Akinwumi Adesina, President of the African Development Bank (AfDB), has emphasized the need to increase Gross Domestic Products (GDPs) in Africa to translate into job creation, particularly for the youth, to ensure sustainable development on the continent.
Speaking at the African Economic Outlook presentation during the 2024 Annual Meetings in Nairobi, Adesina noted that, to eradicate poverty, GDP growth alone is insufficient without corresponding improvements in job creation and tangible improvements in living standards, particularly for the youth, to drive sustainable development.
“We have to ensure that our growth also gives value to the youth and women. We do not need GDP. It does not matter how that GDP is. We have to make sure that it is creating quality jobs for our people,” Adesina stated.
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He identified youth unemployment as a critical issue, pointing out that Africa could not afford to have 477 million young people under 35 without opportunities.
“I have said it: Migration to Europe is not Europe’s problem. It is our problem. We cannot have 477 million young people under the age of 35 and have nothing for them. We must invest in our young people, in their skills, talents, entrepreneurship, and give them tools,” he said.
Nigeria, one of Africa’s largest economies, provides a stark example of this phenomenon. Despite recording a 2.98% GDP growth in the first quarter of 2023, the country faces deep-seated economic hardships. The Minister of Finance, Wale Edun, highlighted this growth as a significant achievement that would, among other things, enable the government to service its debt without resorting to emergency borrowing.
“What that means is that the government can now pay its debt service without resulting in Ways and Means, particularly international debt service,” Edun stated, highlighting the GDP growth as a milestone of President Bola Tinubu one-year leadership.
However, these macroeconomic indicators do not reflect the lived reality of many Nigerians.
Economic hardships in Nigeria are multifaceted. The unemployment rate remains alarmingly high, especially among the youth, with millions unable to find stable employment. This has led to increased frustration and a sense of disenfranchisement among the younger population.
Inflation rates have soared, reaching an all-time high at 33.69%, eroding the purchasing power of citizens. Basic necessities such as food, housing, and transportation have become increasingly expensive, putting significant pressure on household budgets. Many Nigerians are struggling to meet their daily needs, despite the country’s economic growth.
Poverty levels remain significant, with the World Bank estimating that more than 40% of Nigerians live below the poverty line. This figure underscores the disconnect between national economic growth and individual prosperity.
Despite the GDP growth, Nigeria faces substantial infrastructure challenges. Poor road networks, unreliable electricity supply, and inadequate healthcare and educational facilities hinder economic productivity and quality of life. These deficits prevent the country from fully capitalizing on its economic potential.
Insecurity, particularly in the northern regions, has severely impacted economic activities. The threat of violence from insurgent groups has displaced millions and disrupted agricultural and commercial activities, contributing to poverty and economic instability.
Against this backdrop, Adesina’s comments highlight the urgent need for growth that benefits all segments of society. His focus on job creation, particularly for young people, is crucial in addressing the unemployment crisis that undermines the benefits of economic growth.
“We must invest in our young people, in their skills, talents, entrepreneurship, and give them tools,” Adesina stressed.
To bridge the gap between GDP growth and poverty reduction, Adesina said structural reforms and targeted investments are essential. He advocated programs like the Youth Entrepreneurship Investment Banks and Special Agricultural Processing Zones, which aim to create jobs and foster entrepreneurship among young people. He also mentioned key areas African leaders should work on if they are to harness the potential of Africa’s youth.
African Continental Free Trade Area (AfCFTA)
Adesina pointed out that the African Continental Free Trade Area (AfCFTA) offers a pathway to boost industrial manufacturing and intra-African trade.
“Trading among ourselves in a free trade zone must be backed by industrial manufacturing to avoid being competitively poor. We need consolidated infrastructure for export-oriented industrial manufacturing to increase our manufacturing share of GDP,” Adesina added.
He explained that by reducing dependency on exports outside the continent, African countries can create more jobs and increase their manufacturing GDP share.
Effective Governance and Management of Resources
Another area touched by the AfDB President is the effective management of national resources, transparency, and accountability are critical. He highlighted that Africa’s future is bright but stressed the need for governance reforms to ensure resources are used for the benefit of all citizens.
According to him, Africa had $6.8 billion in national capital assets as of 2018, which could significantly accelerate the continent’s transformation if managed transparently and effectively.
“Africa’s future is bright, but we must tackle governance issues and ensure our resources are fully utilized for the benefit of our people,” he said.
Diversified Financial Sources
He also talked about how increasing domestic resource mobilization and leveraging concessional finance can provide the funds necessary for development projects, noting that blended finance models can attract private sector investment, further driving growth.
“We need more blended funds to accelerate the continent’s development,” Adesina noted, expressing gratitude for governments’ robust support for the AfDB’s capital increase. This support is crucial for maintaining the bank’s triple-A rating and securing long-term, low-interest financing for Africa.
The paradox of rising GDP amidst persistent poverty in Africa, particularly in Nigeria, highlights the need for a shift in focus from mere economic growth to inclusive development. Economic experts say by creating quality jobs, investing in infrastructure, and ensuring good governance, African countries can turn economic growth into real improvements in living standards.
Adesina’s insights are believed to provide a roadmap for achieving this transformation, emphasizing that the ultimate goal of economic policies should be to enhance the well-being of all citizens, especially the youth.