It has been a testing two years for West Africa’s prosperity. On average, the competitiveness of the region has remained flat. According to the World Economic Forum’s latest Global Competitiveness Index, it scores about 3.6 points out of 7. This is mirrored by barely changed standards of living, with GDP per capita stuck at around $4,600 in terms of purchasing power parity.
Certainly there have been large differences across the region. Nigeria, the largest economy in the area, has under-performed, driving regional competitiveness down. On the other hand, Côte d’Ivoire, Senegal and Ghana have achieved better performances both in terms of competitiveness and growth of per-capita GDP. To build more resilient economies, West African countries need to address the structural foundations of their prosperity.
Two years ago, the Africa Development Bank, the World Economic Forum and the World Bank started to map these “structural foundations” for West African economies in a multi-stakeholder workshop. These stakeholders, which included governments and businesses as well as civil society organisations, identified five areas that must be tackled to increase prosperity. Since then, very little progress has been achieved. It’s time to make these five factors a priority, and help West Africa towards a more prosperous future:
It is hard for companies to thrive amid relatively inefficient institutions with burdensome procedures, slow public services, and ineffectively applied laws and regulations. In addition, there is little use of information and communication technology in government. This also affects the other four factors.
Most of the region’s economies are held back by bad roads, severe electricity shortages and inefficient ports. The poor state of the infrastructure increases transaction costs for businesses in the region, with multiple roadblocks both across borders and within countries.
Despite the presence of a large number of regional and international banks, credit to the private sector is limited and expensive. The sources of finance need to be broadened to include insurance companies, pensions, remittances, and venture capital and equity markets. This particularly affects smaller companies that depend on external financing to grow, innovate and inject new energy into their economies.
Low agricultural productivity is holding back the structural transformation of West African economies. To move ahead, these countries need to improve access to land and rural credit, spread modern techniques from mechanization to better seed varieties, improve quality standards, and create better access to markets and value chains.
The skills found in the West African workforce don’t match those demanded by the workplace. This problem affects recent graduates as well as older workers. Improving the educational system, from vocational training to direct instruction, will ensure better employability.
Structural changes can take a long time, and often require international assistance. But West African countries must tackle these areas if they want to achieve greater prosperity. Better regional coordination could help channel the right resources and produce synergies to overcome some of the bottlenecks encountered so far.
Millions of African youth enter the labour market each year, and their expectations are growing. This makes it all the more important to take action and make these five priorities a reality. The next competitiveness workshop will be an excellent opportunity to cooperate across the region, analyse the structural challenges, and begin a new chapter of economic progress for West Africa.