African Economies to Grow Despite Global Crisis

Davos, Switzerland — Although the continent is not insulated from the global financial crisis, African countries will perform "relatively better" than other regions of the world this year.

This was the consensus among discussants at the session on Africa at the World Economic Forum Annual Meeting holding in Davos, Switzerland.

Also, the Chairman and Editor-in-Chief of THISDAY Newspapers, Mr. Nduka Obaigbena, has made a strong case for more investments in Africa.

The tempered optimism on Africa's growth in 2009 is fuelled by the fact that its capital markets are not integrated globally, except for South Africa, thereby limiting the effects of the crisis on Africa.

However, it was projected that some 3.5 percentage points may be shaved off the continent's GDP growth this year, with serious problems already obvious as seen in the closure of numerous mines in Zambia.

The panellists were Chairman, Actis Africa Advisory Board, Actis, United Kingdom, Nkosana D. Moyo; President, African Develo-pment Bank (ADB), Donald Kaberuka; Chairperson, Indu-strial Development Corpo-ration, South Africa, Wendy Luhabe; Vice-Chairman, Absa Capital, South Africa, Leslie Maasdorp; and Executive Vice-President and Chief Executive Officer, International Finance Corporation (IFC), Lars H. Thunell.

The discussants listed the risks ahead as massive unemployment, as well as food and fuel shortages which could spawn social unrest.

They also expressed fears that the economic reforms that had helped boost growth could be reversed as governments take over "at risk" financial institutions and other private sector companies.

More restrictive regulations may be imposed and progress in good governance may be eroded as hard times aggravate corruption, they argued.

However, at a dinner session later in the day, Obaigbena said the focus should be on the opportunities the continent offers.

Obaigbena, who moderated a dinner session on "The Africa You Don't Know", asked investors to think of the continent in terms of "what we can do for Africa and what Africa can do for us", highlighting the fact that in the face of the global financial crisis, South Africa's ABSA Bank is now worth more than UK's Barclays Bank even though the British bank has 53.96 per cent stake in ABSA.

"In global news coverage, Africa takes between 1 and 2 per cent," he said. "And even at that, 80 per cent of news on Africa is about wars, famine and corruption. There is far more to report about Africa than that. For instance, many African countries have now embraced democracy. Guinea which recently witnessed a coup has been suspended from the sub-regional association on the account of this. Nigeria is now in the 10th year of unbroken democratic rule. No matter how slow things appear to be, we are making progress."

The discussion, held at Hotel Cresta Sun, was led by the Prime Minister of Mozambique, Mrs Luisa Dias Diogo, Managing Director of Shanduka Energy, South Africa, Phuti Malabie, Chief Executive of Wesizwe Platinum, South Africa, Michael H. Solo-mon, and Chief Executive of Shoreline Energy Intern-ational, Nigeria, Kola Ka-rim.

The Mozambican prime minister said her country has recorded tremendous pro-gress in recent years in order to boost the economy and promote growth.

"Our economy is expected to grow by about 6 to 7 per cent in 2009 in spite of the global downturn," she said. "In gender promotion, we're next to Rwanda in the whole of Africa. If you want to change the title of land ownership, it now takes two days. Our agricultural sector grew by 15 per cent last year and we expect a similar growth this year. All these engender economic growth."

She said African countries have embarked on initiatives which encourage good governance, an example being the peer review mechanism under New Partnership for African Development (NEPAD) under which African governments subject themselves to reviews by their counterparts.