It is possible to foster development in an era of financial and economic crisis – Meles

Addis Ababa, 12 November 2009 (ECA) – The Prime Minister of the Federal Democratic Republic of Ethiopia, Meles Zenawi, said it is still possible for Africa to foster development in the current era of financial and economic crisis.

Speaking while opening the fourth African Economic Conference in Addis Ababa, Ethiopia, Meles said while the current situation is very challenging, it nevertheless offers some opportunities.  He listed efforts to address climate change, rechanelling savings from Asia and the Gulf States, and imaginative action by African States as possible solutions.

“If the decision to tackle climate change effectively were to be made, then Africa with its vast sources of renewable energy: solar, wind, hydropower, bio-energy….would have an important niche in the global market,” he said.  Although he conceded that this was unlikely to happen soon, he nevertheless said it was possible.

He also said that if Asian and Gulf States used their massive savings to invest in Africa, it would help spur consumption which could lift the world out of recession.  But for this to happen, African countries need to create the conditions that would attract investment from these countries.  “It is possible to imagine that Africans will act in unison to bring about the changes in global direction that we have outlined and that open opportunities for us,” he said.

He said economic policy-making in the current era should therefore focus on designing strategies that can make “the possible probable.”

In his opening remarks at the conference, president of the African Development Bank, Donald Kaberuka, said that while the Banks core function was long-term development financing, it nevertheless had a duty to understand the development process.  He said it is important to find out “What is it that works? And under what conditions? How can we deploy best practices in economic management to better influence the African economic conditions?”

He said that although the economics profession may have much to atone for in the current crisis, papers at this conference would nevertheless prove the economic analysis remains a powerful tool to understand the complex economic and financial interrelationships.

Mr. Kaberuka said although Africa was hard-hit by the crisis, at the macroeconomic level, the continent was emerging in better shape than earlier expected.  He attributed this to “stamina and firmness of purpose in staying the course on sound policies.”

The president said the problem of crating employment and stimulating global demand may be dealt with by extending Keynesian policies to African countries.  He said following the great depression, Keynesian policies were eventually extended to Europe and it helped the continent in its post-war recovery.

He also asked the conference to address the issue of diversification – noting that after fifty years of independence, most African economies were still commodity-dependent.

United Nations Under-Secretary-General and Executive Secretary of ECA, Mr. Abdoulie Janneh, commended the prime minister for his “keen and analytical insights on issues pertaining to African development” and the “leadership that he has provided to Africa in G20 processes and climate change negotiations.”

He pointed to the experience of emerging markets showing that countries tend to achieve enduring growth through the process of internationally competitive industrialization. 

“This was often achieved by active public measures to support the building of productive capabilities, which are urgently needed to reverse the de-industrialization experienced in Africa since the adoption of structural adjustment programmes in the1980s,” he said. 

To sum up, Africa must continue to focus on promoting high level, sustainable and job-creating growth, irrespective of the economic and financial crisis.  ECA on its part will continue in partnership with the AUC and AfDB to provide the necessary research and advisory services to member States and Regional Economic Communities that must perforce underpin the transformation of Africa.