Economic growth in Africa picked up steam last year and is set to accelerate strongly in 2018, but “massive investments” are needed in infrastructure, the African Development Bank (ADB) said on Wednesday.
Growth in Africa rose from 2.2% in 2016 to 3.6% in 2017 and is likely to rise to 4.1 percent in 2018 and 2019, the ADB said in its annual report, African Economic Outlook. “The recovery in growth could mark a turning point in net commodity-exporting countries,” it added.
However, across the continent job creation did not rise in lockstep with growth, lagging by 1.4%. Woman and young people, aged 15-25, are those who have been most affected by the slow growth in employment.
To generate jobs for the 12 million young people entering its workforce each year, Africa must take a fast-track to industrialization, the ADB said. But key obstacles in infrastructure remain, including energy, water and transport, as well as health, education, security and administrative capacity.
“The continent’s infrastructure needs amount to $130-170bn a year, with a financing gap in the range of $68-$108bn,” the report said.
Tax reform is also essential, the ADB said. Tax collection is improving in Africa – it hauled in around $500bn last year, a figure that compares with $50bn in foreign aid, $60bn in remittances and $60bn in foreign direct investment. Despite this progress, tax revenue is still below the threshold of 25% of gross domestic product (GDP) deemed necessary to scale up infrastructure spending.