 |
| Kaberuka: optimistic |
Africa is looking forward to a prolonged rebound from the crisis and a return to the sort of expansion it enjoyed pre-crisis, African Development Bank (AfDB) president Donald Kaberuka said yesterday. “I am bullish about Africa,” he told Emerging Markets in an interview. “Africa has surprised the world by the speed of its recovery.”
Economic growth across the continent is expected to reach 5.9% in the next 12 months, compared with 5% in the past 12 months. “Overall real GDP per capita has also increased,” Kaberuka said, except in a few countries that have a strong demographic growth of more than 3% per annum.
“The level of [foreign currency] reserves are being rebuilt, foreign remittances have also built up,” he said. Foreign remittances from migrant workers are an important source of foreign currencies for some African countries. Those had fallen by 5% in the aftermath of the crisis, but have now fully recovered, Kaberuka said.
“I am very confident we shall go back to the momentum built in the early 2000s. The speed of the recovery has been remarkable. It is not concentrated in a few countries.”
Africa did not decouple from the rest of the world after the crisis, and its economic fortunes remain tied to that of the global economy. But Kaberuka believes that improvements in the business environment will help it to overcome the impact of the crisis.
“The way Africa has recovered from this crisis shows that economic reforms over the past 15 years, the governance reforms and the investment climate have made the continent much more resilient than in the past.”
The growth of trade, including intra-regional African trade, is also responsible for the rebound. “The way to look forward is continue building capacity, lowering barriers and constructing infrastructure”, Kaberuka said.
Regional trade is estimated to have increased by 10-12% over the past decade, according to Kaberuka. This is a positive trend, but it is still minuscule compared to the growth of Africa-China trade, which has grown more than 10 times over in the last 10 years.
Paul Collier, economics professor at Oxford university, has expressed reservations on infrastructure. “It’s not just about building infrastructure, it’s about running it,” he said. He added that “excitement about Chinese investment” was “misplaced”.
Large African economies are feeling the effect of the global currency war. Pravin Gordhan, South Africa’s finance minister, said: “The currency has become too strong. We share the concern of other emerging markets.” The strong rand “affects export industries” and can become “a negative on the competitiveness side”.
South Africa is trying to build on the momentum of this summer’s football World Cup, especially in terms of attracting investment. “We are in a very optimistic mood. Africa has a much better profile around the world. There’s a lot of goodwill towards the continent and the country as well. Our task right now is how to capitalize on that,” he said.
Among fragile countries, the best performance was registered by Liberia, and to a lesser extent Sierra Leone, Burundi and Chad. Meanwhile, Kaberuka voiced his continuing concern about the situation in Sudan and Somalia.