Domestic demand is the key driver to growth in Africa
As the African Union enters the final day of its 50th anniversary in Ethiopia’s capital today, speeches made yesterday left a lot to be desired as they were more about existing problems rather offering solutions to the one billion people. None of the so called best brains from the continent tackled the issues affecting the continent head on. Even head of states speechwriters failed miserably as most focused on past rather than present and future. In economic field, strong domestic demand will continued to be the engine of growth for development in Africa which posted a 5 percent growth for the last ten years according to His Excellency President Yoweri Kaguta Museveni, Republic of Uganda head of state higher than any other region in the world, except Asia. In particular, I was delighted by President Museveni’s speech because he made it clear that the continent has a long way to catch up with rest of the world.
Those who focused on economic sector, were categorical that continent’s contribution is less than ten percent of global growth as of the first quarter of this year, though the global economy continues to rely on the Africa’s mineral and other raw materials. Luckily, the investor confidence surging and financial markets in Africa is growing and appetite to enter one of the world’s fastest growing region remains solidly high. Me think it is the time for African countries to focus on helping the remaining poor, with more and better quality investments to accelerate inclusive growth under what the new generation of pan Africanists call intra African countries trade. Risks emanating from the euro zone and partly United States have declined since the middle of last year and that has impacted positively on Africa countries main markets in Europe. The recent numbers on agricultural production and producers’ expectations confirm continued solid growth for countries like Uganda, Nigeria and Tanzania.
Movements in high income currencies, such as South Africa’s rand and Botswana Pula, are likely to affect trade and investment flows in the southern African region in the mid term. Most countries in developing Africa are well prepared to absorb external shocks because of their relatively smaller economies, but continued demand boosting measures may be counterproductive, as it could add to inflationary pressures across the continent. In Africa, sound economic management has been effective in dealing with the global economic crisis, which has enabled the continent to remain resilient and sustain growth. I do strongly think that the challenge for policymakers in Africa is to build on these strengths and address short- and long-term challenges with smart policies. For countries that show some signs of inflationary pressures, it would be a good time to rebuild policy buffers. Most African countries could increase productive capacity by investing in infrastructure and human capital, and thus pave the way for continued high and equitable growth.