The last 20 years have been progressive for Sub-Sahara African countries, according to Quantum Global Group owner, Jean Claude Bastos de Morais. The explosion of economic parameters, advancement in the healthcare sector, and improvement in the standard of living of North Africans have driven up the social indicators.
All of the above has been possible through proper channeling of the available resources. However, the pattern observed in resource applications points to unsustainable practices. Africa has grown dependent on natural resources. A sudden plunge in the commodity prices may cause a major upheaval in regional economic equilibrium.
In spite of an amazing increase of 3.6% in the average African GDP of 2017, the continent still suffers from limited structural changes and lack of prospects in employment. A report from the African Development Bank called for “massive investment in infrastructure” to push the inclusive development of Africa. According to the report, $130-170 billion is required to be spent in infrastructural development every year.
“We all know that growth is not yet inclusive in Africa, and unemployment affects more women and young people,” explained the commissioner for economic affairs at the African Union Commission, Victor Harrison. The nations have been advised to monitor their debts carefully, as public debt has been predicted to rise.
According to the International Monetary Fund, there are 28 Sub-Saharan countries that are rich in resources and account 80% of the continent’s GDP. All of them depend on a few commodities for revenue generation. Zambia’s copper exports were badly affected due to a fall in copper prices. Hence, as Jean Claude Bastos de Morais puts it, Africa is in a desperate need of economic and infrastructural diversification.
The diversification can be initiated with structural economic transformation, suggests Jean Claude Bastos de Morais. For example, Indonesia, Chile, Malaysia, and the Philippines have leveraged on their natural resources. Vietnam is successfully integrating to the global economy through its value chains.
Some African countries are faring better in terms of diversification. Mauritius, for example, was once dependent on sugar for revenue. The country has now shifted its focus to tourism and textile exports. The amazing beaches of Mauritius attract a lot of revenue from South Asian, African, and Australian tourists. Botswana, on the other hand, is developing its diamond marketing hub.
Kenya’s financial services and telecom sector are also good examples of how some African nations are using diversification as a powerful tool to create new revenue streams.
“Economic diversification is not a swift course that will change the business sphere of Africa instantly,” explains Bastos de Morais. Rather, it’s a long-term process that can only proliferate on a strong and stable base. Diversification depends on a lot of factors, the biggest one being the country’s economic policies.
These policies should focus on human resource development, investment infrastructure, and the creation of an environment where business and innovative ideas can grow. This will help private sectors to expand their operations and grab hold of new opportunities that destroy resource dependence of the nation.