1 Introduction

Africa’s recent progress is being threatened.

The need to address Africa’s challenges and opportunities for promoting growth, job creation and poverty reduction has never been more urgent. The global economic crisis is hitting African countries hard. This crisis comes on top of recent food and fuel price increases and the challenges arising from climate change.

Prior to the current situation, Africa was an increasingly active player in the globalised economy. Economic growth in Sub-Saharan Africa averaged 5 percent a year for five years, based mainly on improved policies and strong international demand for African commodities. The current economic crisis will have a severe impact on Africa’s growth rates and its capacity to reduce poverty. Even before the crisis, progress towards the UN Millennium Development Goals (MDGs) was off track in many African countries. Although progress has been made in many sectors and on individual targets, no African country is on track to achieve all eight MDGs by 2015. The current crisis may further threaten the continent’s prospects of reaching the MDGs.

Growth in Sub-Saharan Africa is projected to decline from just under 5. 5 percent in 2008 to 1. 5 percent in 2009. Growth threatens to fall further as the crisis dampens the prices of commodity exports, cuts access to private capital markets and foreign direct investment and reduces levels of remittances. Furthermore, at a time when the need for a WTO trade agreement that is responsive to Africa’s needs has never been greater, protectionism is on the rise.

The potential consequences of the global downturn for Africa’s development should not be underestimated. However, the future also presents real opportunities for Africa.

It is predicted that over 80 percent of future global economic growth will depend on emerging markets. African countries can become major beneficiaries of this trend if the continent pursues the right policies for private sector-led growth and value-added exports. By 2025, one in every four young people worldwide will be from Sub-Saharan Africa. This gives the region a significant opportunity. If capital is available and if the skills needed to compete in the global economy are nurtured, the continent’s youth will constitute a major comparative advantage and be a force for positive change in Africa.

The Commission has, therefore, placed special emphasis on the need for policies that will enable Africa to benefit from globalisation. The consultations of the Commission strongly confirmed the need to enhance the competitiveness of African economies through private sector-led growth and job creation for Africa’s youth. Young people are central to Africa’s development, yet they have been largely absent from and unrepresented in past policy debates. The Africa Commission wishes to address this shortcoming and put youth and employment at the top of the international development agenda.

Although the input and recommendations differed among the more than 1000 stakeholders consulted, there was wide agreement on the need to focus more on poverty reduction through private sector-led growth and to give special attention to youth entrepreneurship, decent employment and gender equality. In order to ensure that the constraints to private sector-led growth are addressed efficiently, the Commission has repeatedly underlined the need to include private sector stakeholders in identifying and delivering solutions to the problems facing the private sector. This consideration will be reflected in the delivery mechanisms of the Commission’s five concrete initiatives.

The findings contained in this report are not intended to answer all the challenges facing Africa or provide a ’one-size-fits-all’ solution. The aim, rather, is to use the knowledge and experience the Commission has gained to build on ideas which have worked and offer concrete, actionable initiatives. The Commission does this with a fresh point of departure: To address the need for greater growth as a necessary precondition for social and economic development. The five initiatives presented in this report should not be considered in isolation. Improved skills and capacity, sustainable and affordable energy, the development of financing and business support for small and medium-sized enterprises, the need to improve business environments – these initiatives are integrated and mutually reinforcing.

The Africa Commission has worked within the overall context of the MDGs. It has taken into account, and builds on, the recommendations of the 2008 MDG Africa Steering Group Report that highlighted the need for African countries to implement comprehensive policies and strategies that would increase their competitiveness while reducing poverty. The Commission underlines the importance of respecting and implementing the Paris Declaration on Aid Effectiveness and the Accra Agenda for Action. Consequently, the initiatives presented in this report will take into account the key principles of aid effectiveness, including the need for strong national ownership, alignment wit country policies and systems, harmonisation with other development partners, and capacity development of African organisations and institutions, especially within the private sector.

The Commission seeks in concrete terms to contribute to the implementation of the Africa-EU Strategic Partnership agreed in Lisbon in December 2007. And it complements the objectives of the African Union (AU) and the New Partnership for Africa’s Development (NEPAD). To promote ownership and contribute to the development of African solutions, the Africa Commission has placed particular emphasis on working with and through African institutions, in particular the AU and the African Development Bank (AfDB).

In building on these international efforts, the Africa Commission will support reformers and stakeholders who are promoting private sector-led growth. And it will seek to guide international development cooperation towards a greater focus on assistance to private sector development that creates employment and reduces poverty. The Commission recognises that the full integration of Africa into the global economy is a prerequisite for achieving the MDGs.

The remainder of this report is divided into four sections. The first presents the rationale for the priority focus; the second provides overall recommendations for international development cooperation with Africa; the third outlines key areas that are vital for private sector-led growth and the five concrete initiatives designed to improve the lives of young Africans; and the fourth describes the way forward in the implementation of the recommendations of the report. Finally, the five concrete initiatives are described in detail.