Over the last decade, many African countries focused on getting the economic fundamentals right. They put in place more sustainable fiscal policies, controlled inflation, and managed their debt. Some went further, addressing fundamental structural rigidities by divesting from private-sector activity, opening up some publicly dominated sectors—such as telecommunications—and reducing public-sector borrowing from the banking sector, which was crowding out private investment. These reforms paid off. Investors both domestic and foreign welcomed these reforms, and foreign direct investment (FDI) in particular increased from US$2.4 billion in1985 to US$53 billion in 2008. Similarly, exports from Africa increased significantly and continuously. African countries witnessed a period of sustained economic expansion mostly fuelled by export-led growth.
Global integration offers incredible opportunities for increased investment, greater growth, and job creation.
Africa must take advantage of this opportunity and must claim a greater share of world trade. The continent has made genuine progress in first-generation reforms. But to further boost competitiveness and increase volume and sophistication of exports, Africa must tackle much tougher second-generation reforms.
Two strategies can help the continent achieve this goal: diversifying its product and market base, and capitalizing on its own underutilized resources: managerial skills, female entrepreneurship, and natural and cultural resources.