Final Communique of the AfDB Economic Conference (AEC)
In the opening remarks to the conference, it was indicated that a major objective of organizing the AEC was to end the disconnect between policy-makers and researchers to arrive at mutually satisfying outcomes. The general concensus is that this objective has largely been achieved.
President Kaberuka of the AfDB started the conference well on this path when he, using a South African proverb, cautioned us that "until the lions have spoken, the only story to be told will be that of the hunters." I believe that during this conference we were able to listen to both the hunters and the lions. We received words of encouragement from Professor William Lyakurwa, Executive Director of the AERC who spoke to us through the voice of Professor Olu Ajakaiye; from Cheick Modibo Diarra, the Microsoft Africa Chairman, who called for the development of infrastructure across the continent; and from Honourable Slaheddine Jemmali, the Tunisian Secretary of State for Foreign Affairs, who also urged Africa to take charge of its own destiny, adding that intra-African dialogue was necessary for the sharing of experiences.
The following gives a brief summary of the outcomes of the conference in terms of the papers presented and the discussions the followed.
In a keynote address, Professor Patrick Guillaumont of CERDI, France, focused on the continent’s economic vulnerability, adding that economic vulnerability was related to growth, poverty reduction and security.
Professor Ji Hong Kim, from Korean Development Institute, cautioned us that while the Korean experience had important lessons for Africa, country specific conditions matter a lot.
Dr. Alan Gelb, from the World Bank explained that growth in Africa during the past decade has been based on natural resources to a large extent; few indigenous investment; and, little progress in the manufacturing sector.
In the evening of the first day, Professor Paul Collier, gave a provocative address that combined despair and hope, in which the interaction of physical and human geography creates three main intractable challenges which require three sets of solutions.
The breakaway sessions were characterised by high quality presentations and discussions. This underscores the great interest the various presentations generated.
Session A: Wealth Creation and Equity in Africa
i. The provision of quality services is key to the achievement of accelerated economic and overall human development. Africa must intensify innovations such as contracting out, introducing competition in service provision and accelerating the pace of decentralized governance.
ii. Individuals, families, societies and nations reap substantial gains from investing in education and health. However, in Africa, the road towards attainment of the MDGs is still long, especially for most African countries, and greater mobilization of resources will certainly be necessary.
Session B: Trade and Regional Integration
iii. While short-term adjustment costs of various trade-opening scenarios are likely to arise should the Doha negotiations resume, there will also be potential for immediate and longer-term gains for Africa.
iv. To achieve favourable development outcomes from trade, the necessary conditions include a positive result for Africa from the Doha Round; a realistic pro-development agenda in bilateral trade negotiations; stronger regional integration in Africa; and diversification of African economies.
v. Exports are a critical element in economic growth and poverty reduction strategies. However, several challenges confront African exports, ranging from those related to market access to domestic export supply constraints; overcoming supply side constraints and building competitive economies based on the private sector.
Session C: Finance and Investment
vi. Regarding policy guidelines on promoting investment in Africa, there is need for more individual country studies on the determinants of FDI and on the direction of the causality between FDI and Economic Growth.
vii. Capital markets play an important role mainly in terms of consumption, investment and economic growth. In the light of market microstructure, the main challenges relate to how the frontier capital markets in Africa are responding to revitalisation and reforms.
viii. The quality of corporate governance practices impacts on the valuation of firms and their general performance. But corporate governance in Africa is weakened by, among others, the poor role of monitoring financial markets; ineffective CEO turnover, and tension between social and corporate governance, just to mention a few.
ix. The record of development finance institutions in Africa in their role of promoters of economic growth has been less than satisfactory. Thus there is an urgent need to initiate a new approach to make development finance institutions both sustainable and effective at bridging the financing gap faced by the credit-rationed sectors.
x. For commercial banks in Africa, overall cost inefficiency is explained by bad loans, high capital ratios and financial liberalisation. However, bank size and external competition improve efficiency.
Session D: Growth and Sectoral Policy Issues
xi. Agriculture remains key to the development of Africa and water resource harnessing and management is absolutely necessary for agricultural development.
xii. Most of Africa’s agricultural production still remains in the hands in the peasant farmers who need to be supported with all the zeal that is being advocated for SMEs.
xiii. Increasing agricultural productivity is a necessary requirement to improvement in the fortunes of the sector, as the specific experience of Tunisia demonstrates.
xiv. Debt relief on its own does not matter for the health service provision unless it is accompanied by strong changes and improvement in the quality of institutions.
xv. In the relations between Africa and the two "Asian Drivers" China and India the continent requires a coordinated approach to help maximise benefits and minimise risks.
xvi. The compelling forces of global competition, the pace of technological advance, the shifting roles of government, and the decentralisation of economic and regulatory functions all require that we develop our science, engineering, technology and innovation (SETI) capacity.
xvii. And finally, infrastructure is a key ingredient to Africa’s development but its current state is characterised by inadequacy and poor quality. This calls for institutional capacity, strategic partnerships, and regional cooperation and integration.
The Way Forward
The following are some proposal for the way forward.
- As the papers presented at this conference will be published for widest possible dissemination to all relevant stakeholders, authors should begin making revisions, taking into account some of the comments received during the discussions. We expect to receive revised papers over the next few weeks.
- The African Economic Conference is to be made an annual event, which will require immediate preparation and assistance from all stakeholders.
- During the year, stakeholders will be informed through e-mails and the website of the AfDB on the progress being made in knowledge generation and sharing. The Bank would welcome feed back from stakeholders.
- The theme of the next conference would be arrived at after wide consultations among stakeholders and the Bank urges active interest from partners.