## Africa Rising - Building to the Future, Keynote Address by Christine Lagarde, Managing Director, IMF

_IMF News, May 29, 2014_

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## Bibliographic details
- Published: May 29, 2014

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### Introduction & Mozambique’s Journey
- Delivered in Maputo, May 29, 2014; keynote by Christine Lagarde, Managing Director, International Monetary Fund.
- Mozambique highlights:
  - Average growth of 7.4 percent per year over the past two decades.
  - Major steps taken to reduce poverty and raise life expectancy.
  - Recent discovery of natural resources presenting opportunities to make growth more inclusive.
- IMF engagement with Mozambique:
  - Financial support, policy advice, stepped-up technical assistance and capacity building.
  - Continued partnership emphasized.

### Where We Stand—Africa’s Takeoff
- Broad regional performance:
  - Sub-Saharan Africa growing strongly and steadily for nearly two decades.
  - More than two-thirds of the countries in the region have enjoyed ten or more years of uninterrupted growth.
  - Africa is a growing investment destination with a record $80 billion inflow expected this year.
- Social and human-capital gains:
  - Significant declines in infant mortality and increased education attainment.
  - In Benin and Madagascar, primary school enrolment has increased by more than 50 percentage points.
- Remaining gaps:
  - Poverty still afflicts about 45 percent of the region’s households.
  - Inequality remains high; some countries continue to face recurring conflict and fragility.
- IMF institutional changes and capacity development:
  - Reformed lending instruments to increase access and flexibility; extended zero-interest policy; streamlined conditionality.
  - Tailored policy advice and support via five regional technical assistance centers in Gabon, Ghana, Côte d’Ivoire, Mauritius, and Tanzania.
  - Today, the largest share of the IMF’s capacity development services is devoted to Africa.

### Challenges Ahead—Near-term Worries and Longer-term Challenges
- Near-term worries (three main risks):
  - (i) Slower growth in advanced economies and in particular emerging market economies that are major trading partners for Africa.
  - (ii) Lower prices for some commodities.
  - (iii) Tightening external financial conditions and potentially increased market volatility as monetary policy is normalized.
- Longer-term challenges:
  - Demographic:
    - By 2040, the continent is projected to boast the largest labor force in the world—1 billion workers strong—more than China and India combined.
    - Harnessing this reservoir of human capital requires skillful management and vision.
  - Technological:
    - Technological innovation can support global integration, improve productivity, and foster inclusion; the challenge is effective and efficient harnessing.
  - Environmental:
    - Climate change and sustained demand growth pressure natural-resource sustainability and can exacerbate inequality and exclusion.

### Building to the Future—Three Policy Priorities
- Overview: Three priorities—build infrastructure, build institutions, and build people.

- Build infrastructure
  - Key shortfalls:
    - Over the past three decades, per capita output of electricity in Sub-Saharan Africa remained virtually flat.
    - Only 16 percent of all roads are paved, compared with 58 percent in South Asia.
  - Investment needs and examples:
    - Investment needs for the region are estimated at about $93 billion—annually.
    - Examples of scaling up: energy investments in Ethiopia and Mozambique; regional projects in Kenya and Côte d’Ivoire for electricity, roads, and railroad networks.
  - IMF support:
    - Strengthening public investment and debt management capacity through capacity building centers and on-the-ground technical assistance.

- Build institutions
  - Focus on governance, transparency, and sound economic frameworks to ensure resource endowments benefit broad-based development.
  - Challenges with extractive industries:
    - Mining can account for a large share of output and export earnings but often contributes relatively little to budget revenues and job creation; rents can be captured by a few.
  - Policy responses and examples:
    - Strengthen institutional and governance frameworks that manage resources and increase transparency and accountability.
    - Sierra Leone and Uganda setting new fiscal rules in anticipation of large resource flows.
    - Côte d’Ivoire implementing a new legal framework for the mining sector to attract higher foreign direct investment.
  - IMF role:
    - Bringing cross-country experience and continued technical assistance.

- Build people
  - Labor-market and inclusion challenges:
    - By some estimates, a one percentage point increase in the working age population can boost GDP growth by 0.5 percentage points.
    - Today, only one in five people in Africa finds work in the formal sector.
  - Human-capital investments:
    - Wider access to quality education, healthcare, and infrastructure services to support formal private-sector job creation.
    - Technology and financial inclusion:
      - Kenya: combining mobile banking with financial services provision has resulted in 75 percent of Kenya’s population now having access to financial services, with the poor benefiting most.
  - Gender and girls’ education:
    - Women are largely in informal activities with low productivity, low incomes, and limited prospects; constraints include access to education, credit, and markets.
    - Economic loss from the education gap between girls and boys could be as high as $90 billion a year in developing countries.
    - Recommendation: invest in women—high economic and social returns.

### Conclusion
- Africa is undergoing a momentous transformation; the outlook is optimistic compared with five years earlier.
- The opportunities are vast; challenges can be overcome through sustained strong economic and social policies.
- Priority actions: work together for inclusive, job-rich, and sustainable growth; extend gains to those left behind by helping overcome fragility and build strong institutions.
- Closing metaphor: “Pedra a pedra construindo um novo dia.” Stone by stone, building a new tomorrow.

*Keynote Address by Christine Lagarde, Managing Director, International Monetary Fund, Maputo, May 29, 2014.*

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## References

- [Kenya and the IMF](http://www.imf.org/external/country/KEN/index.htm)
- [Republic of Mozambique and the IMF](http://www.imf.org/external/country/MOZ/index.htm)
- [United Republic of Tanzania and the IMF](http://www.imf.org/external/country/TZA/index.htm)
- [Technical Assistance -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-capacity-development)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [Christine Lagarde](https://www.imf.org/external/np/omd/bios/cl.htm)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/sp052914_