IMF on the foundations of technological transformation in Africa

During the United Nations Economic Commission for Africa (UNECA) which was held recently in Addis Ababa, Ethiopia, Christine Lagarde, Managing Director, International Monetary Fund, took the stage to speak on the impact of technology for the economies of Africa and the new opportunities being created for the next generation.

Ms. Lagarde chose to focus on the next generation because of historic demographic changes which require all to focus on youth and assess the impact of the changes.

“This is a moment where young people can take their destinies into their own hands. In fact, youth in Africa already comprise 75 percent of the working age population. By 2030, over half of new workers entering the global labor force will come from Africa,” Ms. Lagarde added.

“With the right strategy, the demographic dividend can bring prosperity. This incredible surge could translate into a virtuous cycle of economic growth and development. Clearly technology does not hold all the answers. In fact, technology often raises new questions, including about the impact of automation. But there is no doubt that technology is an important part of the story,” she continued.

According to Ms. Lagarde, Technology is already shaping the continent, and with the right investments, it can be a powerful tool to help build stronger economies in the Future.

Outlook

She went on to give a brief overview of the economic context for the application of new technologies and home-grown innovation in Africa, saying: “Globally, the sun is shining through the clouds and helping most economies generate the strongest growth since the financial crisis,”

The IMF is projecting 3.6 percent growth for 2017 and 3.7 percent for 2018. Looking at the continent of Africa, the recovery is strengthening in many countries. Growth is expected to reach 2.9 percent in 2017 and 3.5 percent in 2018 and 2019.

This topline number masks significant variations among countries. While nearly one-third of nations are growing at around 5 percent, others — particularly the commodity exporters — are seeing a slowdown due to lower commodity prices.

On a GDP per capita basis, 15 countries on the continent are expected to see a decline this year. This encompasses about 40 percent of the population.

“It is when the sun is shining that we have to fix the roof. One concern we see is a sharp increase in public debt, which has reached 50 percent of GDP in nearly half of sub-Saharan Africa’s countries. This is a big cloud on the horizon,” she continued.

During her speech Ms. Lagarde, posed the question, “How can we find a way to achieve lasting growth that is stronger and more inclusive, so that people across Africa benefit and see higher living standards?”

Part of the solution according to her is, economic diversification ,and how it is critical to strike the right balance between investment and debt sustainability.

“It is not the only answer. Each country will have to find the right policy mix,” Ms. Lagarde continued.

“And again, harnessing the promise of technology is another way we can accelerate economic and social development,” she added.