Slower Productivity Growth Responsible For Africa's Slow Growth - WB

A World Bank official last Thursday said while lower investments were important
for explaining Africa's slow growth, it was the slow productivity growth that more sharply distinguished the continent's growth performance from that of the rest of the world.

Professor Benno Ndula, Manager of the Partnership Group Advisor to the Vice President of the Africa Region of the World Bank, said the situation called for Africa to look beyond attracting new investors to more explicitly pursuing measures to help raise productivity of existing and new investment.

He said investment in Africa yielded less than half the return measures in growth terms than in other developing regions.

Prof Ndula, a former Executive Director of the African Economic Research Consortium, was speaking at the launch of a new report: "Facing the Challenges of African Growth: Opportunities, Constraints and Strategic Directions."

The report, authored by Prof Ndula is part of the World Bank's Development Dialogue Series and is intended to help clarify the opportunities, constraints and strategic directions facing Africa and its partners as they attempt to accelerate economic growth to reduce poverty and put Africa on a path toward meeting the Millennium Development Goals (MDGs).

Prof Ndula said African countries and populations were highly dependent on agriculture for food, exports and income earning more broadly.

"Productivity in this sector lags far behind the phenomenal progress made in Asia and Latin America and should be a key target for raising overall productivity of African economies," he said.

Prof Ndula said taking 45 years of Africa growth experience the impacts of poor policy had been shown to typically account for between one-quarter and one-half of the difference in predicted growth between Africa and non-African developing countries.

"However, the evidence also suggests that the importance of policy in explaining the growth differential between African countries and others may have waned since the 1990s as a result of major reforms implemented in the region, which have moved policy performance in African countries much closer to the global average."

Prof Ndula said overcoming disadvantages arising from geographic isolation and fragmentation, as well as natural resources dependence, would be necessary if Africa was to close the gap with other regions.

He said estimates showed that taking actions to compensate for these disadvantages might facilitate closing up to one-third of the growth gap with other developing countries.

"With much higher proportions of countries and populations in Africa being landlocked and resource rich, it was necessary to compensate for these disadvantages, primarily by closing the infrastructure gap and better managing and using resource rents," he said.

Prof Ndula said the growth of trading partners' economies had a very powerful influence. He added that the key transmission mechanisms were trade and capital flows, requiring greater openness, strengthening capabilities for taking advantage of the rapid growth in the global markets and improving the investment climate to make African countries better destinations for global capital than in the past.