This fact-filled annual reference book brings readers the latest information on development policies on the African continent and its five regions. It presents a new narrative assessing Africa’s economic, social and institutional performance in light of the targets set by the African Union’s Agenda 2063. This third edition of Africa’s Development Dynamics explores how digital transformation creates quality jobs and contributes to achieving Agenda 2063, thereby making African economies more resilient to the global recession triggered by the COVID-19 pandemic.

Struck by the COVID-19 pandemic, the global economy will contract by at least 4.5% this year. The African continent, which is highly exposed to external shocks, will experience its first recession in 25 years, with a decline in gross domestic product (GDP) of between 2.1% and 4.9% according to scenarios mapped out by the African Union in July 2020 in collaboration with the OECD Development Centre. African governments have responded to this massive shock with lockdowns, social protection, economic support and recovery measures. The African Union is supporting these efforts, in particular by setting up a COVID-19 fund to bolster the continent’s response to the economic, social and health ramifications of the pandemic. It is also co-ordinating a call for creditors, including financial institutions, to cancel member countries’ debt.

COVID-19 poses an unprecedented threat to financing Africa’s development by creating new risks and exacerbating pre-existing vulnerabilities. The amount of financing per capita decreased over 2010-18 for both domestic revenues and external financial flows, by 18% and 5%, respectively. Between 2019 and 2020, the ratio of tax to gross domestic product (GDP) is expected to decrease by about 10% in at least 22 African countries; total national savings could drop by 18%, remittances by a fourth and foreign direct investment by 40%. Donors have pledged to maintain official development assistance at their pre-crisis levels, although their capacity may depend on economic trends. This negative shock is increasing fiscal expenditure to support health and economic activities, which will probably double fiscal deficits. As a result, Africa’s debt will soar to about 70% of GDP in current US dollars, with debt exceeding 100% of GDP in at least seven countries. The G20 debt moratorium that began in April 2020 provides a necessary respite for African countries, but it remains insufficient. Suspending and, in some cases, restructuring the debt may prove necessary to free up resources that are critical to achieving the African Union’s Agenda 2063: The Africa We Want. Where possible, debt negotiations should include the growing group of private sector lenders.

The economic recession triggered by the COVID-19 pandemic is hitting African countries hard. Most of them are facing their first recession in 25 years: gross domestic product (GDP) growth will likely decrease in 41 of the 54 countries in 2020, according to an International Monetary Fund forecast (October 2020). By contrast, when the global financial crisis hit the continent in 2009, only 11 countries went into recession. The crisis has affected Africa’s growth through various external and domestic channels (). For example, the plunge in oil prices in the first quarter of 2020 has severely struck commodity-based economies. The shutdown of the global tourism industry, which employs 24.3 million people on the continent, has harshly affected tourism-dependent countries. Domestic demand and regional trade have suffered from confinement measures. At least 42 countries have imposed partial or full lockdowns on economic activities and the movements of people (UNECA, 2020). The crisis has also led to the postponement of the implementation phase of the African Continental Free Trade Area until 2021.

This chapter analyses the dynamics of digitalisation in Africa and how it can create jobs for youth and fulfill Agenda 2063 in the context of the COVID-19 crisis. The first section examines the importance of digitalisation – the use of digital technologies and data and the interconnection that results in new activities or changes to existing activities − for Africa’s productive transformation and resilience to future crises. The second section documents the progress of digitalisation in Africa since the start of the mobile money revolution in 2007. Then it highlights the main channels through which digitalisation can create jobs. The third section identifies critical mismatches that require policy makers to act now, to accomodate the changes in Africa’s youth profiles by educational attainment. The final section of the chapter documents ongoing continental initiatives to promote Africa’s digital transformation and identifies key policy areas for enhancing co-operation.

This chapter discusses public policies that can use Africa’s digital transformation to trigger large-scale job creation and achieve Agenda 2063 objectives. In each of the three policy domains presented, the chapter highlights policy levers and the most relevant practices that African policy makers can mobilise at local, national, regional and continental levels. The first section focuses on bridging the digital divide through place-based policies. The second section presents policy priorities to upgrade Africa’s large informal sector, including skills development, labour regulations to deal with emerging forms of employment and digital solutions for financial inclusion. The last section examines how policy makers can empower Africa’s small and medium-sized enterprises and start-up ecosystems to compete and innovate in the digital world.

This chapter examines the relationship between digitalisation and youth employment in the countries of Southern Africa (Angola, Botswana, Eswatini, Lesotho, Malawi, Mozambique, Namibia, South Africa, Zambia and Zimbabwe). The first two sections assess digital development across two groups: countries in the Southern African Customs Union (SACU) and non-SACU countries. They highlight problems that the countries face in using digitalisation to address challenges of youth employment.The last three sections discuss public policies that can help create more and better jobs through digitalisation in Southern Africa. The first of these sections considers measures to ensure equitable and affordable access to communications infrastructure. The second examines public policies to prepare the workforce for future skill demands. The last section reviews interventions that can build an integrated digital economy in the region and enhance strategic regional value chains with digitalisation.

This chapter analyses the actual and potential contribution of the digital economy to accelerating job creation in Central Africa (Burundi, Cameroon, Central African Republic, Chad, Republic of the Congo, Democratic Republic of the Congo, Equatorial Guinea, Gabon and São Tomé and Príncipe). Despite the boom in the use of digital services in 2020 due to the coronavirus (COVID-19), Central Africa is struggling to increase the Internet penetration rate among the population in general, and public and private companies in particular and thereby create more jobs. The chapter opens with the opportunities digitalisation brings for reducing unemployment, while pointing out the constraints related to the limited communications infrastructure. It then highlights the untapped potential of digital development, and identifies areas in which this could facilitate a rapid expansion of youth entrepreneurship, notably through the creation of start-ups. The conclusion formalises the priorities for improving the contribution of digitalisation to job creation.

The chapter examines the relationship between digitalisation and youth employment in 14 East African countries: Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Mauritius, Rwanda, Seychelles, Somalia, South Sudan, Sudan, Tanzania and Uganda. The first section presents the state of youth employment and digital development in East Africa. The second section analyses how East Africa can leverage digitalisation for job creation, looking at the strengths, weaknesses, opportunities and threats. The third section discusses how the region needs to invest in human resource capacity to meet future labour demand, develop appropriate mechanisms to facilitate the school-to-work transition, promote national digital literacy programmes and create a monitoring process to understand changes in technology. The fourth section addresses how to nurture entrepreneurship and innovation by building a supportive regulatory environment for home-grown start-ups and facilitating financing for the development of technology parks. The final section highlights strategies for mobilising resources for regional infrastructure and building a single digital market.

Unemployment and the precariousness of youth employment remain major concerns in North Africa. The digital transformation presents several opportunities but also generates new risks for economies, requiring the implementation of adequate policies. Despite high mobile phone penetration, significant Internet service coverage and progress in e-commerce, the region still needs to build infrastructure, develop human capital, promote innovation and deregulate the digital environment if it is to exploit its full potential. The chapter starts with an overview of the labour market and digital development in North Africa. The following section highlights the risks and opportunities related to the digital transformation to support youth employment and fulfill the ambitions of the Agenda 2063. The last section proposes public policies to support and accelerate the digital transformation.

This chapter examines how public policies can leverage digitalisation to accelerate productive transformation and provide solutions to youth unemployment in 15 countries in West Africa. The first two sections provide an assessment of labour market and digital development in the region and highlight opportunities and challenges that countries face in leveraging digitalisation. The third section explores the main channels through which West African countries can make the most of the digital transformation to tackle youth unemployment and fulfill the Agenda 2063. Finally, based on these assessments, the last section highlights strategies and policy interventions that can help West African countries build an integrated digital economy.

The chapter analyses the state of Africa’s development financing in the face of the COVID-19 global crisis and highlights key policy areas to ensure its sustainability. The first section presents recent trends and dynamics of Africa’s main sources of development finance before COVID-19 hit in 2020. The second section discusses the global economic impact of the coronavirus pandemic on domestic resource mobilisation and highlights the opportunities for digitalisation to improve Africa’s tax revenues. The third section analyses the risks of declining external financial flows on African economies. It also identifies policy priorities to relaunch remittances, foreign direct investment and official development assistance to Africa. The last section examines both the urgent need for debt restructuring to free up critical development financing and reforms in debt management to ensure future debt sustainability.

Data used in this edition of Africa’s Development Dynamics have been compiled and presented in tables available for free download on the Development Centre’s website (https://oe.cd/AFDD-2021) along with some additional social and economic indicators that add context to the report’s analysis.