ADB President expresses concern about the impact of the financial crisis on Africa’s economic growth

The President of the African Development Bank, Dr. Donald Kaberuka, expressed concern about the impact of the current financial crisis on African economies during a luncheon with the press on Tuesday, 7 October 2008.

President Kaberuka indicated that the financial turmoil posed two major risks for the Continent. Although Africa is relatively protected from the initial impacts on the financial markets, the continent could be seriously affected by the weakening of global economic growth and a decline in demand for products from emerging markets. This situation, coupled with the negative impacts of the recent escalation of food and oil prices, could undermine the gains of the remarkable economic growth over the past several years. He also pointed out that some middle income countries, and others aspiring to attain this status, recently raised funds on capital markets. The current crisis will increase the cost of borrowing on capital markets, and make access to the markets more difficult.

Budgetary pressures resulting from the various rescue plans could reduce the volume of aid and investments in Africa, and lead to the rise of protectionism.

"On the whole, Africa recorded sustained and unprecedented growth of about 7% over the last decade. This performance is the outcome of the implementation of macro-economic and structural reforms. The current crisis could slowdown these hard-earned gains".

However, he added that Africa was still an attractive destination for investors because of the improved business climate, and expressed hope that the improved climate would be sustained.