Addis Ababa, Ethiopia (PANA) - The UN
Conference on Trade and Development (UNCTAD) has warned that African
economies will not sustain the current high economic growth rates driven
by consumption of goods and services, which has partly lowered the
manufacturing capacity.
Speaking at the launch of UNCTAD’s
latest report, the Economic Development in Africa Report, 2014 last
week, UNCTAD Director for Africa Taffere Tesfachew said the high
economic growth rates recorded in Africa in the past few years have not
had a positive effect, because it had been driven by consumption.
“We are not saying consumption-driven
growth is bad but the widely spread income distribution should encourage
local production. The manufacturing sector is declining and the
consumption is accounting for 60% of the Gross Domestic Product (GDP),”
he said.
The report, which focused on “Catalysing
Investment for Africa’s Transformative Growth,” calls on governments to
invest in improving human skills and invest in private firms to get
links with foreign firms.
While experts point out Africa’s high
population as a source of economic growth and a driver for future
investments, UNCTAD warns that relying on consumers to drive growth
might lead to more disastrous consequences should commodity prices fall.
“We need to broaden the source of growth
from consumption to investment driven growth and encourage the private
sector to invest more by giving them incentives,” Taffere said.
For African countries to promote
economic growth that would last and help create more jobs, the report
calls for the lifting of major barriers to trade.
These include improving public
infrastructure, roads, rail and ports and improving access to financing
for private businesses, which mostly lack private capital.
“This report provides useful insight
which countries like Ethiopia can use,” said Ethiopian Minister Mekonnen
Manyazewal. “This report has given us the intellectual knowledge to
address our current challenges.”
The report says public investments in
infrastructure and other fields is necessary to create adequate room for
private sector driven enterprise to invest.
UNCTAD recommends that countries balance
the contributions of consumption and investment to the growth sectors
because consumption driven growth would not last.
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