The African Economic Outlook predicts approaching growth for the future of Africa

The African Economic Outlook (AEO) published their 2012 report recently, providing us with an overview of the economic progress for the entire continent over the past year.

The Outlook is published annually by the African Development Bank, the OECD Development Center, the United Nations Economic Commission for Africa, the United Nations Development Programme and a network of African think tanks and research centers. This year’s edition, released in Arusha, Tanzania, is one of the most comprehensive accounts of Africa’s annual economic progress.

Though the Arab Spring led to a decrease in growth in Northern Africa that affected Africa’s overall growth, sub-Saharan Africa exhibited fantastic progress. For example, though the continent’s overall growth fell from 5 percent in 2010 to 3.4 percent in 2011, sub-Saharan Africa maintained a growth rate of more than 5 percent in 2011.

Also, while African countries as a whole suffered from a decline in foreign direct investment (FDI) in 2011, sub-Saharan Africa had a 25 percent increase in FDI during 2011, and Eastern Africa’s FDI increased by 53 percent, proving that this decline in growth and FDI is probably only temporary and will gradually increase as the governments in Northern Africa stabilize.

As for economic policy, reforms that made it easier to do business were executed between June 2010 and May 2011 in 36 African countries. These countries make up 78 percent of the African economy. Aid for Trade to Africa rose by 21.2 percent in 2009, continuing its eight-year upwards trend, being the steadiest source of trade policy reform in Africa among developing regions. AEO’s political hardening indicator stated that about 50 percent of African governments have begun to appease citizens’ requests for social services with less violent approaches.

Though the AEO rightfully recognized that many of Africa’s governments and economies warrant improvements, all of this growth means a hopeful future for the people of Africa. More growth and better governance means more jobs, better infrastructure, an increase in education, improved healthcare, and, ultimately, further growth.

This year, the AEO’s special theme was youth unemployment, which is enormously important for Africa’s future growth. There are approximately 200 million people living in Africa between the ages of 15 and 24, and this number is anticipated to double by 2045. At the same time, youth unemployment is incredibly high throughout Africa, usually almost double the percentage of adult unemployment.

Current unemployment is significantly damaging Africa’s potential for prosperity. Africa created an estimated 73 million jobs between 2000 and 2008, but only 16 million of these jobs employed youth aged 15 to 24. And the youth population is not only growing, it’s getting better educated. Based on current trends, 59 percent of 20 to 24 year olds in Africa will have had secondary education in 2030, compared to 42 percent today.

In order to solve the unemployment problem, the AEO recommends that schools and governments work to link education and training programs to the labor market. Teaching students critical skills and creating internship programs would help to improve their prospects for employment, and would also give them capacity to become entrepreneurs and make their own contributions to job creation.

Visit the African Economic Outlook website for country-by-country economic data, or read the report for in-depth analysis of the issues Africa faces in trade, commerce, financial flows, human development and governance.