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Africa’s regions offer potential for development policy

What will fuel Africa’s economic growth and development? Will urban centres be the spark? Will agricultural areas drive productivity? The answer is both.

Consider first that the population of urban and rural areas in Africa is booming. The majority of Africa’s population is still rural and likely to remain so until the mid-2030s. In 2015, rural population in Africa accounts for 60% of the total population, compared with 20% in Latin America and 52% in Asia. In 2035 this share in Africa is projected to decrease slightly to 51%, compared with 16% in Latin America and 42% in Asia. Second, urbanisation has advanced faster than industrialisation in Africa. As a result, rural migrants to urban centres have continued to face a lack of opportunities, leading some of them to return to their rural roots. Third, Africa’s role in international trade–with a dependency on commodity exports and cheap food imports–has altered the market relations between cities and the countryside. In Asia and Europe, by contrast, the countryside supplied cities with natural resources and goods, driving structural transformation.

This complementarity between urban and rural places has not developed as well as it should in Africa. Fostering a mutually reinforcing dynamic between cities and countryside requires new thinking and bold strategies for accelerating a sustainable economic transformation.

A regional perspective is therefore paramount to better capture the emergence of the sorts of hybrid lifestyles and complex socio-economic behaviour associated with intensifying and diversifying rural-urban migration patterns and capital flows, including the diffusion of new technologies. Continued demographic growth in rural areas offers real potential, but it means that productive opportunities must be created throughout regions, and not just in urban hubs. Policies focusing mainly on moving the rural labour force to productive activities in the cities could miss out.

The right policy cocktail–the strategy–is critical. Individual policies aimed at increasing industrialisation or generating growth through services, natural resources, green energy and agriculture must be gathered together strategically, tailored locally, and customised from country to country and from region to region.

By firing on all cylinders through this approach, African economies can liberate the potential of their many regions to foster endogenous growth and accelerate a structural transformation that is well-suited to regional capacities and needs. They will enable policymakers to shift the emphasis from top-down, subsidy-based interventions used to temporarily alleviate regional inequalities to a broader approach that empowers regional competitiveness and innovation, mobilises under-tapped resources, and stimulates the emergence of new wealth and welfare enhancing activities.

Take the joint management of the Senegal River basin by Mali, Mauritania, Senegal and Guinea, which is an excellent example of how cross-border co-operation can work by producing and distributing energy, facilitating irrigation and improving navigation, with widespread regional benefits. Similarly, the W Regional Park allows Benin, Burkina Faso, Niger and Nigeria to maximise their natural and cultural endowments to promote tourism and value-added processing of goods made from the region’s natural resources. In addition, local products applying regional knowledge, such as dry figs or weaving from Béni Khedache in Tunisia, benefit regional heritage and create local quality jobs.

Such regionally led initiatives offer bright prospects for both urban and rural areas in Africa. “Decompartmentalising” policymaking optimises the potential of African resources, skills and people regionally and adds new momentum to the continent’s economic growth and development.

NOTE: The African Economic Outlook 2015 is a joint publication by the African Development Bank, the OECD Development Centre and the United Nations Development Programme, in collaboration with the French Agricultural Research Centre for International Development.

The full report is available at www.africaneconomicoutlook.org

©OECD Observer July 2015