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Africa: Diversification is Key to Growth

         Date: 2012-08-02

           Tag: Africa, Africa Diversification Growth

Summary: Though Africa is urbanizing at a fast rate, agriculture remains the most important sector of the continent's economy and will have to be its "driving engine out of poverty", according to a senior Un…

Though Africa is urbanizing at a fast rate, agriculture remains the most important sector of the continent's economy and will have to be its "driving engine out of poverty", according to a senior United Nations official.

Underscoring his point, UN Industrial Development Organization (UNIDO) Director-General Kandeh K. Yumkella says: Agriculture accounts for 65% of the continent's employment and 75% of its domestic trade.

At the same time, the fact is that over a third of Africa's 1 billion inhabitants currently live in urban areas. By 2030 that proportion will have risen to a half, as UN-HABITAT, the United Nations agency for human settlements, said in a 2010 report.

According to the report, the population of some cities is set to swell by up to 85% in the next 15 years. The most populous city in 2010, Cairo, will grow by 23% to 13.5m people. By 2025, however, it will have been overtaken by both Lagos (15.8m) and Kinshasa (15m).

"Food and water shortages, poor infrastructure and a lack of housing are among the problems faced by governments during such rapid urbanisation. Progress in meeting these challenges would be shown by a fall in the proportion of slum-dwellers, who currently account for 70% of urban inhabitants," the Economist summed up the report.

With this in view, Yumkella believes that "in order to turn bright prospects into employment opportunities for its young people," Africa needs to embrace economic diversification as well as focus on agribusiness to lift the continent out of poverty and put it on the path to prosperity.

Yumkella was addressing the Africa Caucus Meeting in Kinshasa, the capital of the Democratic Republic of the Congo (DRC), which brought together the continent's finance ministers, central bank governors, and representatives of international development agencies and financial institutions.

Yumkella stressed the need to boost agricultural productivity to achieve sustainable industrial and agribusiness development as a means of wealth and job creation, saying: "The transformation of agricultural raw materials into industrial products depends increasingly on the capacity of African entrepreneurs to participate and compete in global, regional and local value chains."

He added: "Accordingly, African agribusiness value chains will have to adapt to changing market conditions, continuously improve efficiency and strive to meet consumer requirements in a competitive global trade system."

He further pointed out that Africa needs "new learning and innovation systems involving regional cooperation, new types of partnerships between farmers, sellers, investors and researchers, and the right incentives and public actions that crowd-in rather than crowd-out private investment."

Investment in transport infrastructure, access to energy and water, information and communication technologies and management efficiency were vital for agribusiness to thrive, he noted.

In 2012, in partnership with the UN Food and Agriculture Organization (FAO) and the International Fund for Agricultural Development (IFAD), UNIDO launched the Accelerated Agribusiness and Agro-industries Development Initiative, or 3ADI, to promote value addition to agricultural commodities. The initiative is now operational in 12 African nations.

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