AfDB Calls For Global and Inclusive Solution to Financial Crisis African GDP Growth Revised Downwards

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AfDB Calls For Global and Inclusive Solution to Financial Crisis African GDP Growth Revised Downwards

Tunis, 12 November 2008 - Although African countries have, so far, not witnessed huge losses occasioned by the prevailing global financial crisis, the phenomenon is likely to diminish the considerable economic progress made in the region over the last decade, the African Development Bank (AfDB) Group President, Donald Kaberuka, said on Wednesday in Tunis.

Addressing African ministers of finance, central bank governors and experts at the opening of a day-long Ministerial Conference on the global financial crisis and its potential impacts on African economies, Mr. Kaberuka emphasized that the problem required a global solution.

"It is clear that the global slowdown will lead to a general contraction of the private sector and business closures, especially in sectors that depend on international demand.

"That cannot, but affect the health of the banking sector as defaults build up. Before the crisis, our continent’s economies were set to grow on average 6.5%. Our current estimate is now revised downwards to 5%," he noted in an opening statement titled "Managing an uncertain economic Landscape - The search for a global and inclusive solution."

Mr. Kaberuka noted that Africa had enjoyed ten years of sustained growth, partly because of the strengthened integration into global trading and financial markets and strong demand for its exports which sustained high commodity and metal prices.

The continent had also been able to widen markets for its exports to emerging markets of Asia and diversify its sources of finance. More recently, new partners had joined the traditional donors and creditors in providing concessional financing, Foreign Direct Investment (FDI) and short term capital flows. Diaspora remittances have also provided much-needed financing to households he said.

While commending measures taken so far to address the crisis, the AfDB President stressed the need for the Ministerial Conference to focus on a set of measures, within and between countries, to strengthen the resilience of the continent’s financial sectors and economies. It should send a strong message to rich nations to take bold steps to stimulate the world economy and stave off a recession and encourage the international community "to take necessary steps to ensure the stability of the financial system in which the voice of every nation, every continent, is heard and their concerns taken into account."

"We are meeting here today in Tunis at a critical time for the world - How to restore confidence; reforming financial governance, how to stave off a recession and how to stay focused on the challenge of humanity for this century; fighting poverty in the context of the worst global economic challenge of the post-war era," Mr. Kaberuka emphasized.

Welcoming participants to the Conference, Tunisian Prime Minister, Mohamed Ghannouchi, stressed the need for shared and responsible global governance principles to guard against current and future crisis. He said the gathering provided an opportune moment for constructive dialogue on the continent’s development and protection from external shocks.

For his part, the Executive Secretary of the United Nations Economic Commission for Africa (UNECA), Abdoulie Janneh, reiterated the negative impact of the crisis on Africa and emphasized the need to take quick short- and long-term measures to reduce the impact of the crisis on the continent.

"Our continent must never be reluctant to emphasize to its development partners that this is not the time to reduce aid and ODA (Official Development Assistance) to our countries. Focus on the financial crisis must not deflect attention from efforts to meet the MDGs," he added.

The global financial crisis will also feature in discussions at the 12-14 November third African Economic Forum which is running parallel to the Ministerial Conference organized by the AfDB, the African Union Commission and the UNECA to mobilize Africans with a view to seeking an answer to the global financial crisis.