Chief Economist Delivers Lecture at the Islamic Development Bank

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The African Development Bank Group Chief Economist, Louis Kasekende, on October 28, 2008, delivered a lecture at the Islamic Development Bank (IsDB) on Outlook for Sustained Economic Growth in Africa: the Case of IDB African member States under the IsDB Group Economic Lecture Series. The Lecture Series is an initiative of the IsDB under which distinguished experts and scholars are invited to share their knowledge and perspectives on current economic issues, global developments, challenges and prospects.

The Islamic Development Bank has a membership of 56 countries, and of these, 27 are African countries. These countries are diverse and with a total population of 547 million, they accounts for 56% of Africa’s population and 62% of Africa’s GDP. Mr. Kasekende’s lecture addressed four key questions namely: (i) What is the outlook for sustained growth in African IDB Member States? (ii) What are the potential risks to sustained growth? (iii) What are the major long-term challenges? And; (iv) What additional steps should be taken to keep Africa on an upward growth trajectory?

The Chief Economist noted that despite short term risks in the global environment, including the current global banking crisis and the inflationary pressures due to high food and fuel prices, Africa’s economic performance is quite robust. He, however, further noted that in addition to the short-term risks, longer term challenges continue to threaten long-term growth acceleration and poverty reduction. These include persistent poverty and inequality, high population growth and low human capital development, lack of competitiveness and weak institutions. For Africa to break from the low equilibrium growth cycle to an upward growth trajectory will require investments in infrastructure and skills development, strengthening institutions and promoting effective regional integration.

Mr. Kasekende paid a courtesy call on the President of the Islamic Development Bank, Dr. Ahmad Mohamed Ali, and had a meeting with Dr. Syed Jaafar Aznan, Vice President (Policy). On both occasions, the discussion focused on the impact of the financial crisis on African Countries. They agreed that Africa was not entirely isolated from the crisis and is likely to suffer the second round effects of the crisis. As such, the impact of the crisis on Africa should be examined in terms of effects flowing directly from the Africa’s integration into the global economy and the indirect effects emanating from the slowdown in global economic activity. Further, they agreed that these direct and indirect effects could be traced through the financial and trade channels, the Asian (principally China) factor; and, the impact on commodity prices. Dr. Ali also informed the Chief Economist that the IsDB was immune from the risks surrounding the U.S. mortgage crisis explaining that the Bank possesses a strong financial status and a large capital base. The IsDB would not face difficulty in mobilizing additional resources from the market at competitive rates due to the Bank’s strong financial position.

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