Interview: Antonio Pedro
What policies can be implemented to accelerate the pace of industrialisation across West Africa?
ANTONIO PEDRO: Industrial policy must be at the centre of development to accelerate industrialisation. This requires political support, institutional cohesiveness, coordination between public and private actors, reduced business costs, and increased investment in infrastructure as well as secured financing. In terms of macroeconomic and sector policies, introducing pro-growth tax reform, enhancing human capital development, promoting economic zones, and investing in reliable and renewable energies are key. Moreover, growth diagnostic studies and product space analysis can help to identify the most competitive sectors to target.
How is regional economic integration under the Africa Continental Free Trade Area (AfCFTA) a path towards sustainable development in West Africa?
PEDRO: UNECA analysis shows that with the AfCFTA implemented by 2045, intra-African trade will increase by 41% in the agri-food sector, 39% in services, 39% in industry, and 16% in energy and mining. Therefore, countries that ratify the AfCFTA can potentially advance both regional and global value chains, augment regional trade and enhance external trade by offering value-added goods. A unified marketplace also creates employment and economies of scale strengthening the business fundamentals for industrialisation and growth. It is important to formulate and implement national AfCTA strategies and fast-track the enactment of trade facilitation measures in line with the action plan for boosting intra-African trade.
Which measures are key to catalysing the growth of small and medium-sized enterprises (SMEs)?
PEDRO: SMEs are a key engine for growth across the continent. For example, SMEs in Nigeria account for 96% of all enterprises and 84% of employment, and contribute 48% to GDP. However, the workforce capability, nascent infrastructure, limited access to technology and financing, and porous taxation and regulatory environment are challenges. In some countries, energy availability variances can cost as much as 25% of potential annual turnover for firms and up to 2% of annual GDP. SMEs’ capabilities can be enhanced through implementation of smart local content policies and national suppliers’ programmes, in collaboration with the private sector. Additionally, incorporating blended finance and flexible public-sector lending strategies can enable development finance institutions to fill the SME financing gap. To deepen the provision of extension services to SMEs, official development assistance and grant allocations must also target investment facilitation and strengthen local advisory firms and intermediaries.
To what extent do training and vocational education play a role in enhancing human capital development and combatting brain drain across Africa?
PEDRO: More than 60% of Africa’s population is under the age of 25, and by 2030 young Africans are expected to constitute 42% of global youth. This cohort is looking out to an ageing world with growing demands for labour and innovation. Yet developmental challenges and high unemployment are forcing young people to seek a livelihood outside of the continent. Training and vocational education will ensure that Africa’s youth possess the requisite skill set for the labour market. The mismatch between skills and the labour market demand is generating high social and economic costs, which must be addressed. Therefore, it is imperative that we map skills gaps in support of productive employment strategies, and align training programmes accordingly. Financing and scaling up multi-stakeholder partnerships are also required. The private sector can inform policy, skills and investment to generate lucrative returns, and contribute to talent and innovation development across the continent. Public-private partnerships can also promote and empower youth via internships and credit schemes.