Dominique Strauss-Kahn, the International Monetary Fund (IMF) managing director, recently visited Kenya as part of his African tour.

While in the country, Mr Strauss-Kahn took part in a panel discussion on Africa's Economic Transformation: The Road Ahead, at the university of Nairobi. Here are excerpts of the discussion.

African economies have been affected by the global economic and financial crisis. What is your assessment of Africa recovery?

Africa has been an innocent victim of the crisis and its trade has plummeted, capital flow has dried up and remittances have declined. This affected the gains made in the last two decades. However, Africa has progressed much better through the crisis than other parts of the world.

Indeed, Africa will record strong recovery as we predict a 4.5 per cent growth.

The quick recovery is on the back of improved economic policies adopted during the reform period.

Macroeconomic policies were prudent, strong social budgetary allocation reduced debt burdens hence low repayments and strong reserves that provided cushion for the fall back expenditure programme.

The use of expansionary stimulus package forestalled the decline and this will provide the legroom for private demand to drive the recovery.

Despite these, Africa faces twin challenges which are to revive strong growth, and to reinforce resilience to future shocks. Africa economies are highly vulnerable to economic dislocation through dependency on commodities which are affected by cyclical demand and price fluctuation and remittances.

How has Kenya fared and what are the emerging issues that need to be addressed?

Kenya, like other Sub Saharan African countries, was affected by the global crisis witnessed through decline in the number of tourists, a fall in prices of key exports such as tea and coffee, and a decline in the purchase of fresh produce.

However, the country has managed to contain effects of the global crisis through use of effective counter-cyclical policies. The increased spending on infrastructural projects, use of the stimulus package, and strong revenue collection tampered the effects of the crisis. Prudent macroeconomic policies, increase capital flows and relatively high remittances helped the economy to remain strong.

In addition, important progress was made in addressing weaknesses in governance and the business climate hence attracting foreign direct investment.

The economy is yet to recover from the shocks of the 2008 political violence and prolonged drought that depressed growth.

Integration of the economy to the global system is expected to drive recovery as the global economy picks up through increased tourist visits, remittances and uptake of fresh produce.

Furthermore, continuous improvement on governance through addressing systemic weaknesses on use of public funds, low utilisation of funds, and improving the business climate to improve private sector participation should improve the recovery prospects.

African economies continue to face many non-tariff barriers for their exports to developed world markets. What needs to be done to ease entry of these produce thereby boosting their economies?

There is need to open up the markets to allow for free movement of goods, especially from developing nations to the West. This will enhance trade, lower the overall cost of living through access by consumers to an affordable range of products.

To advance the global economy we need less protectionism measures and not more, even at the current tough times where countries are likely to resort to such measures to boost domestic production.

However, the opening up of economies need not be symmetrical or reciprocal as the needs are varied and the countries are at different stages of development.

There is need to bring to a conclusion the World Trade Organisation's Doha talks which will address the emerging issues of protectionism.

The slow rate of development is attributed to dependency on aid rather than trade. Should trade play a bigger role than aid?

Africa is undergoing a transformation which is expected to change its relationship with the rest of the world. The transformation has opened up markets, attracting more direct foreign investment (DFI) in the last decade rather than aid.

New investments in mineral mining, oil exploration, capital markets, industrial production and farming are driving flow of funds to Africa.

Africa is the next frontier for investment in extraction of primary commodities and equity markets. The recovery is expected to be faster than the rest of world, thereby attracting more investments. This will boost trade with the prospect of aid having a minimal role to play.

However, African economies need to be strengthened through adoption of market friendly policies that will hasten the flow of private capital.

In addition, they need to develop regional trade to enhance integration and take advantage of the huge untapped demand among them.

Proximity to each other will lower the cost of operation hence making goods affordable.

China's investment and aid in Africa has been on the rise. However, there are no conditionalities attached to the funds and investment carried out in African countries. Will these affect governance and increase the debt level in Africa, especially for the less developed economies which have received debt cancellation?

China has become an important global partner and we expect it to continue playing an active role in global issues. The rapid growth of the country, which has seen its demand for commodities rise to meet its growing industrial needs, is important as it provides Africa with markets for its commodities.

However, we expect China and its businesses to engage in fair trade so as to ensure African economies get better returns on their raw materials.

Both IMF and the World Bank are engaged in strengthening governments' ability to handle emerging complex transactional contracts between them and Chinese businesses.

This is to ensure that African economies are able to get better returns for their commodities. For instance, we have been involved in advising the Democratic Republic of Congo (DRC) to ensure its minerals fetch fair prices.

How viable is the green economy and what is the IMF doing to support African economies to adapt to the green economy?

Green economy though expensive is a viable objective as it will wean the world from high carbon dependency.

However, Africa faces a number of challenges in implementing a green economy. First, green economy requires application of advanced skills and knowledge which Africa does not posses. Even where it's available, it remains expensive hence not easy to adopt. Green economy will require huge resources which African economies may not be able marshal.

The resources required will be used for the development of renewable energy sources such as geothermal and solar to avoid the costly environmental trap developed nations are in due to the use of coal to provide power.

In addition, African economies will be required to invest more in modern agriculture and shift from the current largely rain fed dependency. Mechanisation of farming and use of irrigation are capital intensive. To achieve the envisaged green revolution a mixture of public/private partnership will be critical.

The success of a green economy will require a paradigm shift from the current scenario of environmental exploitation to conservation. Africa can achieve a lot with assistance from its partners without having to travel the same road used by developed nations, at a huge environmental cost.

The IMF has set up the Green Fund Scheme which plans to raise $100 billion to be used to mitigate effects of environmental destruction.

There is need to share the burden between developed and developing countries.

The IMF has changed the game plan with less strings attached to its funded programmes. Is this an admission of failure of the use of conditionalities?

The primary use of conditionality in our programme has been to ensure that the funds we provide are utilised properly.

We have, to a large extent, managed to observe proper use of programme funds hence limiting chances of wastage.

However, over time we have appreciated the need to have a flexible mechanism to allow for member countries to easily access funds in order to ensure timely implementation of programmes.

We now have in place less intrusive conditionality that allows member countries to tap funds much more easily through quick disbursement. With the global economic and financial crisis, we have had to relax our borrowing terms making them flexible, with lower interest rates and longer repayment periods to ensure economies under distress do not suffer unnecessarily.

It's important to note that over time we have come to learn that different economies have unique needs hence the one-size-fit-all approach is no longer tenable. For the IMF it's been a humbling lesson.

However, there is need to develop strong local check mechanism such as regular audits to ensure that funds are used for the intended purpose.