Kaberuka raises African concern about global financial crisis

BY GEORGE KAGAME

The President of the African Development Bank Donald Kaberuka has raised concern about the impact of the ongoing financial crisis in developed nations on African economies.

Speaking at the United Nations International Conference on Financing for Development's event on Africa meeting in Doha earlier in the week, Kaberuka said the current international crises in the finance sector, high fuel and food prices, Africa was to be affected in keeping commitments on Official Development Aid, on aid effectiveness, on trade reform is now "critical" and more urgent than ever. The conference brought together international economists from the UN and senior governments officials drawn across the globe.

"There is now little doubt the financial crisis will, and is already impacting on African economies through multiple channels; which cumulatively, are leading to slowdown and contraction of the economies of many countries in Africa. The result is lower government revenues, fiscal retrenchments, cutbacks in social programs, infrastructure projects abandoned business closures and strains in the banking sector"

Doha is also the same venue where the World Trade Organization launched the Doha Development Round in 2002. The Doha Round is remembered for starting the promotion of aid and trade relationships between developing and donor countries. The Doha Round talks also offers global leaders the chance to underscore their commitment to meeting the Millennium Development Goals (MDGs) and to reassure poor nations that the fierce economic conditions enveloping us today will not lead rich countries to scale back their efforts at reducing poverty in the developing world.

Experts and African leaders have voiced their fear and concerns about the ongoing credit crunch in the US and Europe, where consumers have borrowed more money from banks than the banks actually have in their control, powerful banks in the US and housing finance instituions have run bankrupt, merged or closed. In the process affecting other investment sectors of the economy. As a result, it has been feared that developed countries especially the US which contribute significantly to the donor aid that runs Africa would be affected as budget priorities of the rich nations change.

Kaberuka reaffirmed the African Development Bank's commitment to boost its support to the private sector, to help in ensuring that vital key infrastructure projects are not abandoned, to enable banks to continue accessing trade finance and to work with Governments and business to ensure momentum on business reform does not slip back. He highlighted that the financial crisis comes on top of the impact of escalating food and oil prices where many African countries were straining from protests and demonstrations by citizens against government for high fuel and food prices.

In a letter addressed to the same conference, Pascal Lamy, director-general of the World Trade Organization has also called upon developed nations to show their deeds that they remain committed to helping developing countries grow through trade and aid.

He said that with the global financial system in crisis today, the international economy is bracing for the worst economic recession since the 1930s. Lamy wrote that because of the current "tough times" in the world "it will be easy for politicians to blame foreigners for their nations' ills, shutting foreign products out of their markets and slashing foreign aid budgets." He also said that the WTO was happy with the decision recently by the 20 major economies in the world to pledge publicly a moratorium on the imposition of new barriers to trade in the coming 12 months.