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African Development Bank President Donald Kaberuka said African countries have made great strides in growing their economies despite the global financial crisis during an official visit to Lusaka, Zambia, on December 19.
At the PTA Bank’s meeting of Governors in the Zambian capital, Kaberuka delivered a keynote address at a panel discussion on the theme Africa Economic Outlook and Regional Integration Priorities. He observed that the financial crisis had taught Africa how to minimize the impact of the global crisis on African economies.
“The first lesson of the current global crisis is that of building internal economic resilience by proactive policy options, which ensures that strong economic growth does not coexist side by side with massive poverty and exclusion,” said Kaberuka. “That must begin by managing the current natural resources boom differently. That in turn increases shock absorbing capacity not only economically but also socially, politically.”
Kaberuka noted that the “best practices on such inclusive policies are well known. From getting children of poor people of both genders to quality schools, to targeted safety net programs. We have many excellent practices to learn from, in Africa and elsewhere.”
The second lesson of the global crisis was building the internal market, said Kaberuka, who gave the example of several large emerging economies, which until recently were posting strong growth on the back of an export-led model.
“As demand from Europe and elsewhere weakens because of recession, countries such as China are now focusing on internal demand, the internal market. This is why I salute what this region is doing on the tripartite. That is how we will build additional resilience to global economic shocks. The global economic crisis is a phenomenon over which we have no control: its origin, its trajectory, its solutions. But we offer part of the solution, on condition that we are successful in breaking up our economic fragmentation.”
The AfDB President said the next important agenda for African countries was building resilience to these external shocks, highlighting the first step as the implication for economic policy, especially for developing countries and the needed paradigm shift.
Despite weaker fiscal positions compared to 2008, sub-Saharan African growth momentum has been maintained, on the back of exports and internal demand, said President Kaberuka. There is a more realistic appetite by the capital markets at prices that compete with Mediterranean-rim countries. For the first time, growth exceeds population growth and significant gains have been made in human indicators, including a decline in poverty and infant mortality, and the reduction of HIV, AIDS, malaria and tuberculosis.
Kaberuka said the third lesson was the implication for Africa as a continent in financing its own development: “How to get Africa’s finance working for Africa is now more urgent than ever. To seek alternative means to finance our development. It is possible. It is doable; if all our resources – natural, human, financial – are managed and deployed differently.”
“At the last IMF meeting in October, in Tokyo, we discussed the proposal for the Africa Infrastructure Bond. The idea is to invest a very small part of our external reserves of African countries, now about half a trillion dollars, into high return carefully selected infrastructure projects which are also a priority for Africa,” said Kaberuka.
“We fully understand restrictions on investment guidelines for such resources, in line with strong fiduciary frameworks. I can understand therefore why, at this point these reserves are invested in very low return investments in the high income countries, due to a search for security and liquidity.”
Kaberuka emphasized how the AfDB could help manage these resources for the benefit of Africa: “The AfDB is a triple-AAA rated institution, with a strong long-standing reputation in the markets.”
Bank staff are now at work to produce a technical proposal, which I hope can be a win-win situation. Our Central Banks get a better return. Our reserves are managed by an experienced institution offering a world-class level of security. Infrastructures that open up Africa for trade and investments are able to access finance. In short, Africa’s finance works for Africa and its future.
“As I said, a proposal of this nature and magnitude poses a whole range of technical and legal issues which cannot be minimized. However, between now and the Bank’s Annual General Meeting in Marrakech, a proposal will be on the table.”
The Bank’s Annual General Meeting will be held in Marrakech, Morocco, in May 2013.