AfDB’s Prompt Interventions Helped African Countries - Contain Global Financial and Economic Crises
- Africa’s real GDP is projected to pick up to 4.5% in 2010, higher than the 3.9% global forecast during the year
“A decade of progress in Africa has been interrupted by the global financial and economic crisis,” the AfDB said on Tuesday 24 May 2010 in Abidjan, during a presentation of its 2009 operations ahead of the institution’s 27-28 May Annual Meetings.
In the presentation, Bank Group Vice President for Finance, Thierry de Longuemar, explained that the continent was hard hit by the global economic and financial crisis. This obliged the institution “to fully play its countercyclical role by scaling up its activities and bringing much-needed support to its regional member countries,” he said.
The crises triggered sundry external shocks that hit Africa in five critical lifelines – deteriorating terms of trade, collapsing demand for exports, reduced capital flows, lower remittances and declines in tourism.
These setbacks slashed the continent’s GDP growth by half from its decade-long 5% level. The continent witnessed a decline in real GDP per capita for the first time in 10 years. At the same time, the continent’s debt increased from 21.3% in 2008 to 23.4% in 2009.
Thus, the progress achieved by the continent was erased in no time by crises it was supposed to have nothing to do with in the first place.
However, Bank Group management accepted the problems as challenges and opportunities and speedily mobilized resources with which it scaled up its assistance and advocacy role for Africa in March 2009.
Among the outstanding and most acknowledged outcomes of these initiatives include the roll-out of the "Bank’s Response to the Economic Impact of the Financial Crisis” which comprised a USD 1.5 billion Emergency Liquidity Facility, a USD 1 billion Trade Finance Initiative, a Framework for accelerated transfer of concessional resources to eligible countries and enhanced Policy Advisory Support to mitigate the impact of the crisis. Going forward, the Bank more than doubled its portfolio in its regional member countries s in 2009, increasing project and programme approvals to USD 12 billion, from USD 5.4 billion in 2008.
Experts have applauded the “speed and punctuality” of these initiatives which actually saved some of the most affected economies from crumbling as well as helping improve the region’s overall economic outlook in 2010 and 2011.
According to the financial presentation, Africa’s real GDP is projected to pick up to 4.5% in 2010, higher than the 3.9% global forecast during the year.
Recognition of the Bank’s stellar performance in the last couple of years has been highlighted in various forums in recent months. Meeting on 23 April 2010 in Washington D.C., for instance, a committee of Governors representing the institutions shareholders endorsed the tripling of its capital sources to nearly USD 100 billion and recommended acceptance by the Bank’s full membership.
Meeting in Abidjan this week, the Board of Governors is expected to approve the proposal, as well as the 12th replenishment of the African Development Fund (ADF), the concessional window of the Bank Group.