Investment by rich countries in African infrastructure could ultimately curb global economic imbalances and spur worldwide demand, Ethiopian Prime Minister Meles Zenawi said in an interview.
Developed and emerging nations have been bickering about economic policies for weeks amid global tensions that have raised the spectre of a currency war and trade protectionism. At a G20 summit last month, leaders pledged to avoid competitive currency devaluations and underlined the critical importance of bolstering trade, but were short on detail.
Meles, who was one of only two African leaders invited to the Seoul meeting, said the world’s poorest continent was desperate for investment and could offer a solution to global economic woes, Reuters reports.
“As the G20 itself has admitted, the main problem is the global imbalance of huge excess savings that have not found adequate returns in real investment,” Meles told Reuters.
“So you have trillions of dollars in savings moving from one commodity to another and creating a desert as they go through this process,” he said.
“If this money were to be invested in infrastructure in Africa, it would increase global effective demand dramatically, because it would bring Africa into the global consumption network and into the global investment network,” he said.
“AFRICA NOT AN ANNEX”
According to World Bank Managing Director Ngozi Okongo-Iweala, Africa’s collective gross domestic product in 2008 was equal to that of Brazil and Russia and similar to where China and India were just before their economies boomed.
She said during a visit to Mauritius on Monday that with growth of 4.6 percent expected across the continent in 2011, Africa was the world’s third-fastest growing region and another 200 million people would enter the consumer market by 2015.
“The continent has more than 500 million people of working age. By 2040, their number is projected to exceed 1.1 billion, more than in China or India,” she told a news conference.
The G20 summit in Seoul gave more power to developing nations in the running of the International Monetary Fund, largely at Europe’s expense — a nod to the growing clout of emerging nations.
Meles, who has been attracting investment in Ethiopia from India and China to spur growth in his country of 80 million people, stressed that Africa should now be considered part of the answer.
“Africa is part of this structural solution. You have huge savings that the West can no longer use, these savings are not going to come to an end in the east for the next few days or months,” he said.
“So we were suggesting to the G20 that Africa is not an annex to their global agenda. It is not something that they come to after they have finished discussion on global economic issues,” the Ethiopian leader said.