African governments urged to mobilise resources for development

Accra, June 2, GNA - Dr John Kwakye, Senior Economist at the Institute of Economic Affairs (IEA), has called on African governments to mobilize resources to support their developmental programmes to reduce their dependence on unpredictable and burdensome external resources.

"Developing domestic capital markets should be a priority as a vehicle for mobilizing resources to fund infrastructure projects and projects and programs of corporations and municipalities," he said.

Dr Kwakye made the called during a roundtable on the theme: "Mitigating the Costs of Washington Consensus Policies: Tit bits for Ghana and other African Countries" in Accra on Wednesday.

He said the underlying philosophy of the Washington Consensus (WC)policies was the superiority of the markets and private enterprise over systems characterized by economic controls and "statism".

"WC policies, however, come with costs in the sense that, despite their claim to efficiency, markets do not always work perfectly and do not always deliver maximum economic and social welfare," he explained.

For this reason, Dr Kwakye urged African governments to intervene directly to correct the associated market failings and to mitigate the socio-economic costs.

He said WC policy advice to African countries included: promotion of specialisation in production and trade; promotion of private enterprise generally in the economy; elimination of state subsidies, particularly to industry and agriculture; external trade liberalization; liberalization of financial markets; macroeconomic retrenchment and liberalization of product markets.

He noted that African governments needed to manage economic liberalization policies prescribed to them so as to correct their market failings and mitigate the associated costs.

Dr Kwakye said often African governments go to the negotiation table ill-prepared and, therefore, ready to accept whatever measures thrown to them. He urged African governments to put their case forcefully across as to why a particular WC policy was flawed in part or in whole.

Dr Kwakye suggested that state intervention should include: selective privatizations, targeted subsidies and selective trade 93protections," "regulation" of financial markets, macro-economic restructuring, and 93regulation" of product markets.

Mr Seth Tekper, Deputy Minister of Finance and Economic Planning,commended IEA for choosing such a theme for discussion and expressed the hope that governments would take lessons from the suggestions.