Thursday, 6 May 2010

Rebounding Africa under pressure to keep up reform

DAR ES SALAAM: Africa will emerge from the global downturn more quickly and strongly than much of the world, but must shift policies and attitudes still further to benefit fully, business and political leaders said on Wednesday.

"We've come through it better than most and we've done that not because we're not integrated in the global economy but because we are," Maria Ramos, CEO of South African bank Absa, told a session at the World Economic Forum (WEF) for Africa.

"There has been a big amount of reform of this continent over the past decade and a half." The world's poorest continent has defied the direst predictions that it would suffer more than others as a result of the global woes and the World Bank this week upgraded its growth forecast for sub-Saharan Africa to 4.2 percent in 2010 versus 1.7 percent last year.

In addition to rising commodity prices and investment from faster growing Asian countries, policy reforms and debt relief over the past decade have put many African countries on a more stable footing and better placed to attract investment.

Businesses in Africa talk up the potential of 1 billion consumers with ever increasing spending power and point to the explosion of mobile phone services as a sign of what can be done.

Results of a survey of CEOs by PricewaterhouseCoopers showed 77 percent of those in Africa were optimistic for the next three years compared to only 50 percent globally.


"We as Africans need to understand this opportunity," South African Finance Minister Pravin Gordhan told Reuters.

"That's what this WEF is about and to fashion our thinking in a way in which we can take advantage of the opportunities that are there," he said, while stressing that the rest of the world also needed to understand Africa's emerging importance.

The fact Africa's biggest annual business gathering is being held in Tanzania rather than South Africa, as it usually is, was a sign of the growing importance of the countries outside the continent's biggest economic power.

But the east African country's own record on economic reforms has been looking patchy of late. Over two years, it slipped 20 places on the World Bank's ease of doing business survey to 131 out of 183.

President Jakaya Kikwete acknowledged this week that more needed to be done, but he told the summit that laws to promote investment by foreign countries were not enough by themselves.

"We need the support of the governments of these countries," he said, stressing in particular the difficulties created by foreign agricultural subsidies which put African farmers at a disadvantage.

Despite setbacks in some countries, business groups and donors believe that continuing reforms to open up economies and increase political freedoms are an important driver of growth.

"The political will is coming," said Omari Issa, who heads the Investment Climate Facility for Africa, which runs dozens of projects to help countries make it easier for businesses to operate and to eliminate red tape.

"We are creating competition between countries and within countries, competition between agencies. I think the formula is working," he told Reuters.

Source: Arab News

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