African countries must mobilise domestic revenue and diversify their economies to supplement resources that flow into the continent from foreign aid, loans and investment to sustain growth during the global financial crisis, said the head of the United Nations Economic Commission for Africa (ECA).
Executive Secretary of the ECAAbdoulie Janneh said fiscal consolidation and austerity measures in key developed economies could result in reduced global demand and a “double dip” recession with direct implications for Africa’s export earnings and for much-needed official development assistance.
“Quantitative easing elsewhere may lead investors to travel the globe seeking best returns which heralds overvalued currencies and asset bubbles in emerging and developing economies, Janneh told the three-day African Economic Conference, which opened today in the Tunisian capital, Tunis.
He said Africa had the capacity to increase domestic resource mobilization, citing the continent’s combined consumer spending of about $860 billion in 2008, UN News Service reported.
Janneh urged African countries to use policy to deal with balance of payments pressures and manage capital inflows, while using the continent’s “admittedly limited voice” in international economic processes to resist protectionism and push for the conclusion of the Doha Round of international trade talks.
He called for economic planning tailored for diversification of African economies. “There is interesting evidence of diversification of production and trade flows in the continent. Africa’s recent economic performance is not only due to the external demand for its commodities but also as a result of growth in services such as banking, telecommunications, tourism, and construction.”
Asia currently accounts for 27 per cent of Africa’s trade with the rest of the world, compared to 14 per cent in 2000. That level of trade with Asian countries is comparable to the ratio of the continent’s exports to the United States and Europe, Africa’s traditional trading partners, Janneh said.
The conference in Tunis is jointly organised by the ECA and African Development Bank in collaboration with the UN Development Programme (UNDP) and the Development Bank of South Africa. This year’s theme is “Agenda for Africa’s Economic Recovery and Long-Term Growth.” About 300 economists are attending the conference, which will end on Friday.