DW: According to your organization, Africa's working age population
is expected to double to one billion in the next 25 years. A huge number
of Africans will be looking for work. Does it look as if there will be
enough jobs to go around?
Francisco Ferreira: If you're thinking about formal jobs – the kind of
jobs that you and I would like people to have – jobs with contracts,
pensions and security, then the answer is most certainly not. We are
aware of the fact that most employment in sub-Sahara Africa in the next
foreseeable future will remain of an informal kind. Nevertheless, there
has been enough growth in Africa, that even the quality of those
informal jobs has been improving. Our key concern is making those jobs
that exist better and better paid, so that the process of reducing
poverty in Africa can continue.
How important is it for African governments to tackle inequality and narrow the gap between rich and poor?
The gap between rich and poor is a big issue. It's a political issue,
but also an economic issue in the world. In Africa, there is a wide
range of inequality issues. Eight out of the ten most unequal countries
in the world are in Africa. All of those are in southern Africa or in
island states. Elsewhere in the continent, the measured levels of
consumption and income inequality are considerably lower. That said,
there is also another important inequality between men and women, across
different regions and between urban and rural areas. Most poverty in
Africa remains rural and a lot of the emphasis reducing the poverty gap,
has to be on agriculture and people living in rural areas.
Eight out of the ten most unequal countries in the world are in Africa, says Ferreira.
Foreign Direct Investment is instrumental in promoting growth in
Africa, but do African governments still need to offer tax incentives to
foreign companies in order to encourage it?
Each case is its own individual case and its hard to give blanket policy
advice to a region that consists of 48 countries. That said, our
general bias is against additional tax incentives for foreign direct
investment. If anything, Africa collects very little of its revenues
from taxation. At a time when oil prices have fallen and the fiscal
revenues that come from oil and other resources are down, this has been
reminding governments in Africa how important it is to have a domestic
taxing system in place. So providing additional tax incentives runs the
risk of generating a race to the bottom, where you are competing against
your neighbor for investment from abroad. And we don't think that is
what the region needs at the moment.
What are the essential ingredients for growth and prosperity?
The sources of growth are as diverse as the region. In many countries
growth has been propelled by mining and extractives and oil and gas and
by the investment that goes into those sectors and the infrastructure
they need. But that's not true of the whole region. And some of the
countries that have been making quite remarkable progress against
poverty and furthering human development, like Ethiopia and Rwanda, have
actually done that with growth in services and agriculture and not so
much in resources.
What are the risks to that growth?
The primary risk is probably to do with natural resources and commodity
prices. Oil prices have now stabilized and are rebounding a little bit
but still at a much lower level than last year. That is a problem for
countries like Nigeria, Angola, Equatorial Guinea, Gabon, a number of
the big exporters of that commodity. Elsewhere in the continent there
are other problems. South Africa, which is the second largest economy in
the continent, has been struggling for a period with labor unrests ,
with difficulties in the electricity sector and a number of other
issues, which has meant that its growth is lower than the African
average.
Francisco Ferreira is the World Bank's chief economist for Africa.
Interview: Mark Caldwell
