Transform economies to mitigate pain of global economic crisis

Accra, April 6, GNA - World Bank Vice President for Africa Obiageli Ezekwesili has challenged countries in Africa to use the global economic downturn as an opportunity to rapidly transform their economies through diversifying sources of growth, reforming policies, and strengthening governance, a release from the Accra Office of the Bank said on Monday. It said Ms Ezekwesili, who speaking at a national Indaba on the impact of the global economic crisis on Zambia, said transforming economies required political will at the highest levels, accountability for results by both leaders and citizens, and plans that are supported by the right policies.

"All too often I hear leaders tell me that their countries would develop faster if they had more resources. I believe that resources without the right policies will not work. If the policies are right, resources normally follow," Ms. Ezekwesili said.

She said countries ought to reform to create an enabling environment for both local and foreign investors. "After this crisis ebbs, foreign investors will return but they will be cautious and invest first in those countries that have kept to the reforms they had initiated," she said. Ms. Ezekwesili added that investors would also be interested in countries that have demonstrated a willingness to strengthen governance and embraced the rule of law.

Ms. Ezekwesili noted that much as the global crisis did not originate from Africa, it had not left the Continent unscathed. She said Africa has suffered the impact of the global crisis through different ways that included reduced investment and a rapid decline in commodity prices. It has been even tougher for countries that depend on one commodity. So, she said, African countries needed to cushion themselves from future economic shocks by diversifying their economies. Basing her proposal on Zambia's dependence on copper, and the country's boom and bust experiences with the metal, she said diversifying sources of growth was a more certain way to sustainable development. "Imagine a Zambia without copper?" she challenged.

She cited agriculture as an important source of growth that Zambia, just like many other countries, ought to refocus on to diversify economies. Growth originating from agriculture is four times more effective in raising incomes of the poor than growth from outside agriculture, according to the World Bank's 2008 World Development Report. For example, even though copper has been a backbone of Zambia's economy, it does not appear to have improved lives of the rural poor.

During the past five years, the rate of growth of agriculture in Zambia was less than one percent per year, despite large expenditure increases in a fertilizer support programme. The World Bank Vice President noted that for agriculture to grow, much more was needed than fertilizer. "Agriculture development is not just about agriculture - it must also be about roads, especially feeder roads that allow the rural farmer to access markets in Lusaka; about the farmer using mobile telephony to access market information that will ensure that she gets the best value for her products," she said. "It is also about access to energy if Zambia is to see an emergence of agribusiness; and it has also got to be about policies in the petroleum sector to help to reduce the very high prices of fuel that have such a strong effect on transport costs," she said. To succeed in its diversification, Ms. Ezekwesili added that Zambia must also invest in its human capital. Ms. Ezekwesili's call on right policies and diversification were echoed by a representative of Mauritius at the Indaba who said timely policy changes and transparency in reforms were keys to his country's economic success.

Mr. Dev Chamroo, Director of Policy and Planning at the Board of Investment of Mauritius, said policies to consolidate and diversify from sugar business saw sugarcane's contribution to GDP decline from 98 percent of GDP in 1998 to 3% in 2008. Mauritius has expanded growth drivers from sugar to ICT, tourism, and textiles, and amended legislation and policies to make doing business easier. The World Bank's 2009 Doing Business 2009 Report ranks Mauritius as the top reformer in Africa.

Dubbed the G500 after the number of delegates at the Indaba, the Zambian conference is the first of its kind in Africa to discuss the impact of the global economic downturn at national level. The Indaba was attended by Zambian President Rupiah Banda and the country's two former presidents Kenneth Kaunda and Frederick Chiluba and a cross section of Zambian stakeholders and foreign delegates. President Banda outlined how the crisis has affected growth prospects in his country. The major impact point has been the mining sector where he said jobs have been lost resulting in income loss in households and rapid decline of the quality of life. He said Government's ability to mobilize revenue has been affected, and the reduced foreign exchange was affecting procurement of fertiliser for agriculture. He however said Zambia was determined to use its collective wisdom and experiences from other countries to face the challenge and diversify the economy as a safety measure for the future. 6 April 09