May 19, 2007

Policy changes crucial for Africa

SHANGHAI: African countries need to allow more competition in their economies and deepen reforms in the financial and labor sectors in order to sharpen their global competitiveness, a key researcher said in a study on the issue.

Preliminary findings of a team drafting the forthcoming Africa Competitive Report 2007 indicate that the continent should also further push reforms in its tax and legal systems and address corruption problems in order to gain a competitive edge, said Waheed Oshikoya, director of the African Development Bank's (AfDB) development research department.

The 2007 report will be a product of the cooperation between the AfDB, the Switzerland-based World Economic Forum and the World Bank.

This is the first time that AfDB and World Bank are involved in publishing the report, as the three previous editions were brought out by World Economic Forum alone.

The report, which has seven chapters and also provides country profiles, examines many aspects of Africa's business environment, such as assessments of productivity and investment drivers.

Issues ranging from the effect of gender disparities on employment and competitiveness, to the role of new technologies in fostering a more dynamic business environment will also be examined in the report.

It will detail country competitiveness and investment climate profiles - the drivers of investment and competitiveness in each of the 29 countries covered.

The competitiveness report will stress the importance of sound policies to establish a positive business environment in Africa, said Oshikoya.

"The report could serve as a useful tool for policy makers, the business community and international donor community alike," he said.

Infrastructure is still one of the continent's top constraints, with regard to energy and transportation in particular. Access to finance is also a major hurdle for African business, he noted.

Oshikoya said the report will suggest that institutions in Africa need to be more business friendly and also note that corruption remains an obstacle for many countries.

Africa offers many examples of success, but sub-Saharan Africa still lags behind on the global competitiveness index, primarily where basics like infrastructure and education are concerned, Oshikoya said.

"The findings (of the report) are generally encouraging but action needs to be taken to address the problems identified in it."

Labor reforms and tax regulations, the researcher said, are some of the areas that Africa needs to look at.

The report will assess the competitiveness of and investment climate in Africa's four largest economies - South Africa, Algeria, Nigeria and Egypt, referred to as SANE, which account for half the continent's gross domestic product (GDP) and almost one-third of its population.

Preliminary findings show that SANE countries have both the size and the scale to be major drivers of Africa's economic growth.

Source: China Daily