Africa’s recovery from the on-going global financial crisis will be slower than other regions of the world, the African Development Bank has said.
President, AfDB, Mr. Donald Kaberuka, said in Washington DC on Sunday that the journey to recovery would commence in the first half of 2010.
The African region’s resurgence will, however, follow improvements in the economies of the developed world, where the crisis started.
Kaberuka, in an interactive session with journalists on the sidelines of the WorldBank/International Monetary Fund meetings, said the global crisis spilled into Africa much faster than anticipated and that the recovery would also be slower than anticipated.
According to him, “At the beginning of the crisis, we thought it would take a year or a year and half for the crisis to reach us. Now, the effect has been faster than expected on African currencies, on African equities, on investment flows and on Diaspora remittances.”
He said once the world recovery began, African countries, which had been hit faster than expected, would recover much more slower that the rest of the world, adding that this was a disturbing situation.
He added, “The initial assumption that the African economies were “immune” to the crisis was wrong. There are some rather interesting assumptions that somehow because Africa is in the periphery of the investment flows, the impact is not significant, and that is not true. Whichever part of Africa it is today, whether the mining economies, the oil economies, even those who depend on soft commodity export, the impact is the same.”
Reacting to a question on AfDB’s small portfolio in Nigeria, the president said it was the quality and not the quantity of the investment it put in that mattered.
“For every dollar you put into projects, it should attract $10 from other businesses,” he noted.
Kaberuka, however, said the hardest hit industry in Africa in the face of the global crisis was the mining industry, adding that “the second, which is quite unfortunate, is infrastructure. We were beginning to see a lot of interest in the power projects and the rail projects, and that is where we see a lot of retrenchment.”
According to him, the most affected areas in the mining industries are in the copper belt of Zambia and the Southern part of the Democratic Republic of Congo.
“Our advice to the African governments is to continue to improve the cost of doing business such that whenever the recovery comes back, we are better-positioned to take advantage of any situation,” he said.