Employment creation key to poverty reduction in Africa – UN report

High unemployment rates continue to hinder poverty reduction efforts in Africa, the United Nations says in a new report released today, stressing that African countries must give priority to diversifying their economies to create decent jobs to boost social development.

“Africa’s long-term growth prospects and ability to sustain high rates of employment generation and broader social development depend on success in economic diversification,” according to the Economic Report on Africa 2010, published by the UN Economic Commission for Africa (ECA) and the African Union Commission.

The current global economic crisis offers African countries an opportunity to lay the foundation for sustainable, employment-intensive economic growth, says the report.

“The recession should work as a wake-up call for Africa to deal with its vulnerabilities and introduce further reforms to promote growth, but more particularly employment creation to promote social development in the region,” said Rob Vos, Director of Development Policy of the UN Department of Economic and Social Affairs (DESA), at the launch of the report in New York.

The report – whose theme is “Promoting High-level Sustainable Growth to Reduce Unemployment in Africa” – recommends investment in infrastructure and human capital, renewed efforts to mobilize domestic resources, market reforms, incentives to support private-sector employment and efforts to increase productivity and incomes in the informal sector.

It warns African countries against continuing to depend on traditional drivers of economic growth, such as exports of raw commodities, foreign investment and development aid, saying those sources of resources were unpredictable.

Gross domestic product (GDP) in African economies declined from 4.9 per cent in 2008 to 2.4 per cent in 2009, but is expected to grow by 4.8 per cent in 2010, the report says.

Commodity prices, an important determinant of growth in many African economies, fell at the beginning of 2009, but have since rebounded and are expected to stabilize in 2010 and rise moderately in 2011, according to the report.

The rebound in commodity prices observed in 2009 was, however, mainly due to increased petroleum prices, resulting in part from increased demand from China following its stimulus package as well as the upward revision of expected world demand, the report notes.

However, as a result of the depreciation of the United States dollar, 2009 commodity prices were below their 2008 levels in real terms.

The document reveals considerable regional variations in growth in 2009 across African regions and countries.

Growth was highest in West Africa at 5.5 per cent, partly as a result of a boost in oil output in the Delta region of Nigeria following the reduction in hostilities.

East Africa posted a 4.3 per cent growth, much higher than the earlier estimate of 3.9 per cent, while North Africa posted a GDP growth rate of 3.6 per cent.

The worst hit region was Southern Africa where GDP declined by 1.1 per cent, followed by Central Africa with a paltry 1.8 per cent growth rate.

Africa’s other major challenge is climate change, according to the report, which states that agricultural output is expected to decrease by 50 per cent on the continent, resulting in severe under-nourishment. The health burden and conflicts will increase as populations fight over dwindling resources, the report adds.

The cost of climate change adaptation and mitigation measures are, however, extremely high and beyond the means of African countries, notes the report.

It is estimated that the cost of adaptation is between 5 and 10 per cent of continental GDP, the report says, stressing that it is crucial for the international community help meet the cost of climate change mitigation and adaptation in Africa.