The World Bank has today launched the Second Edition of the annual Liberia Economic Update, “Finding Fiscal Space”. According to the report, economic growth is expected to recover to 3.6 percent in 2021, before rising gradually to an average of 5.2 percent over 2022–2025. In the near term, growth will be driven by the expected recovery in the mining sector underpinned by the recent uptick in commodity prices.
Having reached a peak of 31.3% in 2019, inflation declined significantly in 2020 and 2021, and is now down to single digit, largely because of strong macroeconomic policies. The drop in world oil prices in 2020 allowed some easing in Liberian fuel prices, a frequent driver of inflationary pressures, although their decline was moderated by the introduction of an excise tax early in the year. But it was macroeconomic policy that was at the center of the action, with tighter monetary and fiscal policies, and the ensuing lower aggregate demand pressures, helping to ease the self-reinforcing cycle of depreciation-inflation observed in late 2018 through 2019.
“The Government must be commended for making tough policy choices that have resulted in this positive turnaround in macroeconomic fundamentals, especially under a challenging COVID-19 environment,” said Dr. Khwima Nthara, World Bank Country Manager for Liberia. “The focus now should be on complementing the improved macroeconomic environment with critical structural and governance reforms that will help boost domestic and foreign private investment to create more jobs,” he added.
After successfully stabilizing the macroeconomy, the government needs to create enough fiscal space to finance the country’s massive investment needs in physical infrastructure (power/energy, roads, rails, ports, and airports). In addition, Liberia needs to invest in its people and institutions, and create an educated, skilled, and healthy labor force, in both the public or private sectors, and protect its economy and vulnerable population against repeated exogenous shocks, the Liberia Economic Update emphasized.
According to this new economic report, the government also needs first and foremost to reduce the very high level of recurrent spending and strengthen domestic revenue mobilization to generate savings for public investment financing. Between 2012 and 2020, government operating expenses exceeded the domestic revenue it collected by 4 percent of GDP. This means that the external resources mobilized in the period financed a significant part of the government’s operating expenditure instead of financing public investment in infrastructure.
“The recent efforts to reduce duty waivers and the successful implementation of the pay and payroll reform are steps in the right direction and need to be complemented by actions to improve the efficiency in the consumption of goods and services by the Government” said Mamadou Ndione, Senior Country Economist and main author of the report.
Africa Industrialization Week 2021 at UNIDO
A series of webinars on themes such as the Fourth Industrial Revolution, climate-related challenges in industrialization, and opportunities for Japanese and other international investors on the African continent, marked the beginning of Africa Industrialization Week 2021 at the United Nations Industrial Development Organization (UNIDO).
Africa Industrialization Week, observed by the United Nations system each year in November, focuses on raising awareness of the importance of Africa’s industrialization and the challenges faced by the continent.
“The African Continental Free Trade Area – AfCFTA – agreement, which came into being this year, opens up a huge market of 1.3 billion people and is a US$3.4 trillion economic bloc with the potential to lift 30 million Africans out of extreme poverty. Coupled with the African Union’s Agenda 2063 and the 2030 Agenda for Sustainable Development Goals, it will help focus on addressing the existing challenges and opportunities to accelerate the industrial development of the continent,” said UNIDO Director General, LI Yong, in his message on the occasion.
“The Fourth Industrial Revolution (4IR) has deep implications for sustainable development of Africa, and governments’ policymaking approach towards new technology and innovation needs to be more agile, flexible and resilient,” according to Bernardo Calzadilla-Sarmiento, UNIDO Managing Director of the Directorate of Digitalization, Technology and Agribusiness at UNIDO.
At a webinar on ‘Road to 4IR for Africa,’ Calzadilla-Sarmiento said that by 2030 Africa’s potential workforce will be among the world’s largest and there is a massive opportunity for growth when this is coupled with the needed infrastructure and suitable skills for innovation and technology use.
Other panellists from the field of robotics, Artificial intelligence and the Internet of Things also discussed the potential strengths and opportunities, as well as the challenges for African industrialization.
In a separate webinar, hosted by UNIDO’s Investment and Technology Promotion Office (ITPO) in Tokyo, the panelists discussed ways to facilitate and promote investment and technology transfer, especially from Japan, for industrial development in Africa. Panelists emphasized that there was a need to increase manufacturing capabilities and improve capacity building, especially in sectors like pharmaceuticals, both for domestic consumption and for export.
“There are projected business opportunities valued at US$ 5.6 trillion by 2025 due to the increased spending capacity of US$ 3.5 trillion and growth in household consumption to US$2.1 trillion. This creates great business opportunities for investors from Japan, as well as from the rest of the world,” opined Mansur Ahmed, Vice President of the Africa Business Council.
In a webinar on “Carbon-Neutral and Resilient industrialization in Africa,” the panelists discussed ways of addressing the challenges of climate change and ensuring an inclusive and sustainable industrial development on the continent. They agreed there is a need for a policy environment that allows private sector participation in energy generation, and a need to develop pathways aligning industrial policy goals with national climate action priorities and policies.
In 2016, the United Nations proclaimed the period 2016-2025 as the Third Industrial Development Decade for Africa (IDDA III) and tasked UNIDO with leading the implementation of the Decade, in collaboration with a range of partners. According to Victor Djemba, chief of UNIDO’s Africa division, UNIDO coordinated the development of a Joint Roadmap to better streamline international efforts into programmes and projects for the continent’s industrial development activities. “The vision for the implementation of IDDA III is to firmly anchor Africa on a path towards inclusive and sustainable industrial development,” he added.
Ethiopia: Humanitarian aid needed as situation deteriorates in Tigray
With the dire humanitarian situation in Tigray, Ethiopia, continuing to deteriorate, it is critical to establish a regular flow of humanitarian aid into the region, the Deputy Spokesman for the UN Secretary-General said on Wednesday.
Yesterday, almost 40 trucks with humanitarian supplies, including food, left the Afar capital of Semera for Tigray – the first convoy to do so since 18 October.
Meanwhile, trucks containing fuel and medical supplies are still waiting for clearance in Semera.
Around 500 trucks of humanitarian supplies are required per week, Farhan Haq informed journalists at a regular press briefing.
Seven million food insecure
In November 2020, heavy fighting between central Government troops and those loyal to the Tigray People’s Liberation Front (TPLF) have left Ethiopia’s northern regions of Tigray, Amhara and Afar in dire need of humanitarian assistance.
And after months of killings, looting and destruction of health centres and farming infrastructure, including irrigation systems that are vital to the production effort, those needs have only surged.
Currently, some seven million people throughout the country are suffering acute food insecurity.
Meanwhile following their suspension on 22 October, UN Humanitarian Air Service flights to Mekelle have resumed, allowing the UN and humanitarian partners to rotate staff in and out of Tigray and transfer a limited amount of operational cash.
However, said the Deputy Spokesperson, “humanitarian partners on the ground continue to report significant challenges due to cash shortages for operations”.
Despite a $40 total injection of new resources to Ethiopia – $25 million from CERF and $15 million from the country-based Ethiopia Humanitarian Fund (EHF) – the country still faces a funding gap of $1.3 billion, including $350 million for the response in Tigray.
Despite an extremely challenging operating environment, humanitarian partners continue to respond to urgent and growing needs across northern Ethiopia, including in Amhara and Afar.
In Amhara, a major food assistance operation kicked off in Kombolcha and Dessie towns, targeting more than 450,000 people over the next two weeks.
Yesterday, the UN announced that given the security situation in the country, and out of an abundance of caution, it is reducing its footprint in Ethiopia by temporarily relocating all eligible dependents.
“It is important to note that staff will remain in Ethiopia to deliver on our mandates”, said Stéphane Dujarric, Spokesman for the Secretary-General.
The UN will monitor the situation as it evolves, keeping in mind the safety of the staff and the need to continue its operations and support all those who need assistance.
Earlier this month, the Organization confirmed that at least 16 UN staff and dependents had been detained in the Ethiopian capital, Addis Ababa, and that it was working with the Government of Ethiopia to secure their immediate release.
Ghana Can Create Better Jobs through Accelerated Economic Transformation
Ghana has an opportunity in the coming decades, to accelerate economic transformation and create more and better jobs, after navigating through the heights of the pandemic. It can achieve this through fostering greater global integration, technological transformation, macroeconomic stability, and financial sector development, says the World Bank’s latest economic analysis for the country.
The newly released Country Economic Memorandum, Ghana Rising – Accelerating Economic Transformation and Creating Higher Quality Jobs says Ghana has all it takes to continue being an economic development star, if it takes the right steps to nurture growth and job creation.
“Ghana faces an acute challenge of generating more and better jobs and has a ‘missing middle’ of employment in mid productivity sectors”, notesPierre Laporte, World Bank Country Director for Ghana, Liberia and Sierra Leone. “This is the time for Ghana to fill that ‘missing middle’ by cultivating export-oriented activities in both manufacturing and services and harnessing the transformative potential of trade; it faces an historic opportunity to do so with the Africa Free Trade Continental Area (AfCFTA).”
The report highlights four main pillars for accelerating economic transformation and improving jobs outcomes:
- To create jobs, Ghana will need to drive sectoral transformation through the movement of workers into higher productivity firms and sectors and spatial transformation through trade, urbanization, and connectivity. ‘Global innovator’ services, in particular ICT and business services, could play a critical role.
- To deliver productivity growth and boost innovation and entrepreneurship, it will need to drive technological transformation through the adoption of digital and complementary technologies in domestic firms. To enable this change it will be key to improve internet connectivity, invest in foundational skills and advanced digital skills, and facilitate technology adoption for firms.
- To support more inclusive private sector development, Ghana will need to leverage the financial sector to facilitate firm expansion, technology adoption and innovation.
- To enable long-term inclusive growth, Ghana will need to double down on macro-fiscal stability, natural resources management and revenue mobilization (to generate the revenues to fund reforms for economic transformation). Environmental taxation can boost revenues while helping to minimize the impact of climate change on households and incentivize sustainable land-use.
“This report lays out three scenarios for an accelerated economic transformation for better jobs” adds David Elmaleh, World Bank Senior Economist, and co-author of the report. “Without reforms, in a ‘business as usual’ scenario, Ghana’s economy is currently projected to reach upper middle-income status by 2037, while under a ‘bright horizons’ scenario, which includes the adoption of some key reforms to drive economic transformation, Ghana’s economy could reach upper-middle-income status by 2032. However, under a ‘pitfalls’ scenario, Ghana would have to wait until 2040. The greatest impact on GDP would be from reforms to raise the productivity of export-oriented global innovator services and manufacturing. This can start now, under the new budget.”
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