Towards High Quality Growth and Structural Transformation in the Eastern Africa

Kigali, 18 November 2013 (ECA) - Today, our continent celebrates the African Statistics Day on the theme, Quality Data to support African Progress.  The theme was chosen to draw attention to the importance of quality statistics for evidence-based decision making in all aspects of socio-economic development processes.

 African Statistics Day was adopted in May 1990 by the United Nations Economic Commission for Africa (UNECA) conference of African ministers responsible for planning and economic development, to be celebrated each year in order to “increase public awareness about the important role which statistics play in all aspects of social and economic life” of our countries and in Africa.

 One of the essential pre-requisites for a credible narrative around the discussions on development of Africa is to have credible and timely information.

 “As much as we like to hear about Africa’s growth figures we should be also concerned about the quality of the data. Maybe the picture will be even better if we had good data, but most likely less glamorous than it looks”, says Dr. Carlos Lopez, Executive Secretary of UNECA in his blog article titled Counting matters! Statistics are the backbone of proper planning for Africa’s future.

 The national statistical systems in the countries need to develop and maintain statistical systems that regularly churn out credible statistics on a regular basis. Quality assurance frameworks need to be put in place as part of statistical production process to ensure that the statistics are of acceptable quality. There should also be a mechanism to report on the quality of the data being put out in the public domain as part of the metadata.

 Despite the difficult global economic context arising out the 2007/2008 global economic meltdown and financial crisis, macroeconomic statistics in the Eastern Africa region continue to highlight the remarkable resilience of the region’s economic growth. However, this strong performance has increasingly been accompanied by growing concerns over the quality of the growth, particularly the extent to which growth has been conducive to broad-based poverty reduction and employment creation.

 UNECA’s Tracking Progress Report on Macroeconomic and Social Developments in the Eastern Africa Region 2012-13 observes that despite sustaining a growth rate for over a decade of around 6 percent per annum, the absolute number of people living below the international poverty line of $1.25-a-day in the 14 countries of Eastern Africa has increased from 155 million in 2000 to 166 million in 2011. 

 “This is partly due to the size of the population in Eastern Africa that continued to expand rapidly in 2000s. It should be noted that, in percentage terms and relative to population, poverty has indeed decreased, from 65 percent in 2000 to 54 percent in 2011. Nonetheless, the dent in poverty is still unsatisfactory to see the absolute numbers of poor to go down. This observation provides a useful starting point for reflections regarding the quality of growth that we have seen over the last decade”, says Antonio Pedro, Director of the UNECA Sub-Region Office for Eastern Africa.

 [The 14 countries of Eastern Africa region analysed are: Burundi, Comoros, Democratic Republic of Congo, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Rwanda, Seychelles, Somalia, South Sudan, Tanzania and Uganda – hereafter denominated Eastern Africa Region].

 The 2013 tracking progress report is subtitled ‘Towards High Quality Growth and Structural Transformation in the Eastern Africa Region”, and looks into the reasons why growth has not produced more rapid poverty reduction and improvements in social indicators across the region. Among the reasons investigated in the report, which explain these outcomes, is the relatively sluggish labour markets and the lack of structural change into sectors which produce more jobs. 

 Although often not acknowledged, Africa’s income disparities are among the largest in the world, and a number of Eastern African countries are especially badly afflicted by growing levels of inequality. The report provides an account of efforts made by several countries in the region to address this challenge. In the case of Rwanda, it notes that from 2005 to 2011, the country experienced a quite remarkable acceleration in the rate of poverty reduction, which fell from 56.7 percent to 44.9 percent, a 11.8 percent decrease. Part of this is attributed, by the Government of Rwanda, to a decrease in inequality in over the same period. At the national level, the recorded Gini coefficient declined from 52.2 to 0.49 over the same period. According to the government, “successes in increasing non-farm wage opportunities and in increasing production and sales in agriculture are likely to have been important factors here.” [1] The government’s objective, under the EDPRS-II, is to reduce the poverty rate to 30 percent by 2015.

 Eastern African governments are advised to look to the rich international experience about how to reduce inequalities. One country, which has met with considerable success on this front since 2000, is Brazil. Its success in reducing poverty was built on a combination of strong growth and improved income distribution. This was achieved through a rapid expansion of cash-transfer programmes, such asBolsa familia, and simultaneously (and less widely recognized) the enforcement of minimum wage legislation across states.

 The UNECA report also stresses that structural transformation is crucial for economies to attain inclusive economic growth and development. An excessive dependence on a limited range of economic activities has in the past undermined economic growth.

 Diversification could occur through the expansion of many sectors and sub-sectors. For instance, over the last decade in the Eastern Africa region, tourism, horticulture, construction, and the transport sectors have all proved to be dynamic sources of employment creation and economic growth.

 Much can be achieved by harnessing the private sector, through improving the business environment for both domestic and foreign investors. However, the UNECA report stresses that despite implementing important economic reforms, often the response of foreign investors has been disappointing, particularly in the poorest economies of the region. In such circumstances, the role of government becomes essential. “Without targeted government support for new and emerging sectors, accelerated structural change is unlikely to happen”, the report explains.

 The UNECA report also recognises that governments across the region have achieved a great deal in terms of improving access to primary education. But, it argues that  ‘educational deepening’ now constitutes one of the most pressing challenges for countries in the region if sustainable growth is to be achieved. The term ‘educational deepening’ refers to the importance of putting greater emphasis in the future on improving both the quality of educational provision and simultaneously creating better access to secondary, tertiary and vocational training.

Good quality demand-driven Technical Vocational Education and Training (TVET) is potentially one of the most important tools for skilling young people, both in and out of school. “Given the shortage of skills in certain sectors of the economy, and the need to align educational systems better to the requirements of the jobs market, tertiary education and TVET should move higher up the agenda of policymakers” states the report.

A number of countries in the region have announced ambitious plans to expand TVET to meet growing demands. In Ethiopia, the government plans to increase its admissions to technical and vocational education from 312,826 (2010) and 624,095 by 2015. Furthermore, 3,300 classrooms and workshops will be built while an additional 4,500 TVET teachers will be hired. Rwanda, which exhibits the highest TVET in the region, at 36 percent, also has plans to increase the number of technical and vocational education institutions by 50 percent by 2015.

In concluding, the report discusses Early Childhood Development (ECD) programmes as a means to improving the quality of educational provision. It cites the Early Child Development Project in Kenya (USD 35.1 million), the Integrated Early Childhood Development in Eritrea (USD 49 million), as well as the Nutrition and Early Childhood Development Project in Uganda (USD 40 million).