1st Joint Annual Meetings of Addis Ababa, Ethiopia
Reflections
Honorable Chairman Introduction First, let me congratulate and commend the Economic Commission for Africa for the persistence and great work performed over the last fifty years, as well as the African Union for joining the fight in meeting our development challenges over these trying years. Our sincere and best wishes are extended to both institutions for the challenging years ahead. We were reminded yesterday by H. E. Prime Minister Zenawi that the challenges glaring at us today are not new. And what was of utmost importance was to tackle them within a new framework and new strategies. We were also advised yesterday by H. E former President Mkapa of Tanzania that as Africa moves into the 21st century, we need to strategically maximize our gains from the expanded latitude provided by the external environment and the gradual change of attitude that is developing amongst our development partners. This morning our colleague, the Minister from Uganda, urged us to prioritize our challenges and zero on a few of them, and highlighted the energy sector.
Major policy and development issues, surrounding the correlation between rising oil prices and the performance of African economies, have been well articulated in some of the working papers submitted to us for our meeting, and the presentations we have heard during the last two days in these halls. An emerging consensus is that persistent high oil prices do constrain both private and public sectors' investment and pose risks to macroeconomic stability in many African countries, especially oil-importing and landlocked countries. The analysis suggest that high oil prices do put undue pressure on the fiscal and payment balances, and national budgets of oil-importing countries, while providing vital cushion for enhancing fiscal balances and providing budgetary options for oil-exporting countries. The analysis further suggests that the purchasing power of personal and disposal income of the majority of our people continue to decline in the face of rising oil prices thus constraining consumption and escalating poverty. We are reminded however by existing experiences that in the absence of appropriately diversified domestic investment, prudent saving policies, and effective usage of oil revenues in diversifying the sources of growth and export base, oil-exporting countries could overheat and destabilize their economies at the expense of growth. Worst still, in the absence of these enabling factors future generations of oil-endowed countries could be condemned to unsustainable economic foundations for development. Moving into the 21st century Over the years economists have advanced several measures to respond adequately to the short, medium and longer-term challenges posed on Africa economies by oil price fluctuations. These include developing alternative sources of energy, rationalizing oil consumption, promoting international competitiveness, and investing in infrastructure. As indicated yesterday, there is nothing new about these and other suggestive measures. A new and aggressive way to deal with the supply, distribution and usage of oil within the African region must now be found and addressed with a collective commitment made towards achieving our common goal. Critical and strategic thinking is required urgently if we are to respond to the challenges posed by our two eminent persons to the Joint Conference yesterday to "tackle the old challenges in a new way, ...and to capitalize on the growing favorable attitudes among our traditional and emerging development partners towards Africa development". The process should be aimed at defining and evolving a shared regional research, exploration, production and marketing policy framework and action agenda to ensure the availability and affordability of the required energy to support and sustain the upward momentum currently enjoyed by our African nations. In addition, this move shall prepare our region to effectively and adequately participate in the ever increasingly competitive global economic environment. These points were forcefully made by the Minister of Uganda and many other speakers this morning. This exercise should be a joint initiative between the ECA and the AU with our respective secretariats taking the lead in initiating and bringing to its logical conclusion the collective strategic thinking process. Ongoing initiative to prepare the feasibility study on the establishment of the Oil Fund is a right start in these regards. This too should be brought to its logical conclusion. I Thank you. |
