By Silence Mugadzaweta COVID-19 has stalled growth of Africa’s economic convergence with the rest of the world, and its share of the global gross domestics product (GDP) is expected to fall to 4,7%, the lowest since 2002, according to the latest African Union report.
The Africa’s Development Dynamics Report (2022) says the continent may not regain its pre-COVID-19 growth share, adding that existing patterns of participation in global value chains (GVCs) have not been conducive to productive transformation that can speed up economic recovery and job creation.
“African economic growth will reach 3,9% in 2022, one percentage point lower than the growth rate for the rest of the world, which stands at 4,9%. In 2022, Africa’s gross domestic product (GDP) as a share of the world GDP is expected to fall to 4,7%, the lowest level since 2002. This reverses the catching up process that had been underway: between 2000 and 2010, Africa’s global economic weight steadily increased from 4,7% to 5,3% of the world’s output,” the report read in part.
Apart from COVID-19, the reports also noted that the export of raw natural resources and agricultural commodities was a hindrance for Africa’s participation in the GVC.
“Africa and Latin America and the Caribbean (LAC) each account for about 2% of European and US imports. However, Africa’s exports to the European Union and the United States slowed down in 2020 without a sign of recovery, compared to LAC. LAC’s exports to the European Union and the United States experienced a V shape recovery, dropping by 1,3 percentage points in May 2020 compared to May 2019, but recovering to levels similar to the previous year by September,” the report added.
However, the report recommended that Africa should promote regional processing and full utilisation of African Continental Free Trade Area (AfCFTA) to recover from two decades of stagnation.
“Africa’s limited backward linkages have remained at 2% on average since the early 2000s, while forward linkages have stayed around 6,3%. This stagnation showcases the need to rethink integration strategies to better benefit from GVC participation and accelerate productive transformation. Compared to forward participation, backward participation is more conducive for domestic firms to develop essential production capabilities and acquire knowledge about foreign markets, which will enable them to increase their competitiveness and upgrade in the value chains,” the report said.
“The entry into force of the African Continental Free Trade Area (AfCFTA) in January 2021 opens up new opportunities for integrating into regional value chains by expanding access to markets, inputs, technology and investment. The AfCFTA aims to boost intra African trade by connecting 1,2 billion people and a combined GDP of over US$3 trillion. It is the deepest regional trade agreement in Africa to date, as it includes important commitments in areas such as sanitary and phytosanitary standards, technical barriers to trade, intellectual property rights and investment.”
- Chamisa under fire over US$120K donation
- Mavhunga puts DeMbare into Chibuku quarterfinals
- Pension funds bet on Cabora Bassa oilfields
- Councils defy govt fire tender directive
Keep Reading
- Follow Silence on Twitter @Mugadza40
