WASHINGTON (Reuters) - As the world’s finance czars clamored this week for decisive action to clean up Europe’s debt crisis, ministers from the planet’s poorest region Africa were quietly saying “been there, done that”.
A weekend briefing by African finance ministers at IMF/World Bank meetings in Washington attracted modest media attention, but there was quiet pride in the way representatives from tiny states like Cape Verde and Gambia were able to claim concrete achievements in managing debt and public finances.
Developing countries from across the world, including Africa, are portraying themselves as “innocent bystanders” of the economic storm boiling out of Europe and the United States, and have joined the chorus calling on the European nations in crisis to bite the bullet of painful economic reforms.
“It is not easy, it is painful, and we went through the pain, and the Europeans must be prepared to go through the pain,” African Development Bank President Donald Kaberuka told Reuters in an interview.
He said the reforms needed in the ailing southern European states involved the kind of overhauls of public finances and labor markets and other structural reforms that African nations -- with firm urging from the IMF and World Bank -- had tackled over the last two decades and now had results to show for it.
Fund and Bank experts say sound macroeconomic reforms and better budget management are some factors that have helped propel robust growth in sub-Saharan Africa since 2000.
This has given the region one of the brightest outlooks of any region amid the prevailing gloom.
“The outside world still sees Africa of yesterday. We believe that this is Africa’s time,” Kaberuka said.
While acknowledging major challenges on the continent -- huge infrastructure and energy deficits, shortages of skilled labor and the risk of political flare-ups -- he said the moment had come for what he called “a reprofiling of Africa’s risk”.
The continent’s risk profile had been grossly overestimated for too long, Kaberuka said.
“There are risks, the buffers built before 2008 are weakened, inflation is raising its ugly head in some countries because of pressure of food prices, we have residual political issues in a few countries,” he said.
And the continent had good reason to worry about the threat of aid, finance, investment and trade flows falling if conditions in the advanced economies worsened.
“But are we more risky than some of these peripheral countries in Europe, which have 150 percent of GDP in debt, 30 percent fiscal deficit?” Kaberuka asked.
“ALL HANDS ON DECK”
Arguing the change underway in Africa was comparable to that experienced by India 20 years ago, Kaberuka said aggregate economic fundamentals on the continent -- its wide internal variations notwithstanding -- were something to be proud of.
“An average African country would now be growing at about six percent, we’d be having a fiscal deficit of no more than 3 percent, debt no more than 15 percent of GDP,” he said.
His biggest worry was not what was happening in Africa, but what was not happening in the developed world, “the inability or unwillingness of the rich countries to take the decisions needed to return the global economy to growth momentum”.
But he said emerging markets and low-income countries, the Africans included, had a role to play in trying to relaunch a new global growth momentum. “We have to get the ship moving, that requires all hands on deck,” Kaberuka said.
Investment in infrastructure in Africa could help to rekindle aggregate demand for equipment and products from advanced economies, which in turn would put idle manufacturing capacity back into use, he said. This would make Africa’s infrastructure agenda part of the global recovery efforts.
Upgrading power and infrastructure was critical to sustaining Africa’s continuing rise and, while connectivity in broadband Internet services remained a problem, the telecoms sector on the continent was “exploding”, Kaberuka said.
“There’s room here for the private sector, returns are very high, cost of entry, very low, risks, very low,” he added.
Energy sector reforms needed creation of sound regulatory systems and financially sound utility companies, he said.
But Kaberuka warned the continent’s governments that if they wanted to avoid the kind of political upheavals seen in North Africa and the Middle East, they needed to ensure that growth was truly inclusive, and work to tackle inequalities.
“Beyond the jargon, all persons in the country must be seen to benefit, all sectors, all communities,” he said.
Editing by Chizu Nomiyama