Services, informality and productivity in Africa

Forum Afrique2017-Visual Identity - FR-3

By Tabea Lakemann, Research Fellow, GIGA Institute of African Affairs and University of Göttingen, and Jann Lay, Acting Director, GIGA Institute of African Affairs, and Head of GIGA Research Programme Growth and Development


Learn more about this timely topic at the upcoming
17th International Economic Forum on Africa


Services, informality and productivity in AfricaEconomic development and a sustained, broad-based increase in living standards on the African1 continent are critically connected to the capacity of African economies to create decent jobs at a rate that keeps up with the rapid growth of the workforce. This, in turn, depends on the ability of African governments to develop innovative, tailor-made strategies towards private sector development taking full advantage of countries’ comparative advantages. Private sector development strategies require governments to recognise the significance of informality and to look beyond industrialisation — to the service sector — for private sector growth and job creation.

The potential of informal firms

On average, the informal economy is estimated to make up almost 40% of GPD in Africa.2 Informal firms are typically much smaller than formal ones, but even when controlling for size, they are on average less productive, less likely to access external finance and have less educated managers.3 At the same time, heterogeneity between informal firms is considerable. Some firms exhibit very high marginal returns to capital, and between 28% and 58% of informal entrepreneurs in West Africa are identified as “constrained gazelles” with low capital stocks, but some unrealised growth potential.4 Many informal firms thus have the likely potential to provide an improved livelihood to their self-employed owners and family members engaged in the business.
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Youth Employment and Inclusive Growth: Part of the same coin in Cambodia

By Emmanuel Asomba, Development Policy Researcher, and Ji-Yeun Rim, Youth Inclusion Project Co-ordinator, OECD Development Centre

YOut-Employment
Courtesy ©UNV Cambodia May 31, 2016

Some countries in the South Asia and Pacific region are experiencing a rapid increase in the number of working-age people. This will create some opportunities as it will contribute to reducing the dependency ratio and increasing the possibilities for social cohesion policies. But if these people fail to find decent jobs, then per capita income may slow down. With less income, people face lower living standards and difficulties accumulating capital and assets. For young people, these changes potentially bring significant challenges. Take, for example, youth in Cambodia.

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Green Industrialisation and Entrepreneurship in Africa

By Milan Brahmbhatt, Senior Fellow, New Climate Economy (NCE) and World Resources Institute1


Explore this topic further with the upcoming launch of the
2017 African Economic Outlook: Entrepreneurship and Industrialisation in Africa.
Stay tuned for details


Solar salesman in Gulu Uganda Photo credit James Anderson
Solar salesman in Gulu, Uganda. Photo credit: James Anderson

Policy makers across Africa have embraced industrialisation and economic transformation as keys to accelerate inclusive growth. They also increasingly see the need for economic transformation to deliver green growth – growth that does not endanger Africa’s natural environment in ways that reduce the welfare of present and future generations. Economic transformation and green growth depend on doing new things: making risky investments in new, unfamiliar sectors or products or adopting new, unfamiliar methods, processes, technologies, inputs or business models. All this depends crucially on the activity of entrepreneurs, who drive change through their innovation and risk-taking. Fostering entrepreneurship, including green entrepreneurship, is thus a key policy aim for African countries.

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Habitat III decisions crucial for the future of Africa’s cities

By Greg Foster, Area Vice-President, Habitat for Humanity, Europe, Middle East and Africa

habitat-3Africa will have some of the fastest growing cities in the world over the next 50 years. Unless something is done, and done soon, millions more will flood into unplanned cities and live in already overcrowded informal settlements and slums. It would appear as if the United Nation’s Habitat III conference, which happens every 20 years, and New Urban Agenda couldn’t come at a better time.

Habitat III’s goals sound simple — develop well-planned and sustainable cities, eradicate poverty and reach full employment, and respect human rights. Being able to leverage the key role of cities and human settlements as drivers of sustainable development in an increasingly urbanised world, the meeting will seek political commitment to promote and realise sustainable urban development. This could be a watershed moment for Africa’s cities. But critical challenges stand in the way of making Africa’s cities economic powerhouses, centres for exchanging ideas, and places that meld cultures and peoples. Three actions are needed. Continue reading

Myanmar can flourish by sowing seeds of agricultural prosperity

By Deirdre May Culley and Martha Baxter, policy analysts at the OECD Development Centre

MyanmarDEVmattersOn 30 March, Htin Kyaw, a long-time adviser and ally of Aung San Suu Kyi – whose National League for Democracy party achieved a historic victory in recent electionsbecame the first elected civilian to hold office in Myanmar since the army took over in 1962.

The NLD won the democratic battle and enjoys unparalleled political capital and legitimacy. It must now deliver on exceedingly high expectations, build a cohesive multi-ethnic state and improve citizens’ lives. Economic progress will be indispensable if the country is to overcome years of ethnic armed conflict and move towards a common future. So what can the new government do?

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China’s economic slowdown: Good or bad news for Europe and Central Asia?

By Maurizio Bussolo, Europe and Central Asia Chief Economist Office, The World Bank Group

 

China-Dev-MattersChina’s economy looms large in global markets. After decades of sustained economic growth, the country became the world’s largest exporter in 2007 and today sells abroad 60% more goods and services than the United States and 75% more than Germany – the second and third largest exporters, respectively. In addition, China is the second largest importer of goods and services in the world, after the United States.

Because of China’s importance in the global economy, news of its economic slowdown and financial sector turmoil have caused many observers to worry. In fact, at the beginning of 2016, some were explaining the plummeting of stock markets as anticipating a growth collapse in China (also reflected in very low oil prices). Continue reading

A 21st century vision for urbanisation

By Dr Joan Clos, Executive Director, UN-Habitat

UrbanRuralWorldIf urbanisation is one of the most important global trends of the 21st century, with some 70% of the world’s population forecasted to live in cities by 2050, then urbanisation in Africa – and the ways in which that growth occurs – marks one of the most significant opportunities for achieving global sustainable development.

By 2050, cities in the developing world will absorb more than two billion new urban residents, representing 95% of global urban growth. African cities will take the lion’s share, in some cases increasing twice as fast as any other urban population worldwide. By mid-century, the urban population in sub-Saharan Africa alone is expected to quadruple, ushering in 1.15 billion new urban residents. How Africa prepares for its urban future will have far-reaching social, economic and environmental impacts – not only for the continent, but also for the world.  Continue reading