, providing power access to an additional 800 million people, as per PIDA Milestone related to African ownership of its development programmes Ending Africa s dependence on foreign aid by 2028 Milestones related to structural transformation The following imperatives of Africa s structural transformation realised by 2033: o The share of manufacturing reaching 28 per cent of GDP in highand upper-middle income countries and 24 per cent in lower middle-income and low-income countries o The industry share of GDP reaching 10 percent and 14 per cent, respectively in the two categories of countries, and the service sector share reaching 59 percent and 47 percent, respectively, o The share of agriculture of GDP falling to 3.3 per cent In highincome and upper middle-income African countries and 15.5 per cent in lower middle-income and low-income countries.. o Achievement of a per capita energy use of 4,365 kilowatt-hours. Africa s contribution to world GDP reaching 5.1 per cent by The assumed economic growth rate is comparable to India s one over the past three decades. 25