AfDB Chief Economist Speaks Ahead of the African Economic Conference
The African Development Bank (AfDB) Group Chief Economist, Louis Kasekende, has said that the continent’s economic outlook is improving just as the countries of the western Hemisphere and Asia are showing signs of economic recovery. Mr. Kasekende expressed optimism as to the continent’s economic prospects while speaking in an interview with the AfDB Web team ahead of the institution’s African Economic Conference (AEC) which is an annual event that brings together researchers and policy-makers for them to share perspectives on economic and development challenges facing the continent.
“Just as the countries in the western Hemisphere and Asia are showing signs of economic recovery, there are signs that the outlook for Africa is also improving. However, the recovery remains weak for it to be a basis for optimism that Africa is back on a higher growth trajectory. In 2009, we are forecasting a growth rate of 2% for the continent, improving to 3.9% in 2010. Strong recovery will depend on a revival of demand in developed and emerging economies, plus recovery in financial flows to the continent. To maintain growth on a higher trajectory, the challenge facing the continent is to increase the level of investment to at least over 30% of GDP, while also increasing the efficiency of that investment,” Mr. Kasekende said, adding that the AEC had brought the AfDB closer to many research institutes on the continent, pointing out that the AfDB had begun to collaborate with some of the research institutes with regard to AfDB knowledge generation and dissemination activities.
Speaking about the usefulness of the AEC, Mr. Kasekende said “the AEC has been useful in helping us improve the quality of our existing major publications such as the African Economic Outlook (AEO) and the African Development Report, which we now regularly disseminate during the conference as a way of influencing policy,” adding that “We are also using AEC proceedings to improve the quality of our journal, the African Development Review. Every year, we produce a special issue of the Journal containing papers presented at the plenary sessions.”
Answering a question about the Diaspora’s role in development efforts on the continent, Mr. Kasekende said that remittances from Africans living abroad were a very important source of development finance, stressing that in some countries, they even exceeded foreign direct investment. He said that the AfDB and the World Bank were undertaking a study to develop a typology to classify African countries by geographical patterns of migration (intra-regional, migration out of Africa); by cause of migration (economic, conflict-induced, changes in climatic patterns); by duration (permanent vs. seasonal); by primarily sending, receiving or transit country for migration; and along other relevant dimensions. The typology, he said, was expected to facilitate the analysis of issues and the identification of country-specific policy interventions as opposed to generalized region-wide policy recommendations. He added that the AfDB’s Private Sector Department had also undertaken a similar study which also highlighted the importance of remittances.
This year’s conference is being held on the theme: “Fostering Development in an Era of Financial crisis” against the backdrop of a global financial crisis that has hurt many African economies. Following the outbreak of the crisis, the AfDB put in place mechanisms to monitor the impact of the crisis on its regional member countries. It also established a financial crisis monitoring group which issues weekly briefs that monitor the impact of the crisis on the continent. The institution has also increased lending from the AfDB window, improved response times, frontloaded commitments under the African Development Fund (ADF), introduced new lending instruments such as the Emergency Liquidity Facility and the Trade Finance Initiative, and leveraged its portfolio. The institution has also played a catalytic role in enhancing Africa’s voice and effective participation in international regulation by articulating the continent’s interests in the G-20 and the other regulatory institutions. Using its convening power, the Bank continues to facilitate the process of developing a common African position, especially at the level of the G-20 and the Bretton Woods Institutions. In addition, through its participation in various international fora, the AfDB continues to project Africa’s voice to ensure its effective participation and representation at the international level. As Africa’s premier development institution and voice on the continent, the AfDB’s experience and capacity have been critical assets in addressing some of the challenges as the continent responds to the financial crisis.