INCLUSIVE GROWTH Challenge of a Generation? Steve Kayizzi-Mugerwa , Director, Research Department (EDRE)

1. INCLUSIVE GROWTHChallenge of a Generation? Steve Kayizzi-Mugerwa,Director, Research Department (EDRE) AfDB Partnership Forum April 2012

2. Inclusive Growth • Background (I)—the challenge of a generation? • A response to recent expressions of people/youth power, including the Arab spring, occupy Wall Street movement, etc. • Conditions that ignited the “Arab Spring” can be found in many other places in Africa. • Is inclusive growth “the challenge” of our generation? • If seen as a mere recycling of past initiatives we would have failed to harness the power of the moment. • 2

3. Inclusive Growth • Background II—Whatis New? • 50 years ago, newly independent African Governments believed strongly in “inclusive growth”. • Much later still, emphasis was put on policies, markets, and politics (Poverty Reduction Strategy Papers etc.) • In plotting the way forward, what have we learnt from past successes and failures? • The risk of repeating past mistakes is real. • 3

4. Inclusive Growth • Background III—Stability and Growth • Africa has witnessed among the highest growth rates since independence in the 1960s. • Countries such as Cote d’Ivoire, DRC etc. have returned to growth. • Africa, least affected by recent global crisis (mainly because demand for its resources remained high). • The African middle class is expanding, as are its consumer markets. • 4

5. Inclusive Growth • Background IV—Growth Benefits Uneven • The impact of recent high growth on poverty has been uneven/patchy. • Structure of growth—from resource extraction and services, capital intensive and “enclave” like (vs BRICs—labor-intensive manufacturing. • Africa’s has high level of inequality—only second to Latin America (blunts the impact of growth on poverty reduction) • Burden of unemployment falls on the youth • 5

6. Inclusive Growth • Looking Ahead I: To Do List • Need to renew emphasis on economic and political governance • Make Regional Member Countries aware of the pressures of economic and demographic trends • Promote inclusive growth in well-targeted infrastructure projects (rural electrification, mobile telephony etc.) • Look also at the soft side (governance and accountability) • 6

7. Inclusive Growth • Looking Ahead II: New Approaches • Direct Investment in economic and social inclusion (a la Lain America?) • Expand investments in clean energy and climate change adaptation. • Innovative financing (including tapping remittances, pension funds). • Reform development financial institutions • 7

8. Inclusive Growth • Looking Ahead III: Partnerships • EDRE is planning a number of studies: country, cross country, cross continent on the issues of inclusive growth. • We have already initiated collaboration with many of you and intend to develop these further together with colleagues in other departments. • My colleagues here present will provide information on specific projects. • 8

9. Inclusive Growth Contacts: Steve Kayizzi-Mugerwa, Director Research Department, EDRE s.kayizzi-mugerwa@afdb.org Shimeles Abebe, Division Manager a.shimeles@afdb.org 9