Members of the Africa Commission gathered at the UN on September 22nd to discuss how inclusive growth and employment can help accelerate the achievement of the MDGs in Africa. Hosted by the governments of Denmark, Liberia and Tanzania, the discussion focused on the interconnections between the achievement of the Millennium Development Goals and pro-poor economic growth.
The heads of state of the three host countries were present at the panel discussion moderated by Helen Clark, UNDP administrator. The president of the African Development Bank, the executive director of the International Labor Organization and Dr. Mo Ibrahim also participated in this high-level presentation.
What is inclusive growth?
Ellen Johnson-Sirleaf explained inclusive growth as “ the creation of the social and economic opportunities that will restore our people’s sense of self-worth and dignity.” In Liberia, where decades of poor governance and years of civil war left the country in a state of institutional collapse, the challenges of delivering inclusive growth are significant. How do you ensure that a generation of young people who were never educated or trained can find this sense of self-worth and dignity?
In speaking of inclusive growth, Johnson-Sirleaf noted how different policy areas – from education, to health, social services, land reform and infrastructure improvements – strongly depend on, but also underpin, inclusive growth. She made the case for a genuinely comprehensive approach to tackling poverty and achieving social and economic development gains.
Members of the Africa Commission contend that inclusive growth and broad-based economic development are essential to attaining the MDGs:
“[We are] working towards recognition by the 2010 UN MDG review conference that strong growth, productive employment, decent work and scaled up and predictable aid are required in order to achieve the Millennium Development Goals.”
The work of the Africa Commission, originally convened by Denmark in 2008, hinges on the inference that the realization of the MDGs go hand-in-hand with “greater growth that creates jobs.”
“Everything is related to everything else”
During the discussion, African Development Bank president Donald Kaberuka said that “everything is related to everything else” in development. For example, he noted that 40% of agricultural production is lost in sub-saharan African. This is due to factors such as weak or lacking infrastructure and technology, to the scarcity of market information, the high cost of energy – all of which are inter-related causes and consequences of poverty. When we speak about economic empowerment, inclusive growth and income generation, we are not only talking about “creating jobs”, but about nurturing a social, political, institutional and physical environment to support these critical areas of intervention, such as the president of Liberia explained.
How do we deliver inclusive, pro-poor growth?
The Africa Commission has been lobbying in international forums, asking for a recognition that foreign aid must support private sector-led economic growth and employment creation, especially for the youth (In 2025, one in four young people in the world will be from Sub-saharan Africa), and making practical policy recommendations. In addition, they are also undertaking five initiatives to address specific challenges that are obstacles to inclusive growth:
- Benchmarking African competitiveness
- Access to investment finance for SMEs
- Unleashing African entrepreneurship
- Access to sustainable energy
- Promoting post-primary education and research
One of these focus areas, access to investment finance for SMEs, was highlighted during the event. With almost 50 percent of African companies identifying access to finance as a major constraint to doing business, making financing more readily available is critical. While micro-finance institutions making very small loans have been increasingly present in Sub-Saharan Africa, financing has been scarce for companies that are too big or ambitious for micro-loans, but too risky or too small for commercial finance. Financing for these types of companies, sometimes termed “the missing middle”, is a key ingredient of delivering job-rich, inclusive economic growth.
In 2009, the Africa Commission had proposed the creation of a $3 billion Africa Guarantee Fund (AGF) to provide loans to SMEs in Africa. In spite of the fact that by September 2010 the AGF was only capitalized at $300 million, it remains an ambitious and important tool to promote economic growth in Africa. The AGF will offer a combination of services, ranging from loan portfolio and financial guarantees for partner lending institutions to capacity development support for SMEs.
The International Labor Organization executive director, Maria Angelica Ducci, was straight-forward: “if economic growth is not inclusive and doesn’t let people participate and have access to economic gains, it’s not going to work.” She explained that it was very important to monitor, assess and evaluate the success (or lack thereof) of efforts to deliver inclusive growth at the national level. She spoke of the decent work indicators that the ILO developed that are being piloted in Tanzania. Through these indicators, the ILO is able to assess whether job creation is sustainable and pro-poor. These types of efforts are necessary to ensure that economic growth is broad-based, instead of benefiting a minority elite.
Shifting paradigms: finding ways to work together to unlock Africa’s potential
The objectives that the Africa Commission is pursuing – reducing poverty and aid dependency through productive employment, decent work and inclusive economic growth – were echoed prominently last week in New York during the Millennium Development Goal review summit. Indeed, as heads of state – including President Obama – extolled a new approach to development aid which would focus more on achieving impact then increasing spending, the work of the Africa Commission is trying to support the concrete realization of this agenda.
As the president of Liberia noted during her presentation, inclusive growth and the attainment of the MDGs “must be more than mere concepts; they must be reality.” An oft-employed statistic to illustrate Liberia’s state of development is the country’s 85% unemployment rate. This number, of course, doesn’t reflect the reality: almost every individual in Liberia is working hard to make ends meet, most often through micro-initiatives that are difficult to quantify. This reflects how precarious income-generating activities are in Liberia, and highlights the need for more – and especially better – employment opportunities there to support effective and sustainable economic and social development.Photo: © Africa Commission