External sources of finance for productive investments would, at least in the short run, remain crucial in several African countries with a low-income base and an underdeveloped financial sector, according to Abdoulie Janneh, UN Under-Secretary-General and Executive Secretary of the Economic Commission for Africa (ECA).
“External sources of finance are required to meet the financing gap in Africa,” Janneh has told African Foreign Affairs Ministers meeting here as the Executive Council of the African Union (AU).
Janneh said improved governance on the continent was getting reflected in economic trends, where better macroeconomic management has combined with high commodity prices and increased capital flows to sustain growth rates.
Economic growth in Africa as a region, he said, was 5.8 per cent in 2007, which was marginally better than the 5.7 per cent registered the previous year.
“The challenge therefore is to upscale and sustain this growth so as to significantly reduce poverty and achieve the other Millennium Development Goals in the whole continent by the target date of 2015,” said Janneh.
The ECA chief suggested that African countries remain vigilant in view of the disquieting economic conditions in major industrial countries which, he said, raised the spectre of the 1970s when a commodity boom was truncated by policy responses to stagflation in developed countries.
‘These events foreshadowed the lost decade of the 1980s and given that several African countries are still weighed down by a debt overhang, there is need for vigilance, well-considered responses and continued close engagement with the international community,” Janneh said.
Though the international community has pledged support for Africa’s development efforts, he said much still needed to be done “as the quantum of support remains inadequate and the translation of commitments into reality remains a challenge.”
“This is not the time to reduce assistance and all efforts should be made to keep Africa’s improved economic performance on track,” the ECA chief added.
The Executive Council is thrashing the agenda for the 10th Ordinary Session of the AU Assembly, due to open here Thursday under the theme ‘Industrial Development of Africa’.
While concern has been raised that climate change might make the path for industrialization in Africa more difficult, Janneh countered that it should not be the case.
“It is quite timely and appropriate to deliberate on industrialization in Africa because industrial expansion is needed to transform African economies through increases in productivity, improved skills and creation of opportunities for decent and productive work,” he argued.