IMF Survey online
April 16, 2011 Africa should broaden its economic base and not remain so dependent on commodity exports for its growth, African finance ministers said during the IMF-World Bank Spring Meetings in Washington.
Four ministers told a press briefing that diversification into more labor-intensive industry would make Africa’s growth less volatile and more inclusive.Lesotho’s Finance Minister, Timothy Thahane, told reporters that the global financial crisis had spread to Africa through the impact on its commodity exports. A lesson to the continent from the global crisis had been that job creation had suffered from volatility in the commodities sector.
“Africa’s economic strategy going forward should be to diversify—that is the challenge for all of us,” Thahane said. “You cannot create jobs in a declining economy. Our focus must be on long-term, high, sustainable growth; the creation of jobs; and on social provision.”
Chad’s Finance Minister, Gata Ngoulou, noted that Africa typically exports raw materials that are processed elsewhere. “So we cannot count on commodity exports as a proper base for our economies,” he stated. “If export prices are good, we grow. But we all know what happens when prices drop.”
‘Not inclusive growth’
Zimbabwean Finance Minister Tendai Biti said the problem with Africa’s growth is that it is not inclusive growth. He noted that the mainstay of Zimbabwe’s economic growth is mining. “But this growth is a byproduct of the commodities boom that will not touch the peasant farmer in the corner of the country. It needs to be translated into growth with jobs,” he stated.
Chad’s Ngoulou: “ … we cannot count on commodity exports as a proper base for our economies” (photo: Cliff Owen/IMF)
Togo’s Finance Minister, Adji Otteh Ayassor, said his government planned to pay special attention to investment in infrastructure. “We want to expand our port facilities to respond to ever-growing demand. We will have to build capacity in transportation.” He said boosting infrastructure investment was particularly important for landlocked countries that needed to move products to market.Biti called for a new development model for Africa. “Most of our economies depend on agriculture or mining—there is little manufacturing or processing … this is a debate that we should start now,” he said.
The ministers welcomed what was termed a “new energy” in Africa arising from greater political stability. Thahane hailed the continent’s increasing democratization and improving macroeconomic management as factors behind its higher growth levels. Ngoulou noted that peace had been restored in Chad, enabling the country to “turn a page” and concentrate on development.
Infrastructure projects
Ngoulou added that Chad’s economic rebound, with higher growth and lower inflation, was partly due to good rainfall and an exceptional harvest. But he also cited government policies as helping to boost economic performance, as well as major infrastructure projects in oil refinery and electric power generation coming on stream.
Biti said that southern Africa’s greater political stability had positive effects on the growth rates of the region’s economies. “You see a clear link between growth rates and respect for the rule of law, elections, and respecting the people’s will,” he added.
Responding to questions, the ministers stressed the growing importance of information and communications technology in Africa’s development, and welcomed Chinese investment in Africa in high-technology sectors. Ayassor said Togo is benefiting from Chinese financing and technology transfers in its communications projects.
Ngoulou said Chad was improving its infrastructure with China-financed projects that would not have met the criteria of the country’s traditional partners. He added that he had few concerns about adding to Chad’s debt. “Chinese debt is now useful debt, not like in earlier decades when it was mostly wasted. Now we do not fear that these projects will not be repayable.”
Biti stressed the importance of greater food security, saying Africa needed a uniform attitude toward genetically modified crops and should also boost its agricultural mechanization.
imf.org/external/pubs/ft/survey/so/2011/CAR041611A.htm
Joseph Akpan, PhD- International Political Economy commented on Thursday, May 26 ,2011
ReplyDeleteAfrican leaders have failed to address internal problems that impede diversification and processing. They should curb excessive government intervention in the economy, tackle massive corruption in government, reorganize their inefficient bureaucracy, set policy goals for banks to finance value added investments, provide constant energy to attract investors, and build more infrastructure. Government is the problem in Africa. African governments in general, with the exception of South Africa, have completely shackled their private sector. All these African leaders that go about making noise about diversification abroad should go home and tackle their almost insurmountable internal problems. These problems may take generations to redress, even if a genuine foundation is laid today.