Bank Group Delegation Attends World Bank Annual Meetings, Shares Perspectives on Global Financial Crisis

The Annual Meetings of the World Bank and the International Monetary Fund opened on Monday, October 13, 2008, in Washington, D.C. with the financial and food crises high on the agenda. The annual meetings are also taking place against the backdrop of presidential elections in the U.S. Bank Group President, Donald Kaberuka, is leading a Bank Group delegation including senior Bank officials. He is expected to meet with some distinguished personalities with whom he will share perspectives on the global financial crisis that is ripping the global economy apart.

Speaking to the media in Tunis on the financial crisis ahead of the World Bank’s Annual Meetings, Mr. Kaberuka said that he was concerned about the impact of ongoing financial crisis on Africa’s economic growth. He pointed out that the financial crisis posed two major risks for the continent. Although the continent is relatively protected from the initial effects of the financial crisis on global capital markets, it could be seriously hurt by a decline in global economic growth and a fall in demand for products from emerging markets.

This situation, coupled with the adverse effects of escalating oil and food prices, could roll back significant economic growth gains made over the last years, Mr. Kaberuka said. He also pointed out that some middle income countries (MICs) and others aspiring to attain this status had recently raised funds on capital markets. The current financial crisis will make the cost of borrowing on capital markets more expensive and access to these markets will be more challenging, he stressed.

Regarding bailout plans in some countries, Mr. Kaberuka said budgetary pressures resulting from such rescue plans could lead to reductions in the volume of aid and investments to the continent and this could, in turn, result in protectionism. "On the whole, Africa has registered sustained and unprecedented growth of about 7% over the last decade. This performance is the fruit of the implementation of macro-economic and structural reforms. The current crisis could slow down these hard-earned gains," he stressed. He, however, pointed out that the continent was still an attractive destination for investors following the improvement of the continent’s business environment. He expressed the hope that ongoing efforts at improving the business environment on the continent would be sustained.

Meanwhile, on the sidelines of the World Bank Annual Meetings, the AfDB delegation on Sunday, October 12, 2008, attended an award ceremony in Washington, D.C. organized by the African Investment Forum. Held under the honorary chairmanship of Mr. Kaberuka, the event made it possible to pay tribute to Ghana’s former finance minister, Kwadwo Baah-Wiredou, who died recently in South Africa while on an official visit to the country.

In his opening remarks, Mr. Kaberuka paid homage to the devout African who never spared any effort when it came to helping his country join the club of emerging countries. He later reviewed the global economic situation, focusing on the current food and financial crises. Mr. Kaberuka also highlighted the continent’s potential regarding natural resources and its development prospects through business reforms over the last years. He pointed out that the reforms were already bearing fruits. The Nigerian central bank governor, Chukwuma Soludo, used the occasion to review the continent’s investment potential. He highlighted the growing influence of the Diaspora in development efforts on the continent given its expertise and investment capacity.

Afreximbank President, Jean Louis Ekra, for his part, highlighted the continent’s low share of global trade which stands at 2%. He urged the continent to increase its market share, especially in other regions of the globe. That, he said, would require African economies to be more competitive. The African Investment Forum, which is organized by Annual Meetings Daily, awarded prizes to the best African finance minister of the year, the best central banker and the best commercial banker of the year.