Leveraging changes in business, technology and global partnerships

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Executive Summary

Made possible by rapid technological change and demographic changes, Africa is preparing for a major socioeconomic and structural revolution. This report analyzes the main trends driving this change and the opportunities and challenges that result. Africa has the fastest growing population in the world. In fact, by 2050 one in four global citizens will be African. As Africa continues to experience an increase in opportunities and opportunities in its major cities, this growing population is expected to become increasingly concentrated in urban areas. This young, growing workforce will be complemented by a rapidly growing middle class with trillions of dollars in purchasing power in the coming years. This report argues that these trends, if used successfully, present an important opportunity for African countries and the United States to shape a transformation that ensures prosperity and equitable growth for all on the continent.

Episode 1 It provides an overview of the main trends shaping the business environment in Africa during and after the COVID-19 pandemic. After financial liberalization in the 1990s, Africa saw remarkable economic growth and reductions in poverty. However, Africa did not choose the traditional path to development. On the contrary, Africa’s services sector is already growing quite rapidly with “flueless industries” and surpassing manufacturing in its importance in driving growth on the continent. While COVID-19 has caused trade slumps and increased poverty, the effects will be short-term and Africa still has enormous growing business potential that offers rewarding opportunities to both global and local businesses.

part 2 it then discusses the rise of the Fourth Industrial Revolution (4IR) in Africa and shows how 4IR offers Africa the opportunity to close gaps in physical and digital infrastructure, while also posing new challenges related to stability and cybersecurity. Part 2 reveals that Africa is currently adopting 4IR technology and explores how such technologies have the potential to increase safety and efficiency in the primary and secondary sectors of the economy and accelerate the growth of Africa’s tertiary sector. At the same time, this chapter states that African governments do not have to limit themselves to promoting the growth of the manufacturing or service sector; instead, mutually supportive policies that leverage 4IR can be implemented to increase development in both sectors. 4IR offers governments opportunities to improve service delivery with new tools, thanks to the increase in e-governance; however, it also presents significant risks, especially given Africa’s relatively weak cybersecurity.

Chapter 3 It shows that Africa is becoming increasingly interconnected, both regionally and globally. Regional free trade agreements are facilitating Africa’s efforts to transition from commodity dependency to highly skilled, technologically intensive goods and services and manufactured goods. Also, China has become Africa’s largest trading partner and creditor, as non-Western countries have significantly increased their trade and involvement with Africa. New partners like India and Arab States are engaging Africa more aggressively economically. By contrast, the United States has taken a step back in its economic relationship with Africa, with falling credit, aid, trade and foreign direct investment (FDI) inflows in recent years.

Given these trends, this report argues that it is vital for the United States to take action to improve its position on the increasingly influential and globally engulfing African continent. In particular, the United States should target investment and assistance to areas that allow the United States to strengthen increased regional trade on the continent and promote US-African business integration. Likewise, the United States and other international partners should support Africa on its growth path under the 4IR to ensure regional stability and mutual security. Finally, the United States can increase lending, using it for greater flexibility of power for mutual profit. In conclusion, this report concludes that Africa’s rise in global influence cannot be ignored. Policymakers, businesses and international actors, especially the United States, must act now to ensure that the coming decades result in a strategic, coordinated effort to bring socioeconomic and structural reforms on the African continent that will benefit African, American and global citizens. similar.

Key findings

Key trends shaping Africa’s transformation and growth: This report reveals that the key trends shaping Africa’s future include the continent’s rapidly growing population, an increasingly younger workforce, a stronger consumer class and increasing urbanisation. Likewise, Africa is becoming more and more interconnected thanks to increased cell phone penetration across the continent, greater access to electricity or higher broadband speeds. 4IR and its associated technologies also represent an important driver of transformation on the continent.

Africa has not followed a traditional path for development: Instead of following the typical development path of the agriculture-to-manufacturing transition, Africa has jumped directly into developing its tertiary sectors, particularly in banking/finance, ICT services and tourism. Likewise, Africa is urbanized with a much lower per capita income than other parts of the world, resulting in high levels of inequality and poverty and a larger informal sector. At the same time, Africa is the only region whose rural population is still growing along with its urban population.

Developing Africa’s secondary and tertiary sectors is not an either/or choice: African governments do not have to choose between promoting the manufacturing or service sectors. Rather, these sectors can be served by complementary policies, as they share a common business environment, depend on exports, and benefit from agglomeration economies. If African governments adopt policies targeting these three areas, they can create synergies in the process and promote the development of both secondary and tertiary sectors. More specifically, support for ‘no chimneys’ – sectors that are traditionally considered services but share a set of characteristics with industry that makes them poised to grow and create jobs – can sustain Africa’s current growth trajectory.

The Fourth Industrial Revolution brings both great opportunities and notable risks: The rise of 4IR on the African continent presents a huge opportunity for growth and socioeconomic transformation, if managed properly. Overall, 4IR technologies could allow Africa to close existing gaps in its infrastructure and leap forward into new stages of development without accumulating inefficiencies. 4IR can improve efficiency and security in Africa’s primary and secondary sectors, and 4IR innovations based on digitization, including mobile money, can further support the growth of “flueless industries”, increase financial inclusion and formalize Africa’s massive informal sector. However, 4IR, if mismanaged, carries significant risks for the growing inequality and increased risk of cybercrime resulting from the transition to a highly skilled workforce, especially given Africa’s current cybersecurity weaknesses.

Regional integration can lead to more resilient economies: An increase in regional integration through free trade agreements, particularly through the African Continental Free Trade Agreement (AfCFTA), can increase economic diversification and resilience to shocks, as intra-African trade includes a wider variety of goods, including higher-produced and technologically-intensive goods. and services. In this way, regional integration will enable African economies to move away from their traditional dependence on commodities that continue to dominate its trade in international markets, leaving it vulnerable to shocks.

The effects of the COVID-19 pandemic are a temporary setback: While COVID-19 has had a negative impact on the continent, Africa is already recovering and poised for a strong future. COVID-19 was accompanied by a sudden drop in global trade and exacerbated poverty in the region. However, before the pandemic, Africa had seen several decades of strong growth in per capita GDP and trade, a reduction in poverty, and an improved business environment. Increased access to finance and reduced corruption have contributed to better job prospects. The absolute number of citizens living in extreme poverty is expected to fall by 27 million by 2030. A resurgence of trade is also expected, given increased regional integration and a fully implemented AfCFTA.

Africa has large, untapped resources: Important resources in Africa are still not used to their full potential. For example, sub-Saharan Africa has the highest share of uncultivated fertile land in the world. Moreover, large areas of its land are not used for both services and manufacturing according to the productive capabilities of that land. Likewise, Africa’s workforce is a largely untapped resource, as gaps in education systems deprive workers of the skills necessary to compete in the modern economy. African farmers also face challenges with the quality of seeds, the availability of agricultural machinery and irrigation systems. Overall, inefficiencies and gaps in existing infrastructure, whether it’s education systems, power grids, internet access, roads or other areas, prevent Africa from tapping into its full potential.

The US has lagged behind other countries in Africa and must act now to address this issue: While US trade, FDI, aid, and lending to Africa have all fallen in recent years, international players have increased their involvement and influence on the continent. In contrast, non-Western countries such as China (currently the region’s largest trading partner and lender), India, Japan, and the Middle East have deepened their influence in Africa. Notably, the decline in US relations with Africa avoids even that of Western countries, as European countries such as the Netherlands increase their foreign direct investment and trade with the region, and post-Brexit Britain is also committed to increasing its involvement in the continent. Given Africa’s growing role in the global economy, the United States needs to take action to address its declining competitiveness on the continent, for both diplomatic and economic reasons. The United States should strengthen ties across the continent through increased diplomatic visits, target investment based on the opportunities offered by the AfCFTA, and increase aid to facilitate US-African business partnerships while benefiting all stakeholders.

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