Regional Brief
Overview of Region’s Economic and Industrial Development Issues
The surface area of the West African region is about 5.1 Million km2 - equivalent to 17% of the continent’s land mass. With a projected population estimate of about 300 Million, the region is the most populous regional economic community in Africa. Nigeria, the region’s largest economy and perhaps the most important - in terms of its potential global impacts, accounts for over half of the region’s population. Cape Verde has the smallest population - estimated at 520,000.
The region continues to witness rapid demographic growth that is characterized by an increasing urban migration and a very youthful population - with an estimated 60% under 20 years of age. The population growth rate has been influenced by the interplay of the three main demographic processes of fertility, mortality and migration. Unarguably, while health care facilities in the region remain largely inadequate, there have been improved birth survival rates leading to a bulge in population mostly consisting of younger people between the ages of 15-40. Migratory trends resulting from factors such as climate change, conflicts and the search for employment has led to an increase of population in urban centres of the region.
The region is endowed with fertile agricultural land and a plethora of other natural resources. It is a noted hydrocarbon province and the location of several major oil and natural gas discoveries and producing fields. Mineral resources abound - with deposits including gold, diamonds, manganese, bauxite, iron ore, titanium, copper, uranium, coal, lead, zinc and many more. Bordering the Atlantic Ocean on its western and southern fronts, the region also has lush marine resources and stunning coastlines with numerous natural ports and beaches.
Agriculture and natural resources provide the bulk of the population’s income, employment and consumption needs. These sectors have tremendous potentials for transforming economic development in the region; as they can provide opportunities for value addition, wealth creation, growth and provision of employment - particularly for the region’s teeming youth population.
Currently however, 11 out of the 21 least developed countries in the world, according to UN Human Development Indices, are in West Africa. The region also suffers from a serious dearth of jobs, with unemployment rates in some countries as high as 60%. These prevailing high levels of unemployment among young men and women in the region is not only a huge wasted economic asset, it is a brewing security risk in many countries in the region. Evidently, the region’s well acknowledged natural resource endowment is yet to be comprehensively translated into improved living conditions for the vast majority of its citizens. Poverty reduction therefore remains a prime challenge.
Economic growth in the region is largely driven by commodity-based exports such as crude oil, minerals, marine resources and agricultural commodities. These commodities are more often than not traded or exported unprocessed. Whilst average GDP growth rate for the region has hovered around 4.5%/year in the last decade, the contribution of manufacturing and industry to this growth has remained paltry. The sustained macro-economic growth experienced in the region has thus not resulted into the much needed employment creation. This “jobless growth” is attributable to the region’s over-reliance on commodity trade (with little or no value addition), lack of investments in job creation enterprises such as processing plants or SMEs and the prevailing passive role of the private sector with respect to employment creation in the region.
Industrial Development Issues in the Region
The West African region lags behind considerably in accessing appropriate and contemporary technologies for varied industrial enterprises and has not been very successful in attracting quality investments that would support the region’s development efforts. Improving industrial competitiveness and trade in the global marketplace are pressing objectives that countries in the region are desirous of achieving.
The frequently cited industrialization hurdles facing most countries in the region include:
- Lack of affordable and reliable power sources
- High cost of finance for capital investment
- Competition with imported products
- Lack of productive capabilities and capacity to meet product specifications
- Imbalances in the labor market – a disconnect between available skill sets and industry requirements
- Inadequate or inconsistent industrial policies, legislative and institutional frameworks
- Access to and integration with international markets
- External constraints and opportunities linked to environmental and climatic variability
Whilst the levels of industrialization, unemployment rates and overall living standards vary from country to country, there is a general consensus that a strong private sector in the respective countries will be the driving force in transforming the economy of the region. There are ongoing efforts in several countries in the region aimed at removing existing barriers to investment and creating the needed enabling environment for private sector development to thrive.
