This new annual report, Africa’s Development Dynamics, analyses the continent’s development policies. It presents a fresh narrative on Africa’s development, assessing the economic, social and institutional performance in light of targets of the African Union’s Agenda 2063. This first edition examines the relations between growth, employment and inequalities in Africa and draws strategic policy implications.

This first edition of the African Union Commission’s Annual Economic Report, produced with the OECD Development Centre, plays a part in furthering the project to integrate and transform Africa as set out by the adoption of Agenda 2063 in January 2015 and of the Continental Free Trade Area in March 2018. These pan-African initiatives are milestones along the path towards a united, integrated, peaceful and prosperous Africa that can participate fully in international governance.

Africa’s Development Dynamics 2018 shows that despite the continent’s strong growth, quality jobs remain scarce and inequalities high. Africa’s economy grew 4.7% per year between 2000 and 2017, making it the world’s second fastest growing region.

Africa’s Development Dynamics 2018 examines policies to foster inclusive growth, create jobs and reduce inequalities. These policies, in turn, aim to achieve Agenda 2063’s aspirations of "a prosperous Africa based on inclusive growth and sustainable development" and meet the objectives of its First Ten Year Implementation Plan 2013-2023. The dynamics of growth, jobs and inequalities also depend on Africa’s integration into the global economy and on megatrends affecting the continent. The five regional chapters of the report demonstrate important differences in the dynamics of growth, jobs and inequalities between Southern, Central, East, North and West Africa, and propose specific policies for each region. The report provides African decision makers with an up-to-date tool for policy dialogue and reform at national, regional economic community and pan-African levels.

This chapter analyses the overall development trajectory in Africa and its position in the global economy since 1990. It first addresses the determinants, components and dynamics of growth in gross domestic product and their impact on job creation and inequality. The analysis then proposes five reasons why Africa needs better growth patterns in light of its Agenda 2063 development targets. The second part of the chapter looks at growth avenues that regional and global markets present to African economies. The chapter presents the policy challenges to boost domestic competitiveness, further develop domestic markets and unlock investments.

This chapter presents five megatrends that will shape Africa’s development dynamics in the coming decade. The first megatrend corresponds to the stronger role of emerging countries in the global economy (also referred to as "shifting wealth"). The second is the new production revolution brought about by technological change and digitalisation. The third megatrend relates to the continent’s demographic growth, which could bring "demographic dividends" if countries implement the right policies. The fourth megatrend is rapid urbanisation, which impacts the economic structure of many countries, living conditions and multi-level governance. The fifth megatrend is climate change, which calls for innovative and sustainable "green growth" strategies. For each of these megatrends, the chapter assesses the main risks, opportunities and policy implications for African countries.

This chapter addresses the links between growth, employment and inequality in the Southern Africa region (Angola, Botswana, Lesotho, Malawi, Mozambique, Namibia, South Africa, Swaziland, Zambia and Zimbabwe). It examines the drivers of growth and the need to diversify the economy. The chapter also shows the challenges interlinking the lack of quality jobs and the inequality in Southern Africa. It highlights the heterogeneity across countries and the common problems they face. The chapter begins with the region’s economic profile. The subsequent three sections present the evolution of growth, jobs, and poverty and income inequality in the region. A discussion of the relationships between inequality, employment and economic growth follows, and the final section presents policy recommendations.

This chapter presents trends and determinants of growth, employment and inequalities in Central Africa (Burundi, Cameroon, the Central African Republic, Chad, Congo, the Democratic Republic of Congo, Equatorial Guinea, Gabon, Sao Tome and Principe). It looks at the sectoral composition of the economies in the region as well as the dynamics of productivity, of job creation and of inequality of opportunity and income. It also analyses the role of structural transformation in reducing the region’s vulnerability to international commodity price fluctuations. The chapter addresses four topics: growth dynamics, employment dynamics, dynamics of inequalities, and concludes with recommendations that take into account national specificities.

This chapter seeks to investigate the links between growth, employment and inequalities in East Africa (Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Mauritius, Rwanda, Seychelles, Somalia, South Sudan, Sudan, Tanzania and Uganda). Specifically, the chapter analyses the evolution of economic growth, the drivers behind the growth process and the impact of growth on living standards of the people in the region. The chapter gives a comparative overview of the trends in economic growth, labour market outcomes and income inequality since the 1980s in East Africa. The chapter is structured as follows. The first section provides key facts on East Africa. The second section gives an overview of the economic performance in the region. The third section focuses on the evolution of employment and unemployment outcomes. The fourth section analyses the main trends in poverty and income inequality. The final section provides policy recommendations.

Growth has proved to be broadly unstable in North Africa with volatile domestic investment and inadequate productivity gains. Jobs and inequality remain major challenges, despite the vitality of labour markets in some countries and falling inequality. This chapter reconsiders the dynamic and determinants of these aggregates in the countries for which data are available. It then suggests ways of invigorating economic activity while reducing unemployment and inequality. The primary solutions suggested by this chapter include: promoting political stability, accelerating the structural transformation of the economy, and introducing new policy levers targeting youth and female employment.

This chapter examines the economic dynamics of 15 West African countries (Benin, Burkina Faso, Cabo Verde, Côte d'Ivoire, Gambia, Ghana, Guinea, Guinea- Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo) from 1990 to 2015. Strong regional growth could be undermined by youth unemployment, while inclusive and endogenous growth relies on strengthening regional integration. Growth of the population, of regional demand and of an emerging middle class offer important opportunities for West Africa’s development. Harnessing these calls for implementing efficient policies and generating more jobs in the formal economy.

This chapter proposes ten policy actions to address growth, job creation and inequalities in Africa. These recommendations rest on three pillars: sustainable economic development, social development and institutional development. To sustain economic development, African governments should consider better investments, diversifying exports, rural-urban linkages and green growth. Measures to achieve social development relate to education and skills, social protection, and health coverage. To improve institutional development, governments should address their engagements with Africa’s global partners, regional integration, domestic revenues, economic and political governance, as well as their own institutional and statistical capacities. The policy recommendations are divided into specific actions to meet the objectives of Agenda 2063 and of the sustainable development agenda. They assess how to improve statistics and better measure policy impact.

Data used in this first edition of Africa’s Development Dynamics has been compiled and presented in tables on the Development Centre’s website (www.oecd.org/development/ africa-s-development-dynamics-2018-9789264302501-en.htm) along with some additional social and economic indicators that add context to the report’s analysis. Figures are presented on a national basis for African countries for which data is available.