"It will certainly take African countries a longer time to emerge from the crisis than other countries," the African Development Bank (AfDB) President, Donald Kaberuka, said to the development committee of the World Bank and the IMF during the spring meetings of the two Bretton Woods institutions.
Concurring predictions by the World Bank and the IMF pointing to the severe human degradation in developing countries, Mr. Kaberuka recalled that though Africa had relatively been isolated from the global financial system, it is however hard hit by the economic crisis.
"Due to the relative isolation of its banking system, Africa has not been affected by the global financial crisis," Mr. Kaberuka said. "It has therefore not experienced spectacular developments such as chain financial sector bankruptcies. Though not as spectacular as in industrialized countries, the crisis has however not spared the continent."
He recalled in this regard that the crisis was affecting all African growth factors - drastic declines in exports, especially in commodity exporting countries where these commodities are driving the continent's growth; declines in Diaspora remittances which have also been affected by the crisis in immigrants' hosts countries; the drying up of bank credit and trade financing.
The AfDB has reviewed its growth forecasts for the continent, reducing it by half to only 3%, Mr. Kaberuka said. With a population growth of about 3%, we are in a zero growth situation, he stressed. The crisis' consequences on the continent are dramatic ranging from increase diseases, rising mortality rate, especially infant mortality, school drop-out rates to double deficits - balance of payments and budget deficits.
"In this context, it will certainly take African countries a longer time to emerge from the crisis than other countries," Mr. Kaberuka stressed.
Speaking during a press conference on "Future Development Financing in Africa," Mr. Kaberuka said he was satisfied that donor countries had not announced reductions in official development assistance. He however said that aid could be mechanically affected with OECD countries pledging to commit 0.7% of their GDP to official development assistance based on reduced grossed domestic products.
Mr. Kaberuka also drew attention to the need to take into account the requirements of the poorest countries in recent commitments made during the G-20 Summit in London. G-20 countries have agreed to increase resources to multilateral development banks (MDB), but there are no specific commitments on MDB concessional windows whose actions target low-income countries and fragile states.
Recalling that the AfDB had rapidly responded to the needs of its regional member countries affected by the economic crisis by putting in place a number of rapid disbursement mechanisms - the Trade Finance Initiative and the Emergency Liquidity Facility - to rapidly mobilize resources initially intended for development actions, Mr. Kaberuka called for an early launch of negotiations for the replenishment of concessional windows of the African Development Bank and the World Bank.
He also called for a number of measures to be taken to mitigate the impact of the crisis on the continent such as the transfer of a share of the revenue from the sales of IMF gold to the poorest countries.
Speaking in the presence of World Bank and IMF governors during a development committee meeting, Mr. Kaberuka said that it was possible to mobilize the resources necessary to help African countries avoid losing the gains resulting from decades of economic reforms. "It is important for us to now know what we can do in a year or two years to check uncertainty and volatility," he said.
Mr. Kaberuka reiterated the call during a ministerial roundtable organized by the US Treasury Secretary, Timothy Geithner. The round-table brought together finance ministers and central bank governors from Nigeria, South Africa, Zambia, Tanzania, Senegal, Ghana, Kenya and Liberia. Mr. Geithner said in this context that the US was determined to double development assistance to Sub-Saharan Africa from next year. He also announced that the US would increase other forms of assistance targetting "vulnerable segments of the population."
The participation of the African Development Bank Group in the Bretton Woods institutions' spring meetings has made it possible to draw attention to specific issues that will crop up n the event of delays in scaling up aid to Africa.
