New York / Johannesburg, 12/10/2010 - Economic diversification would reduce African reliance on natural resource revenues and encourage sustainable growth in telecommunications, agriculture, tourism and other strategic sectors, according to a report released by the UN, the AU's NEPAD Agency and OECD.
“This report presents […] determinants that could guide any Government in decision-making on diversification of their economy”, while leaving space for them to determine their own priority areas for diversification, said Under-Secretary-General and United Nations Special Adviser on Africa Cheick Sidi Diarra of the report to correspondents at a Headquarters press conference this afternoon.
The report, entitled "Economic Diversification in Africa: A Review of Selected Countries", was produced by the Office of the Special Adviser on Africa (OSAA) along with the New Partnership for Africa’s Development (NEPAD) and the Organization for Economic Co-operation and Development (OECD). Accordingly, Mr. Sidi Diarra was joined at today’s launch by Ibrahim Assane Mayaki, the CEO of NEPAD, and Eckhard Deutscher, Chair of the OECD’s Development Assistance Committee (DAC).
Mr. Sidi Diarra said the report focused on both vertical diversification — in which value was added to primary commodities now sold by the countries in their raw form — as well as horizontal diversification, to multiply the sectors on which an economy depends so as to make a country less vulnerable to external shocks.
He said the case studies included in the report were of five countries from different subregions that also had very different development processes. Those countries were South Africa, Kenya, Tunisia, Angola and Benin. He added that the three organizations involved with the report were simultaneously releasing a series of policy briefs on foreign direct investment, infrastructure, debt and official development assistance (ODA) in Africa.
Mr. Mayaki said the joint efforts between the United Nations, the OECD and NEPAD represented a genuine and constructive partnership. The economic diversification report presented new development strategies without shying away from the obstacles. It also highlighted new instruments that could encourage diversification, such as the development of transport corridors between countries and hubs related to telecommunications and science and technology.
He said that such a focus reflected a major shift of policy design strategy, commenting that “aid is no longer the main determinant of policy design”. The private sector, civil society and regional economic organizations were becoming increasingly important in that process, as were ownership of policy design by individual countries as well as regional integration.
Concurring with that assessment, Mr. Deutscher noted that at $88 billion, direct investment in Africa was twice the level of ODA last year, and remittances had grown from $11 billion to $40 billion from 2000 to 2008. “Africa will become an important player in the future without any doubt,” he added, saying that the global aid system must adapt to that new reality.
In response to questions, Mr. Deutscher said that he could not foresee hostile competition for investment in Africa between China, India and other emerging economies, because there was so much to do. All such investors, as well as those from the industrialized world, had more common interests than differences.
Mr. Mayaki said that such South/South cooperation was of interest to both emerging economies and Africa, and NEPAD was promoting strategic partnerships in that regard. In the case of China, one main objective was to have investments promote industrialization. In the case of Brazil, the building of capacity in bio-technology was a priority.
Mr. Sidi Diarra noted that his Office had produced, with OECD, a study on the relations between Africa and emerging economies, which had concluded that such relationships gave more room to manoeuvre in policy areas than other foreign direct investment because of the competition for natural resources, which was only going to get stronger. His role was to help Africans make the best out of such investments.
Asked about agricultural investment, Mr. Mayaki said that the eventual objective promoted by NEPAD was a quadruple increase in agricultural productivity in Africa through training, fertilizer production, commercialization, the creation of regional markets and other strategies. There were already results from those efforts, he maintained.
On which sectors received the most investment, Mr. Sidi Dairra said energy and information technology were certainly the largest. Unfortunately, the growth of the energy sector often did not did not necessarily benefit other areas of the economy without targeted policy initiatives. Asked about landlocked countries, he said their disadvantages were well known, but that they also had the advantage of receiving preferential treatment, grants and loans in many areas.
The panellists acknowledged that they did not know the specifics on Sudan’s eligibility for debt forgiveness, but Mr. Deutscher noted that the screening for related programmes took fragile situations into account. According to the rules, OECD/DAC could make recommendations, but the world financial institutions had the final say.
Asked about NEPAD’s African Peer Review Mechanism, Mr. Mayaki said that countries that volunteered to undergo such analysis were increasing, and Governments had been accepting critical conclusions. It was one indicator of the improvement of governance systems in Africa.
Asked finally about the advantage of such regional economic organizations as the Economic Community of West African States (ECOWAS), he said that regionalization was crucial partly because it helped increase the competitiveness of countries in a particular subregion vis-à-vis the global market place.