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Economic Forum: World’s Least Competitive Economies in Africa

World Economic Forum

World Economic Forum

A new report released at the World Economic Forum meeting in Cape Town, South Africa, Thursday says most of the world’s least competitive economies are in Africa, meaning they do not have the level of productivity needed for prosperity.

The report says the continent’s robust pace of growth of more than 5% over the past decade has raised living standards amongst its population as observed in other regions with similar growth patterns.

The report, which defines competitiveness as a set of institutions, policies and factors that determine the level of productivity of a country, says Africa’s "deep and persistent" infrastructure deficit is a major impediment to developing trade and improving competitiveness.

“Africa needs well-structured networks linking production centres and distribution hubs across the continent to deepen regional trade and integration," says the report, which also questions whether Africa will be able to maintain “these impressive growth rates.”

But experts agree it's not all doom and gloom for the continent. They say almost half of African countries are attaining middle income status but the continent’s positive outlook is threatened by fluctuating commodity prices, rising inequality and youth unemployment.

Speaking at the forum, African Commission chairperson, Nkosazana Dhlamini-Zuma, said within 50 years, Africa, which celebrates 50 years of existence this month, will become a prosperous continent, with robust growth expected to continue.

Africa, said Dhlamini-Zuma, is working towards building a prosperous continent by identifying and investing in the continent’s assets, primarily its people.

President Donald Kaberuka of the African Development Bank (AfDB) told the forum African countries could learn a lot about development from the BRICS countries given how they have overcome their own growth challenges.

He identified Africa’s key challenges as politics, the effects of the global economy and infrastructure deficits.

Kaberuka said Africa needs to start funding its own development and reduce reliance on foreign aid through increasing savings and leveraging partnerships with organizations such as the proposed BRIC bank.

“We can transform the continent within a generation,” he added.

BRIC countries refers to the rapidly developing group of countries - Brazil, Russia, India and China.

Zimbabwe’s deputy Prime Minister Arthur Mutambara told VOA Thursday that leaders gathered at the forum in Cape Town agree that they need to deal with the challenges facing Africa urgently to eliminate poverty.

“We are saying Africa has so much potential and Africa can do a lot better but we are wallowing in poverty, we are suffering from underdevelopment,” said Mutambara.

“We are identifying the strategic constraints, strategic bottlenecks that we have in Africa so that we can deliver on Africa’s promise, emphasizing matters of regional intergration, beneficiation, good governance, the need to be masters of our own destiny… We can’t depend on aid from foreigners.”

Commenting, Dr Roger Bates, a resident scholar at the American Enterprise Institute in Washington DC, said he was impressed by Africa’s growth rates.

But, he said, besides the good news Africa must deal urgently with the challenges of corruption and cronyism. “The most important thing is that governments provide the framework in which business can flourish rather than to try and micro-manage particular industries,” said Dr. Bates.

About 1,000 international, government, political, business and civil society leaders are attending the three-day event at the Cape Town Convention Centre.

With its 2013 theme: “Delivering on Africa’s Promise", the forum provides a platform for participants to discuss Africa’s integration and commitment to a sustainable path of growth and development.

The leaders are also discussing issues such as accelerating economic diversification, boosting strategic infrastructure and unlocking Africa’s talents.

With expected growth of 5 per cent in 2012-2013, Sub-Saharan Africa continues its transformation from a developing continent to a hub of global growth.