Economic Diversification in Africa

A Review of Selected Countries

image of Economic Diversification in Africa

This study provides an empirical review of the role of governments, the private sector, regional economic institutions and the broader international community in driving economic diversification. Individual case studies of five African economies describe both the catalysts of and barriers to diversification. The study is published jointly by the United Nations Office of the Special Adviser on Africa (UN-OSAA) and the NEPAD-OECD Africa Investment Initiative.


Executive Summary

The global financial and economic crises exposed one of the major weaknesses of a number of African economies: their dependence on too few export commodities and one or two sectors. Such dependence makes many countries vulnerable to fluctuations in commodity prices, demand and extreme weather events such as droughts and floods. This study looks at how African governments can diversify their economies and analyses five countries’ economic diversification profiles in particular. It begins by examining some of the major determinants of diversification and also looks at how the private sector plays a key role by being at the forefront of innovation, research and development and production. Good governance is needed to create an enabling environment for investment and trade; to manage natural resources; and to set policies to develop strategic sectors. A regional approach to economic diversification is particularly important, especially given the small size of African economies and the benefits of economies of scale from regional initiatives. New economic partnerships, including South-South co-operation and relations, offer Africa the opportunity to expand its economic options. Lastly, infrastructure and human resources help to facilitate trade, productivity and innovation and are key drivers of diversification.


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