23 March 2019: The 2019 Economic Report on Africa finds that countries in the region must undertake comprehensive macroeconomic reforms to build resilience, increase potential growth, and improve inclusiveness if they are to achieve the SDGs. Africa’s progress in poverty reduction remains “steady” even though it is slow, the publication explains, because the population is growing more rapidly than poverty is being reduced. It also notes that women represent a much higher percentage of the working poor than men.
The UN Economic Commission for Africa (ECA) released the 2019 ERA on 23 March, in Marrakech, Morocco. The report says that Africa needs to boost investment from the current 25% of its gross domestic product (GDP) to 30-35%. To meet the SDGs, the authors argue that Africa will need to raise 11% of GDP per year for the next ten years.
Subtitled ‘Fiscal Policy for Financing Sustainable Development in Africa,’ the yearly report examines the institutional and policy reforms needed to maximize domestic public resource mobilization. The report focuses on the role of fiscal policy in attracting investment and in creating the needed fiscal space for social policy, including supporting women-led and youth-led small and medium enterprises (SMEs).
The publication highlights that domestic drivers for growth include sustained investment in infrastructure, strong private consumption, higher oil production from new fields, and favorable weather. Based on the forecasts for these drivers, Africa’s GDP is projected to rise by 3.4% in 2019 (from 3.2% in 2018) and 3.7% in 2020.
As downside risks that might jeopardize this projected growth, the report identifies: the tightening of monetary policy and new protectionist policies in advanced economies, weather-related shocks, threats of terrorism and conflict, political instability, and high chance of debt distress in some countries. For many countries, the publication says financing and implementing capacity remain “the biggest bottlenecks.” The financing shortfall could be addressed through “efficient and effective” domestic resource mobilization, the report notes, as Africa’s current average tax revenue to GDP is below 16%.
Regarding the identified risks, the report mentions that the negative effects of external shocks on African countries could be reduced by the proposed African Continental Free Trade Agreement (AfCFTA). The publication explains that the reforms that AfCFTA will create can also enhance trade performance and assist countries’ integration into global value chains. [UNECA Press Release] [Publication: Economic Report on Africa 2019]