KAMPALA - A team of Economic experts from the African Commission have warned that the current global financial crisis will inevitably have an impact on Africa.
The warning was sounded, Thursday, in Kampala where the experts had converged to discuss impediments to Africa’s growth under the theme “Creating Economic Growth in Africa.”
According to the experts, the continent’s tourism sector, remittances from abroad and Aid flows will dramatically fall as a result of the global crisis.
Dr. Grey Mills, one of the commissioners, explained that the global financial crisis will affect access to finance by governments although there will be money for good economic reforms.
“The critical thing for Africa is, those countries which remain on the reformist path are the ones that are going to do much better,” he said.
He added that this would also have an impact on long term investment finance which is still very limited in most African countries, especially for small and medium sized companies and new businesses.
“The crisis is itself still unfolding, it may be too early to make full assessment of this crisis on African countries,” said Louis Kasekende, Chief Economist of the African Development Bank.
He said that the impact is currently felt by Stock Exchanges in Uganda, Tanzania, Kenya, Egypt, and South Africa, where international investors are withdrawing in fear of what impact the crisis will have.
“My plea to all countries is that we should not give up implementing very strong reforms leading to very strong macro economic frameworks that will promote more flexibility to mitigate the effects of the crisis on countries,” said Kasekende.
Economic experts at the meeting cautioned African countries to urgently adopt precautionary measures to cushion their economies.
“African governments will have to reduce their expenditure because they are not going to get as much aid. Governments should prepare themselves by concentrating on domestic growth to sustain the economies because ultimately even the export market will be affected and there will be reduced sales,” said Betty Maina, Executive Director of the Kenya Association of Manufacturers.
The economists also noted that many African countries are currently experiencing high growth rates, which have resulted into circles of prosperity and opportunity for some people but growth does not appear to have had the expected positive impact on employment and poverty alleviation.