African Transformation Index report reveals pervasive economic transformation challenges in Africa
The recently unveiled African Transformation Index (ATI) 2023 report, compiled by the African Center for Economic Transformation (ACET), underscores a disconcerting narrative of sluggish economic transformation across the African continent. The study delves into key findings that expose critical challenges within the realm of economic development and transformation:
Lethargic Economic Transformation
The report pulls no punches in asserting that economic transformation in Africa has been advancing at an unimpressive pace. This chronic sluggishness has given rise to a significant chasm, isolating African countries from their early-transforming counterparts in Asia and Latin America.
Modest Progress in ATI Scores
Despite pockets of commendable progress in select African nations, the average ATI score for the continent languishes at a mere 30.3 out of 100. This score paints a stark picture of a substantial gap in transformation efforts when juxtaposed with early transformers in other global regions.
Deepening Disparities in Key Dimensions
The study accentuates the disturbing fact that discrepancies have deepened in pivotal dimensions such as productivity, income levels, and export competitiveness, when comparing Africa to its counterparts that embarked on transformation journeys earlier. These disparities have not only endured but have broadened over the past two decades.
Human Well-being Improvements
In a ray of optimism, the report acknowledges significant advancements in human well-being across the African continent. More individuals are experiencing an improved quality of life and greater opportunities for personal growth than they were two decades ago.
Vulnerability to Economic Instability
Despite positive developments in human well-being, these advancements remain susceptible to economic instability owing to underlying fragilities in economic resilience. Fundamental components like income levels and formal employment continue to exhibit vulnerabilities.
Declining Economic Diversification
The report raises a red flag regarding the concerning decline in economic diversification across African economies. Furthermore, export competitiveness has eroded, posing a potential risk to these economies’ resilience in the face of external economic shocks.
The ATI serves as a potent instrument for assessing and monitoring the progress of economic transformation in African nations. This diagnostic tool is tailored to assist policymakers, researchers, and development partners in pinpointing vulnerabilities, fortifying resilience against economic crises, and ensuring that Africa’s transformation agenda remains steadfast.
The ATI evaluates economic transformation within 30 African nations through five pivotal dimensions:
- Diversification: The capacity to produce and export an extensive range of goods and services.
- Export Competitiveness: The ability to compete in the global arena for non-extractive exports.
- Productivity Increases: Labor productivity in diverse sectors, weighted by sector size.
- Technology Upgrading: The infusion of medium- and high-technology elements into production and exports.
- Human Well-being: This encompasses factors such as incomes, income inequality, and formal employment, including female employment.
The 2023 ATI report encapsulates data spanning from 2000 to 2020, deploying a three-year moving average for scores. All scores are calibrated on a scale ranging from 0 to 100, where a score of 0 symbolizes a lack of transformation, and a nation attaining a score of 100 is considered highly transformed. These scores facilitate not only the assessment of individual countries’ transformation journeys over time but also cross-country comparisons to inform informed decision-making.
