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Interview with AfDB Chief Economist, Louis Kasekende
“…the Bank is finding new ways of attracting African experts living abroad back to the continent, notably through recruitment, young professional programs and internships, and there are efforts underway to initiate a sabbatical program. The sabbatical program will, in particular, give Africans living abroad an opportunity to reform and redesign their work to fit the continent and participate more productively in Africa’s development debate,” says the AfDB Chief Economist, Louis Kasekende
Question: The African Economic Conference (AEC) is in its fourth edition. This year’s conference will be held against the backdrop of a financial crisis that has wreaked havoc on the continent. What should our readers be expecting from next month’s conference in Addis Ababa?
Response: The theme of this year’s conference is: “Fostering development in an era of financial crisis.” As the theme implies, the conference will create a platform for an economic discussion and a debate on the crisis among researchers, development practitioners and policy-makers. Therefore, the reader should expect to have a much better understanding of the global financial and economic crises, and how it affected African countries. More importantly, the reader would have detailed knowledge on how the Bank, together with other regional and international organizations, has responded to the crisis so far; the issues and perspectives of African countries with regard to the crises; and the role that knowledge and technical assistance have played in shaping the effective and timely African response to the crises. The reader will also be enlightened on how much financial assistance - whether in the form of grants, loans, or technical assistance - were provided by the Bank to different African countries, and the critical role that such financial assistance played in making country responses more effective in mitigating the impact of the crisis.
Question: Generating and sharing knowledge constitute the cornerstone of every development initiative. The AfDB is taking the lead on knowledge-generation on the continent. What knowledge products have been developed since the commencement of the Annual Economic Conference in 2006?
Response: 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. We have also used the AEO to strengthen the quality of our working papers series, which benefit from discussions at the conference. The AEC is also helping to generate knowledge within the Bank. In that context, we welcome the strong participation of our colleagues in the Operations Complexes in the conference through a presentation of their research papers. 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.
Finally, as a way of sharing and disseminating knowledge, we also compile the proceedings of the conference into a book. At the forthcoming AEC in Addis Ababa, we will be releasing 2 books covering the proceedings of the 2007 and 2008 conferences.
Question: Bringing national policy-makers and researchers is one of the beauties of the African Economic Conference as it enables them to share perspectives on many issues facing the continent. Beyond the conference itself, are there any follow-up measures the AfDB has put in place to enable it monitor the implementation of jointly agreed recommendations at the level of African countries?
Response: I think this is one area that is still a work-in-progress, but I believe we are moving in the right direction. The conference has brought us closer to many research institutions on the continent, and we have begun to collaborate with some of them in our knowledge generation and dissemination activities. A number of institutions are taking part in writing Country Economic Notes for the AEO as well as its dissemination. Also, beyond the conference, we have used other avenues to mobilize the Bank’s regional member countries (RMCs) around issues that are of particular concern to Africa. Take, for example, the current global financial crisis and how it is impacting African countries. In November 2008, we brought together finance ministers and central bank governors in Tunis, Tunisia, to discuss the early effects of the crisis and possible solutions the continent could use. The outcome of the discussions provided valuable input into the G-20 meeting in Washington in the same month. The meeting also gave birth to the Committee of Ten African Finance Ministers and Central Bank Governors (the C-10) which has been tasked with sustaining the debate on appropriate responses to the crisis and promoting Africa’s voice in the global arena. The Bank has played a leading role in providing technical assistance to the committee, in particular, through the preparation of analytical input for the meetings and in helping articulate an African position in G-20 deliberations.
Question: The African Diaspora surely plays a role in the continent’s development. Their remittances to their countries of origin go a long way in putting smiles in many faces on the continent. But beyond their financial resources, are there any other roles the AfDB thinks these educated and experienced human resources can play in order to give development efforts on the continent a shot in the arm?
Response: First, let me note that remittances are a very important source of development finance. In some of our countries, they even exceed foreign direct investment. In that context, we are undertaking a study together with the World Bank 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. African migrant networks play a significant role in increasing access to migration, especially to high-income countries. The typology is expected to facilitate the analysis of issues and identification of country-specific policy interventions as opposed to generalized region-wide policy recommendations. The AfDB’s Private Sector Department has also undertaken a similar study which also highlights the importance of remittances.
Now, looking beyond the financial contribution of the African Diaspora to the continent’s development, we are very pleased that many researchers and academics from the Diaspora have embraced the AEC. We hope that this year, we will have an even bigger participation than in previous years. As a Bank, we need to develop this link with Africans in the Diaspora and tap into the immense technical skills that are available.
Question: Within the AfDB, do you really have any Diaspora-led initiatives that are being coordinated by the Bank?
Response: At the moment, the initiatives that we have are led by the Bank. In 2007, we collaborated with the World Bank and the South African Reserve Bank to sponsor a Conference on Capital Flight in South Africa that brought together Africans from within the continent and the Diaspora. Furthermore, the Bank is finding new ways of attracting African experts living abroad back to the continent, notably through recruitment, young professional programs and internships, and there are efforts underway to initiate a Sabbatical Program. The sabbatical program will, in particular, give Africans living abroad an opportunity to reform and redesign their work to fit the continent and participate more productively in Africa’s development debate.
Question: The financial crisis will surely take centre-stage at the 2009 African Economic Conference. Its effects will linger for a long time. What actions has the AfDB taken since the advent of the crisis?
Response: As you know, the Bank’s response has been multifaceted. First, we have put in place mechanisms to monitor the impact of the crisis on our member countries. We have established a Financial Crisis Monitoring Group which issues a brief every week that monitors the impact of the crisis on the continent. Second, we have increased lending from the AfDB window, improved response times, frontloaded commitments under ADF, introduced new lending instruments such as the Emergency Liquidity Facility and the Trade Finance Initiative, and leveraged our portfolio. Third, the Bank has responded by providing analytical support to member countries through background analysis, continuous provision of economic forecasts, identification of country needs and policy dialogue. Under the C10 that I referred to earlier, we have organized three meetings so far: Cape Town in January 2009; Dar es Salaam in April 2009, just before the G-20 meeting in London; and Abuja in July 2009, just before the G-20 meeting in Pittsburgh.
Finally, the Bank 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 Bank 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 Bank’s experience and capacity have been critical assets in addressing some of the challenges as the continent responds to the financial crisis.
Question: When are we going to see a possible return to growth on the continent? There have been a few green shoots in other parts of the world, but Africa’s clouds do not seem to have any silver lining on them. Should the ordinary African still be looking to the future with hope and enthusiasm?
Answer: 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 too 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.