Expert conference issues advice for Africa’s smaller, richer nations

1 Feb 16

Small, middle-income countries (SMICs) in sub-Saharan Africa should prioritise investments that generate wide economic benefits and rationalise regulations that hinder the private sector in order to preserve stable growth as challenges emerge, a conference has heard.

 

The International Monetary Fund’s deputy managing director Min Zhu and the governor of the Bank of Botswana Linah Mohohlo released a joint statement summing up conclusions of the conference, which took place on Friday in Gaborone, Botswana.

The statement said SMICs in sub-Saharan Africa have made “significant progress in terms of maintaining macroeconomic stability and sustaining higher growth over the past two decades”, but a number of challenges have recently emerged such as the fall in price and demand of oil and the slowdown in the South African economy.

It noted that while some countries may have built savings to cushion them from the slowdown, others could see their fiscal positions deteriorate rapidly at a time when external financing conditions have tightened.

Either way there is now “scope to rethink growth strategies and move forward with bold, complementary reforms that could facilitate [the countries’] transition to high-income status”, it said.

“Participants concluded that, beyond following prudent policies that will preserve economic stability, SMICs should not lose sight of the need to build resilience, adopt more inclusive policies and foster economic diversification.”

Reforms should be comprehensive yet carefully focused on unlocking productivity growth, it said. In particular this includes prioritising investment projects that generate wide benefits to other sectors of the economy such as energy infrastructure, rationalising regulations that hinder the development of the private sector and adopting a ‘smart’ growth strategy that can take advantage of or address global megatrends in technology, climate change and demographics.

Growth also needs to be inclusive in terms of job creation and participants, and policies to protect the most vulnerable segments of society will be appropriate in a number of cases.

“This will likely require courageous reforms to reduce skill mismatches in the labour force through cost-effective training programmes, adopting reforms that can lower the cost of doing business and facilitate the hiring of highly skilled workers, and enhancing the composition and efficiency of government spending,” Zhu and Mohohlo said. 

  • Emma Rumney

    Emma is a reporter at Otsubo7 International. She also writes for in the UK.

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