Africa must realize the potential of its non-oil economy through a productivity-led transformation.
After a surge in prosperity over the past decade fueled by rising oil prices in Nigeria, Algeria, Angola, Lybia, Egypt and the rest, the continent's economy is at an inflection point. We see a real opportunity for the countries to inject new dynamism into its economy through a productivity- and investment-led transformation that could help ensure future growth, employment, and prosperity.
The oil price boom from 2003 to 2013 fueled rising prosperity in Nigeria, which became Africa's largest economy. GDP doubled, household income rose by 75 percent, and thousands of jobs were created, including jobs for a growing number of women. The various countries invested heavily in education, health, and infrastructure and built up reserves amounting to almost 100 percent of GDP in 2014.
The continent can no longer rely on oil revenue and public spending for growth, in the face of a changing global energy market and a demographic transition that will significantly increase the number of working-age Africa by 2030. The current labor participation rate is 52 percent, and productivity growth of 0.8 percent annually from 2003 to 2013 trailed many emerging economies.
Governor Akinwunmi Ambode of Lagos State, said the massive fall in oil prices in the international market is a blessing in disguise for Nigeria, just as he said the development is a tipping point not just for positive change but also to achieve inclusive growth.
Our model integrating Nigeria's economic, labor-market, and fiscal perspectives shows that even if the country responds to these challenging conditions with policy changes such as a budget freeze or immigration curbs, unemployment will rise rapidly, household income will fall, and the fiscal position of the national government will deteriorate sharply.
However, a productivity-led economic transformation could enable Nigeria and Africa at large to double its GDP again and create as many as six million new jobs by 2030 (exhibit). We estimate this would require about $4 trillion in investment. Eight sectors—mining and metals, petrochemicals, manufacturing, retail and wholesale trade, tourism and hospitality, healthcare, finance, and construction—have the potential to generate more than 60 percent of this growth opportunity.
Instead of over-dependence on oil or importation, Africa should concentrate more on building Native intelligence and exporting her cultural heritage, local products(Agric Produce) and services..