Most African countries will be middle income by 2040, says Carlos LopesFollow @MadeItInAfrica
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It’s been a year since Carlos Lopes was appointed UN under-secretary-general and executive secretary of the Economic Commission for Africa (ECA), based in Addis Ababa, Ethiopia. As the head of ECA, he is in charge of promoting the economic and social development of Africa and fostering regional integration. In an interview with Africa Renewal’s Kingsley Ighobor, Lopes shared his thoughts on Africa’s current economic situation and his hopes for the future. The following are excerpts from the interview.
The 2013 Economic Report on Africa appears to mirror the 2012 report. What has changed over the past year?
Not necessarily on the economy, but in terms of the mentality and the priorities, there is a sea change taking place. We are working with the African Development Bank and the African Union Commission on something called Vision 2063 – 50 years from now. We got African ministers of finance to approve the idea of transforming African economies and shift from agriculture into industrial and service sectors. This has to be done now for three reasons. First, it’s because you do your big transformation when you are on a growth path, not when you are in recession. Second, you transform when you actually have an increasing urban population, which is what is happening now in Africa. And third, you do it when there is a good macroeconomic environment, which we do have. Our reserves are now at an all-time high – half a trillion dollars. We have inflation around 7% on average. We have managed to get the regulatory system right, particularly on the financial sector. Budget deficits are under control. We are saying that industrialisation is the key driver of this transformation.
At the macroeconomic level, a lot of progress has been made. But there is still joblessness.
First of all, what is the value of labour statistics in Africa? The definition of employment as applied in other regions has very little currency in understanding the current reality in Africa. Right now we have a major statistical problem on the continent. So you are talking about not knowing, apart from guessing games, the real characteristics of the composition of GDP in African countries. Demographics – same problems. You have only about 12 African countries that have done a census in the last 10 years. The quality of methodological development in terms of checking the trends in census has not been followed in many countries, even those with the means to do so. For example, Nigeria is now revising its base years for national accounting.
Is that a reasonable thing to do in Nigeria? It seems like statistical manipulation – an arbitrary upward GDP revision.
We will come to that, let me address jobs. One of the areas where we have a weakness is precisely employment and labour statistics. We don’t know exactly how many people are really employed. If you take the statistics of South Africa you can be almost sure they are on the mark because they have more sophisticated machinery. For the rest, we have a guessing game. So to say it’s a jobless growth or a growth that is losing a lot of jobs – both are wild guesses. What we know for sure is that the population is increasing too fast and there is no historical precedent in the world where you have this kind of curve. This means we have to create 10 million jobs a year.
Most investments in Africa are in the extractive sector, which does not produce many jobs. Is it not possible we are experiencing a jobless growth?
Jobless growth? I don’t believe it! I think we are not creating as many jobs as required by the economy, but it’s not a jobless growth. Right now there are people that are occupied, not employed, and we don’t know the dynamics of the situation because we have not adapted labour statistics to capture the types of activities that typically an urban young African has. People are occupied but don’t have jobs. We don’t have a way of capturing these types of activities because it’s informal. Labour statistics are very scanty and static; they were designed for a reality that is not the African reality.
Your report calls for value addition to Africa’s commodities. This should be a commonsense approach.
The conventional wisdom is that when you have a commodity boom you also have a commodity curse, and therefore it is very rare for commodity-rich countries to move into industrialisation. But historical facts demonstrate the opposite. A number of regions in the world, including this country [the United States], have developed their industries on the basis of commodities. So we have to be much more sophisticated in the way we deal with commodity-based industrialisation than in the past. First step, you assess what has happened; we have nine case studies [in the ECA report]. We look into what happened and then try to understand the mistakes made and the positives as well. Second, we say this is not just about regulation, but regulation plays a very important role, including sophisticated protectionism.
What is sophisticated protectionism?
Protection is not a bad word. But we should do it with sophistication, which means you have to have the right balance. Then we come to regional integration. You are not going to industrialise if each country tries to survive on its own little thing. For example, Togo wants to survive on toothpaste produced in Togo and Benin wants to produce its own. Some markets are big enough – certainly Nigeria. But the majority of the countries would not be in a position to take advantage of industrialisation if they don’t integrate regionally. We have been talking about regional integration for 50 years. Is it happening? Well, there has been progress but that progress is timid.
Sophisticated protectionism sounds like regulation. The World Trade Organisation is likely to oppose that.
But we are talking about the African agenda. The WTO is a negotiating platform.
The African economy is integrated in the world’s economy.
Integrated to a point. What you need is to make the case for an Africa agenda.
Can that case be successfully made?
Well, the EPA [Economic Partnership Agreements] discussion is still ongoing – so why not? There is no country in the world that has industrialised without sophisticated protectionism.
What about the argument that formulating new policies to regulate trade is anti–free market?
It’s not a matter of choosing between state and market as if these were two opposites. That discussion is over. Everybody agrees now that there is a role for the state and there is a role for the market. There are regulations that are necessary. This country [the US], Europe, Japan have done it. The moment they get in crisis, what do they do? They intervene in the banks and so on. So that discussion is over.
What about subsidies for farmers in the West, which tend to affect African farmers who cannot compete on the international market?
Africa will continue to fight. Maybe they will never succeed in that fight. They should not put their eggs into that basket too much.
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