COVID-19 is slowing Africa’s economic growth

By Silence Mugadzaweta
COVID-19 has stalled the growth of Africa’s economic convergence with the rest of the world, and its share of global gross domestic product (GDP) is expected to fall to 4.7%, the lowest since 2002, according to the latest African Union report. report.

The Africa Development Momentum Report (2022) indicates that the continent may not regain its share of pre-COVID-19 growth, adding that existing patterns of participation in global value chains (GVCs) n have not been conducive to a productive transformation likely to accelerate economic recovery and job creation.

“African economic growth will reach 3.9% in 2022, one percentage point less than the rest of the world’s growth rate of 4.9%. In 2022, Africa’s share of gross domestic product (GDP) in global GDP is expected to fall to 4.7%, the lowest level since 2002. This reverses the catch-up process that was underway: between 2000 and 2010, the global economic weight steadily increased from 4.7% to 5.3% of global output,” the report reads in part.

Apart from COVID-19, reports have also noted that the export of raw natural resources and agricultural products is a barrier to Africa’s participation in the GVC.

“Africa and Latin America and the Caribbean (LAC) each account for around 2% of EU and US imports. However, exports from Africa to the European Union and the United States slowed in 2020 with no sign of recovery, compared to LAC. LAC exports to the European Union and the United States experienced a V-shaped recovery, falling 1.3 percentage points in May 2020 compared to May 2019, but returning to similar levels in previous year in September,” the report added.

However, the report recommends that Africa should promote regional transformation and full utilization of the African Continental Free Trade Area (AfCFTA) to recover from two decades of stagnation.

“Africa’s limited backward linkages have remained at 2% on average since the early 2000s, while forward linkages have remained around 6.3%. This stagnation shows the need to rethink integration strategies to better leverage participation in GVCs and accelerate productive transformation. Compared with forward participation, forward participation is more conducive for domestic enterprises to develop key production capabilities and gain knowledge of overseas markets, which will enable them to increase their competitiveness and level in value chains,” the report says.

“The entry into force of the African Continental Free Trade Area (AfCFTA) in January 2021 opens new opportunities for integration into regional value chains by expanding access to markets, inputs, technology and investments. The AfCFTA aims to boost intra-African trade by connecting 1.2 billion people and a combined GDP of over $3 trillion. It is the deepest regional trade agreement in Africa to date, as it includes significant commitments in areas such as sanitary and phytosanitary standards, technical barriers to trade, intellectual property rights and the investment.

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