African Economic Conference emphasizes key role for development finance institutions
The 12th African Economic Conference taking place in Addis Ababa, Ethiopia, has emphasized the need to develop and deepen the role of the development financial institutions to play a more active role in financing industrialization projects, energy, agriculture and administrative reforms.
The participants attending the conference’s second plenary session discussed the role of the state in governing developments in Africa. They also emphasized the need for further research and the deepening of national and regional development finance institutions to play an expanded role in financing the broader development objectives of the state.
The conference, jointly organized by the African Development Bank (AfDB), the United Nations Development Programme (UNDP) and United Nations Economic Commission for Africa (ECA), under the theme of “Governance for Structural Transformation”, provided a platform to share experience on the role of the state in fulfilling its development mandate.
Dr. Abdalla Hamdok, Deputy Executive Director and Chief Economist at ECA, said the state remains a critical player in driving economic development and its role should continue to be strengthened.
According to Hamdok, the economies of the Asian Tigers grew faster largely because of state-driven economic and industrialization programmes.
Similarly, the initial African states of the 1960s and the 1970s, which were advanced by founding leaders such as Kwame Nkrumah of Ghana and Gamal Abdel Nasser of Egypt, were driven by grand industrialization projects and a greater state role in the economy.
“The early states in Africa were developmental states. They had industrialization projects and implemented greater import substitution projects. These did not, however, deliver the required results. The process was followed later by the destruction of the state and Africa’s lost decade of the 1980s,” Dr. Hamdok told the delegates attending the forum.
Dr. Adeyemi Dipeolu, Economic Advisor to the President of Nigeria, said the developmental state has the responsibility to identify the sources of revenue, handle vested interests as well as keep its citizenry happy through regular participation in political governance.
Dr. Dipeolu said Nigeria has restored its medium-term planning as part of its strategic approach towards restoring the role of the state in the economy. He said the government has also reviewed its role in the financial sector by playing its role in stabilizing the foreign currency exchange market.
The Nigerian government is currently reviewing the role of the development finance institutions. According to the Nigerian President’s Economic Advisor, there is a need to understand why the agriculture sector and farmers in particular are still unable to access funds for production despite the availability of such state-owned development finance institutions.
This is being done through the government’s participation in the agriculture finance sector and through another initiative to ensure industrial extension programmes are implemented to achieve the goal of industrialization, Dr. Dipeolu told the conference.
Prof. Edward Edokat Tafah, Vice-Chancellor of the University of Bamenda, Cameroon, said the African developmental state is possible.
“It is a tough call and is not available in a pre-fabricated form. It is possible based on certain conditions being met,” Prof. Tafah said.