The African Development Bank (ADB) Group President, Donald Kaberuka is convinced that Africa can limit the damage of the global financial crisis and prepare for a re-takeoff.
Africa, which was once considered as crisis proof, is currently feeling the impact of the global economic recession for which the world has come together in search for solutions.
“First, I remain convinced that the long-term prospects for Africa are still very bright. I believe, we can limit the damage and prepare for a re-takeoff,” Kaberuka made the remarks during last week’s opening ceremony of the2009 annual meetings of the ADB Group in Dakar, Senegal.
In his speech, Kaberuka said that Africa can withstand the effects of the crisis, if it does the right things.
In the first quarter of 2009, in spite of the global economic slump, 14 countries in Africa are holding out and still managing to grow at above 5 percent. Thirteen others are able to post Gross Domestic Product (GDP) growths above population increase.
Africa has not suffered banking crises or major financial sector distress, but suffered the second round effects in commodity exports and investment flows, lower remittances and tourism receipts.
“Perhaps what is a cause of greater uncertainty is that most likely, and in contrast to the emerging markets, the crises for Africa is still unfolding and therefore have not yet seen its full impact,” Kaberuka warned.
He projected that there will be, inevitably, everywhere, some contraction of those sectors dependent on international demand and hence what that means for tax revenues, jobs and especially the health of the banking sector, which would require vigilance.
What took Africa a decade to build is rolled back in such a short period of time, and in all probabilities, whenever the global economy recovers, Africa’s turn around will be much slower.
Kaberuka had four categories of countries in question majority of whom are convinced the situation is reversible. They include; very open economies, strongly dependent on international demand, countries dependent on oil, or a narrow range of minerals, economies touched by slowdown in the regional engines of growth, and the fragile States.
With the mentioned groups of people who believe that the situation is reversible, it is evident that combined national and international action can turn round the situation.
In 2008 the bank expanded its operations in the middle income countries, in low income countries and in fragile states with total approvals up by 14 percent to around 5.4 billion dollars, with the ADB non-concessional window’s activities accounting for 51.2 percent.
“We have continued to be focused in our core areas such as private sector, infrastructure and regional integration. Infrastructure accounts for 44.5 percent of our total operations,” Kaberuka said.
Among the major risks highlighted include large reductions in budget balances, loss of Millennium Development Goals (MDG) momentum and deteriorating social conditions.
Some countries in Africa are said to be off track for several MDGs, such as infant mortality; though progressed in others like universal primary education.