By REUTERS Posted Monday, November 10 2008 at 18:19
Africa’s economy will grow by less than previously expected in 2008 as the global financial crisis hits demand for commodities and Africans working abroad send less money back home, the head of the African Development Bank (AfDB) said on Monday. As it prepares to host a meeting this week of African finance ministers and central bank heads to discuss the crisis, the AfDB’s President Donald Kaberuka said the bank had lowered its forecast for Africa’s economic performance. “We see an effect on the growth of African economies, which this year we expect to be not more than 5 per cent, whereas before we said around 6.5 percent,” Kaberuka said in a telephone interview from the bank’s headquarters in Tunis.
African economies grew by 5.7 per cent in 2007, according to the AfDB, the only multilateral development body devoted specifically to Africa. Kaberuka said the impact of the financial crisis on African banks was quite small given their limited integration into global markets and a general absence of derivative products on their balance sheets. “However, the economic impact is beginning to be felt. In the short term it will be felt in terms of a drying up of credit finance, and we’re already seeing falling demand for products such as oil and minerals, even coffee and cocoa,” he said. “Clearly there is already a decline in remittances from migrants, which plays a very big role in some economies,” he added.
Kaberuka urged the richer industrialised countries of the Organisation of Economic Cooperation and Development to enact economic stimulus plans, saying it would help the world emerge quicker from recession. He called for a rapid deal to free up global trade and said the global financial regime needed to change to be more inclusive of the world’s emerging economies. Africa represents a small share of global markets, with 1.3 percent of world stock market value, 0.2 per cent of debt securities and 0.8 percent of bank assets, according to AfDB. “This crisis has shown the deep integration of the world economy,” Kaberuka said. “New rules should be global and inclusive and like that we will rebuild confidence quicker.”