Africa Growth Initiative’s top 5 figures of 2021
By Leo Holtz, Tamara White
Every week, the Brookings Africa Progress Initiative group highlights figures associated to African financial development and growth. These so-called “Figures of the Week” embrace visuals from lately revealed experiences that reveal one thing important or fascinating about tendencies on the continent. Within the ultimate “Determine of the Week” of 2021, we assessment the 5 most-read posts from this 12 months.
1. Addressing Africa’s excessive water inequality
Entry to water stays a pervasive growth challenge throughout the continent: In truth, in accordance with the World Assets Institute (WRI), 1 in Three Africans face water insecurity and roughly 400 million individuals lack entry to primary consuming water in sub-Saharan Africa. Determine 1 reveals Africa’s publicity to water-related threat, accounting for vulnerability to floods and droughts, water stress, and seasonal variability. Total, though the diploma of water threat varies all through the continent, giant swaths of the continent face excessive and very excessive water-related threat elements.
Determine 1. Africa faces a number of the highest water threat on the planet
Supply: “Local weather Change Is Hurting Africa’s Water Sector, however Investing in Water Can Pay Off,” World Assets Institute, 2019.
2. Africa’s renewable power potential
Though Africa’s present power combine is nearly completely composed of fossil fuels and biomass, within the Worldwide Financial Fund’s (IMF) quarterly publication Finance and Improvement, IMF researchers forecasted that renewable power will change into essentially the most outstanding supply of the continent’s electrical energy by the following century. Most notably, they projected that photo voltaic will generate the lion’s share of Africa’s power combine by 2100. The authors discover how scientific advances in renewable power expertise, its falling prices, and the continent’s geography contribute to renewable power’s rising significance as a supply of electrical energy in Africa.
Determine 2. Africa’s power combine: Current and projected
Notice: CCS (carbon seize and storage) is an rising expertise that captures carbon dioxide (CO2) immediately from the supply of air pollution (e.g., coal energy plant) and sequesters it to scale back emissions and stop it from coming into the environment.
Supply: Gregor Schwerhoff and Mouhamadou Sy, “The place the Solar Shines,” Finance and Improvement, IMF, 2020.
3. Cellular cash dominates fintech funding in Africa
Africa stays the world’s largest adopter of cell cash switch programs, accounting for roughly 70 p.c of worldwide cell cash transactions and two-thirds of the world’s cell cash transaction quantity by worth. Monetary Expertise Companions, a boutique funding banking agency, notes that digital funds led monetary expertise (fintech) investments in Africa over the previous decade, when it comes to each monetary and transactional quantity. Along with digital funds outpacing different fintech investments, 2019 (the newest information within the examine) recorded almost twice as a lot funding in Africa’s fintech sector with solely barely fewer offers than the prior 12 months.
Determine 3. African fintech funding flows over time
Supply: Supply: Monetary Expertise Companions, “FinTech in Africa: Leapfrogging Legacy Straight to Cellular,” 2019.
4. Industries with out smokestacks in South Africa and Uganda
As a part of a multiyear challenge inspecting prospects for creating jobs for Africa’s youth, two of AGI’s frequent companions performed nation case research to search out the potential for industries with out smokestacks (IWOSS)—service-sector industries that mimic conventional industries’ potential to soak up labor and develop—to spur inclusive development, financial transformation, and job creation for staff with totally different talent ranges.
Based on the Improvement Coverage Analysis Unit’s South Africa case examine, the share of IWOSS in general employment is rising, accounting for 66.7 p.c (8.Eight million) formal personal sector jobs in South Africa in 2018. In distinction, the contribution of non-IWOSS sectors fell: For instance, mining’s contribution to GDP dropped from 19.5 p.c to eight.1 p.c between 1980 and 2018 (Determine 1). Total, the group discovered that IWOSS has the potential to soak up labor, however tourism and horticulture particularly usually tend to take up low-skilled labor and are poised to expertise large development if sure constraints will not be addressed.
Determine 4a. Contribution to GDP by trade, South Africa, 1980 and 2018
Supply: Allen, C., Asmal, Z., Bhorat, H., Hill, R., Monnakgotla, J., Oosthuizen, M., and Rooney, C. Employment creation potential labor expertise necessities, and expertise gaps for younger individuals: A South Africa case examine. (Washington, DC: Brookings Establishment, 2021).
The Financial Coverage Analysis Centre (EPRC) in Uganda discovered comparable broad tendencies, however famous variations particularly subsectors. In different phrases, like in South Africa, the prominence of IWOSS has grown in recent times, particularly in comparison with manufacturing, however the fastest-growing subsectors for Uganda have been agro-processing and tourism. Tourism particularly has been a significant contributor to Uganda’s financial development, comprising 7.7 p.c of the nation’s GDP as of 2019 (Determine 4b). The case examine authors discover that, like in South Africa, in Uganda, horticulture, agro-processing, and tourism have the potential to create much-needed jobs.
Determine 4b. Uganda’s tourism efficiency, 2000-2017
Supply: Guloba, M., Kakuru, M., Ssewanyana, S., and Rauschendorfer, J. Employment creation potential labor expertise necessities, and expertise gaps for younger individuals: A Uganda case examine. (Washington, DC: Brookings Establishment, 2021).
5. COVID-19 impacts on overseas direct investments in sub-Saharan Africa
The complicated well being and financial challenges created by the pandemic all through the African continent have had important impacts on overseas direct funding (FDI) each to and from the area, as proven within the 2021 World Funding report revealed by the U.N. Convention on Commerce and Improvement. Determine 5a reveals a number of the report’s principal findings: FDI inflows had been already on a decline, and COVID-19 continued to have a destructive impression on funding globally and regionally.
Determine 5a. Overseas direct funding inflows, 2007-2009 and 2018-2020
Supply: United Nations Convention on Commerce and Improvement, World Funding Report. 2021.
FDI outflows had been additionally impacted by the COVID-19 pandemic, however, once more, assorted throughout and inside areas (Determine 5b). In truth, in accordance with UNCTAD, FDI outflows from Africa fell by two-thirds, from $4.9 billion in 2019 to $1.6 billion in 2020.
Determine 5b. Overseas direct funding outflows, 2007-2009 and 2018-2020
Supply: United Nations Convention on Commerce and Improvement, World Funding Report. 2021.
