African response to the global financial crisis
South Africa's Minister of Finance, Trevor Manuel on Friday January 16, 2009, addressed a news conference at a meeting of the Committee of Ten (C10) recently created by African Ministers of Finance and Governors of Central Banks. Mr. Manuel said the financial crisis was already taking a heavy toll on African states and urgent action was needed to prevent a total erosion of the important economic gains made throughout the African continent in recent years.
"We know how much deeper the economic recession now bites, we have seen the collapse of commodity prices, huge currency volatility, the collapse of equity prices across all stock markets, the virtual inability of most of our firms to access trade finance and the dawn of a period when capital markets are effectively closed to all developing countries," he told the media earlier.
Many African countries were witnessing significant outflows of capital as recent investors retreated from the continent while export markets developed at enormous sacrifice were suddenly being closed to imports from the continent as consumer demand in the importing countries fell and their protectionism rose.
The need to immediately cushion the impact of the current global financial crisis on African states, he said, demanded a rapid infusion of substantial capital into the African Development Bank (AfDB). Mr. Manuel called for a "significant general capital increase" for the AfDB, Africa's premier development finance institution. He said the funding would provide critical support for AfDB efforts to help steer African states through the current global financial crisis.
The African Development Bank President, Donald Kaberuka, told the news conference that African economies had already shed some 2 to 3 per cent of their Gross Domestic Product and that the decline would continue, endangering recent economic and social gains and, in some cases, laying the ground for social instability.
Mr. Kaberuka urged greater international support for African countries to help them cope with the challenges created by the crisis. Without urgent infusions of capital, he said, African countries would face serious reversals of important economic progress in recent years.
The Committee of 10 (C10) was created at a meeting of African Ministers of Finance and Governors of Central Banks in Tunis in November 2008 to help steer African states out of the effects of the current global crisis. It comprises five ministers and five central bank governors from Africa's central, eastern, northern, southern and western regions.
The Committee's functions were to take stock of the impact of the global economic crisis and recommend possible actions to African Heads of State. The Committee was also expected to make proposals for reforms in the way in which international multilateral institutions are governed to ensure that Africa had greater representation in these bodies.
Contact: Daniel Sibongo, African Development Bank, Cape Town, Tel: 00 216 71 10 30 65 danielsibongo@yahoo.com or d.sibongo@afdb.org
