African governments must strive to promote macroeconomic stability, reduce unemployment and promote intra-African regional trade if the dangers associated with reduced economic growth are to be averted, Tanzanian president Jakaya Mrisho Kikwete has warned.
“In Africa we have to contend with inflationary pressures caused by the high prices of food and fuel,” Mr Kikwete said in a speech in late May. “At the same time, we are witnessing declines in prices for commodities, [as well as] FDI and official development assistance. Unemployment is on the rise, and so are the challenges associated with it. We must strive to maintain macroeconomic stability through tackling [our economies’] overall external deficit, and I wish to appeal to the [African Development Bank] to continue to support regional integration endeavours across the continent.”
Addressing delegates at the 47th annual African Development Bank (AfDB) meeting that took place in Arusha, Tanzania, Mr Kikwete was frank in his assessment of the challenges African economies face in ensuring sustained economic growth. “We are meeting against a backdrop of the second wave of the global economic crisis,” he said.
“During the first wave, developed economies were more affected than African economies. Economic growth in developed economies declined from 2.8% in 2007 to -3.6% in 2009, [while] in Africa growth declined from 7% in 2007 to 2.1% in 2009, yet it recovered to 5.3% in 2010. [However] we are still not in good shape. African economies were able to ride the storm partly because our financial markets were not fully integrated into the international financial system. Our economies are not as strong as they were in the first crisis, and it is now evident that African countries may not be able to achieve most of the Millennium Development Goal targets by 2015.”
Speaking to more than 2000 private sector and governmental delegates who had gathered from around the world for the AfDB meeting, Mr Kikwete’s assessment of the challenges African economies face was sobering. Nonetheless, he was quick to point out that Africa’s abundant natural and human resources could enable the continent to further maintain its economic growth, if managed properly.
Highlighting regional integration as one of the key ways in which African economies can access capital markets, Mr Kikwete said: “We need to increase connectivity in Africa, to facilitate the growth of intra-Africa trade. We need more roads, railways, airports, seaports and information and communications technology to open up and increase market access in Africa. These are capital-intensive investments, which many African countries alone cannot afford.”
Nonetheless, Mr Kikwete was careful to end on a positive note, highlighting notable developments that have been made with regards to intra-African trade. “Within Africa, trade between our countries has increased,” he said.
“Total intra-East African Community [EAC] trade has increased from $2.2bn in 2005 to $4.1bn in 2010, which is an 86% increase. FDI to EAC increased from $682m in 2000 to $1.7bn in 2010. These existing alternative opportunities, if well exploited, could steer African development to greater heights despite difficult times in the world economy. I have no doubt that Africa is poised to become the world’s economic powerhouse, as currently 11 of the world’s 20 fastest growing economies are in Africa.”