AfDB holds workshop on financial crisis

Accra, April 9, GNA - In continuation of efforts to devise ways of mitigating the prevailing financial crisis, the Economic and Development Research Department of the African Development Bank (AfDB) Group would host a workshop on Friday in Tunis, Tunisia, to explore ways of helping the institution's member countries deal with the crisis. Organised on the theme, "Financial Crisis - Strategies for Mitigating its Impact in Africa," participants would consider how national governments, regional organisations and the international development community can help develop strategies that minimize the impact of the crisis while building the internal capacities of African economies to withstand external shocks.

A statement received in Accra, on Thursday, said in addition to bank staff, participants would include Governors of African Central Banks, high-ranking government officials in the Ministries of Finance and Planning, and representatives of partner institutions, including the World Bank, the U.K. Department for Foreign and International Development, Overseas Development Institute and the United Nations Conference on Trade and Development.

Specific issues to be discussed at the workshop include, "Domestic resource mobilization"; "Capital flows and capital account liberalization;" "Financial sector reforms and regulation;" and "The impact of the crisis on the manufacturing sector". "The workshop is designed to create an opportunity for detailed technical discussions on the above issues, using empirical analyses as a guide in the search for sustainable solutions to the crisis as it affects Africa," AfDB said.

It said African economies had been hit by three successive crises since 2006 - the food crisis followed by the oil crisis and now the financial and indeed, economic crisis.

"These crises have come at a time when hopes for resurgence in African growth were high, against the backdrop of relatively high economic growth averaging 5.8 per cent over the last five years." AfDB said Africa's recent growth had largely been driven by high commodity prices and economic reforms, which resulted in better economic management and an improved business environment. AfDB said: "Both high commodity prices and the improving business environment attracted increasing amounts of foreign capital, with foreign direct investment rising by 16.8% in 2008 to a record US$61.9 billion, and net portfolio inflows reaching an all-time high of US$15 billion in the same year.

"It is now clear that the impact of the crisis, which was initially underestimated, is threatening to effectively reverse these positive trends. The continent's projected growth rate of 2.8 per cent for 2009 means that real per capita incomes would stagnate. Surpluses on fiscal and current accounts of 3% and 2.7% in 2008 are expected to turn into deficits of 5.4% and 4.3% of GDP, respectively in 2009.

"Export value growth will fall by 7.1% in 2009, while capital inflows, including remittances are expected to fall as well." The statement said beyond these economic impacts, were real negative welfare effects arising from mounting job losses in key economic sectors.

It noted that while African countries had initiated some responses to counter the slowdown in economic activity, the crisis requires global and adequately coordinated solutions. The statement said the Bank had played a leadership role in policy advocacy and providing analytical support in the debate on appropriate policy responses to the crisis.