African Economic Conference shifts focus to role of international banks in fighting poverty
The role of financial institutions in supporting the fight against poverty has come into sharp focus at the 10th African Economic Conference (AEC), which opened in Kinshasa, Democratic Republic of Congo, on November 2.
In a research paper on the “Growth and Development Finance Required for Achieving the Sustainable Development Goals in Africa,” Abbi Kedir, Economic Affairs Officer at the UN Economic Commission for Africa (ECA), said financing for infrastructure was one key elements of maintaining economic growth.
Speaking specifically on the role of the African Development Bank (AfDB), Abbi said financing of infrastructure was critical in redistributing income to areas where farmers live because it would ease access to the markets and improve transport, a key element for new businesses to thrive.
“It is not important every time for the AfDB to look at new areas for investment. The Bank has done excellent work on infrastructure. This is creating new opportunities for the poor to develop export-oriented businesses and for governments to invest in livelihood development,” Abbi said.
The AfDB energy financing portfolio currently stands at US $10 billion. Most of the committed resources is being deployed to the improvement of energy and electricity systems in Africa.
Abbi said the AfDB could also play a more prominent role in helping countries in Africa to access funds set aside for climate change mitigation to fight extreme poverty in Africa.
“The Bank could provide the technical assistance that is required by communities to access the climate change funds for the improvement of agriculture and livelihoods,” Abbi said after presenting his paper.
The 10th African Economic Conference, which runs from November 2-4, has emphasized the role of development finance, focusing on the role of financial institutions to fight poverty and improving access to international financial resource.
Experts said with African countries able to attract US $200 billion in financial inflows a year, more resources could still be available to governments to enhance the fight against poverty.
Among the approaches proposed are mechanisms to deal with the management of cash inflows from commodities such as oil, minerals and agricultural produce during the high-production-high-demand season.
According to Abbi, although oil prices started dropping recently, key export agricultural commodities exported by African countries have been falling dramatically since 2011.
The experts at the African Economic Conference have therefore sought a new mechanism to ensure that countries can maintain stable economic growth and protect their citizens from deepening poverty.
“There is need for proper management of the commodity prices when there is a boom through proper matching of economic policies. This will help stop the countries from struggling with the lack of resources. This is only possible if the currency reserves and policies are cautionary to deal with pressure.”
Meanwhile, a new report by the UN Development Programme (UNDP), titled “Primary Commodity Booms and Busts: Emerging Lessons from Sub-Saharan Africa,” is advocating for monetary policy adjustments to deal with loss of foreign exchange and low savings as a result of price drops.
This will ensure countries do not lack funds to support key poverty-reduction interventions when the prices of key export commodities drop.