Africa will not achieve the Millennium Development Goals if the Doha development round of trade talks is not resuscitated, Donald Kaberuka, president of the African Development Bank (ADB), has said.
African countries will only meet the 2015 deadline for the MDGs if they are able to “mobilize domestic resources”, and achieve growth rates of 7-8% a year, Kaberuka told Emerging Markets in an interview.
“Trade is the key. Africa must trade its way out of poverty,” he said, adding that the international community should open its markets and reduce subsidies to agricultural producers. The UN estimates the funding gap for the region to be 10 to 20% of a low income country’s GDP.
The former Rwandan finance minister acknowledged that full trade liberalization does carry risks for agriculture exporters, who would face increased competition from very productive Asian producers in some markets.
But he said this is not an argument for delaying liberalization. “It’s an argument for African producers to increase productivity, increase the quality of their produce and secure the supply chain,” he said.
Kaberuka, who became president of the 77-member bank a year ago, supported last year’s debt relief deal for heavily indebted poor countries. However he put export-led economic growth ahead of the improved prospects for many African countries to access international and local capital markets to meet the funding gap for the MDGs.
Regulation, reform and increased macroeconomic stability in African countries, along with global investors’ search for yield, have opened new frontiers, Kaberuka said. In December, last year the AAA-rated ADB and the European Investment Bank launched their first international bond issue in Botswana pula, worth 800 million pula in total.
Kaberuka said that the ADB is exploring similar issues in several currencies, including the Ghanaian cedi, the Moroccan dirham and the CFA franc. He did not rule out the possibility of smaller African countries issuing jointly on the international capital markets, but said that “there are some preconditions... we are not there yet.”
On the role of the IMF and World Bank, Kaberuka said: “We need multilateralism now more than ever... but at the same time we must strengthen not weaken the voice of low income countries in international institutions. When the Bretton Woods institutions were set up, the developing countries had no voice at the table. Today, they have a very weak voice.”
The relative shift in global economic power away from the US and Europe towards Asia had resulted in African countries becoming more marginalized, he said: “Our role in the world economy remains marginal except as suppliers of raw materials.”
On economic growth and poverty, there is “a danger that Africa will be forgotten.”