African Finance Ministers meeting to unleash Africa’s potential as new pole of global growth

Dr. Kwabena Duffuor - Ghana's Finance Minister

As the world teeters with the ongoing ripples of the global economic crisis of 2008 and the Eurozone struggles to settle its own economic woes, Africa has been unanimously touted as the new hope for global economic revival.

The global economy is marred by slow and highly uneven growth recovery, high unemployment and massive global macroeconomic imbalances. Uneven growth and global imbalances are manifestations of high surpluses and savings in emerging and developing economies, and high deficits in many developed economies, according to the Economic Commission for Africa (ECA).

The UN organ also indicates that several studies and reports by institutions such as the World Bank, the International  Monetary Fund and the McKinsey Global Institute have underscored Africa’s potential as a new  global growth pole because of its human and natural resource endowment, demographic  transition, improving political and economic governance and business and social environment,  and the fact that it is gaining increasing recognition as a profitable investment destination.

Prior  to the global economic and financial crisis, African countries sustained relatively high growth  rates, averaging 5.5 per cent, it adds.

The ‘5th Joint Annual Meetings of the AU Conference of Ministers of Economy and Finance and ECA Conference of African Ministers of Finance, Planning and Economic Development’  to be held in Addis Ababa, Ethiopia  next week will seek to provide a platform for African ministers to deliberate on Africa’s role in solving the problem of low global growth, high unemployment  and global imbalances. This role is well founded as Africa has enjoyed steady growth in the  past decade and can therefore no longer be neglected, not to mention its untapped potential and  vast natural resources. Political and economic conditions are improving, as are the general  economic outlook and business and investment environment, the organisers, the ECA and the AU said.

The organisers believe that Africa has the potential to attract sizeable savings from emerging and developing  countries and also become an attractive investment destination in the future.

The ECA and AU are also of the view that compared to the stagnation of the previous two decades, this  positive trend in growth is an indication of a possible turnaround for the continent. Based on this recent growth momentum, Africa is projected to become the highest growing region of the world over the next decade. Moreover, African countries have demonstrated their ability to  absorb shocks, with their swift and relatively strong recovery from the recent crisis.

But they however, admit that, despite this  optimism, the continent faces significant challenges and binding constraints in terms of  governance, human capital, infrastructure, slow regional integration and weak financial  institutions.

“In order to increase growth capacity and fully unleash its potential as a new pole of  global growth, the continent must address these key development challenges,” they said.

The organisers also believe that the demographic changes in Africa have led to urbanization and a growing middle class. However, for the continent to be a veritable new pole of global growth, certain challenges and binding constraints must be addressed. This requires action by both Africans and members of the international community alike.

The Conference will also provide an opportunity to discuss concrete ways of addressing  these challenges and the policies needed to position Africa as the new pole of global growth. It will recognize, however, that addressing these constraints that limit Africa’s capacity to develop  presents opportunities for dealing directly with the problem of global imbalances and increasing global aggregate demand. Such issues as prioritization, policy coherence and policy coordination will require urgent attention in this regard, they said.

Before the Ministers meet, a high-level panel of eminent personalities, senior government leaders and distinguished  experts from regional and international organizations, including the United Nations system and  the World Bank will lead the discussions.

The Conference will also be preceded by a technical preparatory meeting of the Committee of Experts, which will analyze the theme and make recommendations to the ministers for adoption.

In addition, the Committee will review the state of economic and social conditions in Africa and consider other statutory issues relating to the work of the African Union Commission (AUC) and the ECA secretariat and make appropriate recommendations for consideration by the Conference.

By Emmanuel K. Dogbevi

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