World Bank lowers Africa forecast on global recession

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African economies will grow by an average of 1.7% this year, a downgrade from an earlier forecast of 3.5%, as a result of the global recession, the World Bank’s vice president for Africa said.

Obiageli Ezekwesili told Reuters the continent’s growth in 2010 will be 2.5 %, down from an annual average of 5.8% over the last decade.
“This year it is 1.7 percent and next year, we think it will probably get to 2.5 percent,” she said. “Commodities are gradually strengthening, (there will be growth) if there is a resumption in private capital flows, and diaspora remittances, investments in construction then the agriculture sectors.”
She said Africa’s economic recovery can be quickened if governments invest in core infrastructure projects and China’s investment on the continent is welcome.
“The fallout remains and there is going to be a lead time (to recovery),” she told Reuters, adding that the last wave of the global economic crisis hit Africa last.
“If indeed governments spend resources well, if they are efficient in spending in important areas of public investment, in human capital development, economic infrastructure for growth, that lead time will reduce.”
Financing for the projects needed will be key and should come from African governments, traditional donors like the World Bank and new partners such as Brazil, China or the Arab world.
China’s involvement in developing Africa’s infrastructure was welcome, Ezekwesili said, although many people on the continent complained that the Asian giant did not ask hard questions on governance or corruption in countries it invests in.
“China, frankly, can be an opportunity for Africa based on the huge infrastructure deficit on the continent, but what needs to happen is that governments and citizens have to build internal ownership of the need of good governance, transparency, accountability, for respect for the environment.”
Kenya must fight corruption
Africa is investing $43 billion on infrastructure but requires an annual outlay of $98 billion, the Washington-based institution says.
Ezekwesili was speaking in Kenya where she inspected projects funded by the World Bank, which has current commitments of over $1.4 billion in east Africa’s biggest economy.
She said one of the challenges for Kenya was corruption, but leaders there had told her they understood the negative impact it was having on the country and were willing to tackle it.
“(They have) the understanding that you have no choice, the rest of the world is not waiting as the global economy begins to recover, board rooms are going to make decisions,” she said.
“In terms of competitiveness of new global environment, Kenya will have absolutely no choice but to tackle the most important constraint to its development: it has been corruption.”
Kenya is ranked the most corrupt nation in east Africa by graft watchdog Transparency International and companies frequently complain of the hidden costs of doing business here.
The former Nigerian cabinet minister said Kenya’s so-called Agenda Four reforms in the police, constitution and the judiciary were crucial for the country it to reach its full economic potential.
“Kenya currently underperforms when you compare it to its possibilities, that creates an impetus for change and that needs to be modelled by the leaders.”