Post date: Aug 06, 2013 5:10:26 PM
African Development Bank (AfDB) president Donald Kaberuka speaks to Reuters Insider aboutAfrica's growth which is forecast to grow by the 4.8 percent this year and 5.3 percent in 2014. Kaberuka warned that the slowdown in major markets like China and in the eurozone threw up risks to the Africa rising narrative.
CAIRO, EGYPT (REUTERS) - Trouble in large emerging markets like China, and the eurozone debt crisis threatens to cast a cloud on Africa's growth prospects if those economies continue to slow, Africa Development Bank (AfDB) President Donald Kaberuka said in an interview with Reuters multimedia platform Insider.
Sub-Saharan Africa's expected GDP growth - forecast at 5.8 percent this year by the AfDB - is the envy of much of the world as parts of the developed West struggle to climb out of recession.Africa is also a pool of oil and minerals especially for big commodities buyers like China.
But China's economy is slowing. Some analysts believe its 2013 growth could slip to as low as 7 percent, and healthy economic growth still looks like a distant prospect for the Eurozone.
"Africa cannot be an island in the world with the slowdown in the large emerging markets, with the continuing malaise in the Eurozone, clearly some of the African countries, especially more open ones like South Africa are affected, however, as I speak to you now, a5 countries will be growing at 7 percent and above. An additional perhaps 15 countries also above 5 percent. We have only five countries, including those you mentioned that are growing below population increase so up to now, the threat has not materialized. We are watching carefully, especially the slowed down demand for commodities," said Kaberuka.
China's trade with Africa surged from about 10 billion US dollars in 2000 to 166 billion in 2011, with much of that an exchange of African minerals for Chinese manufactured goods.
China's ties with Africa date back to the 1950s, when Beijing backed African liberation movements fighting to throw off Western colonial rule. It has built roads, railways, stadiums and pipelines to win access to Africa's oil and minerals like copper and uranium to feed its booming economy.
Many across Africa see China as a valuable counterbalance to the West's influence. But there is mounting discomfort that Africa is not getting enough out of the relationship with the Asian powerhouse.
Kaberuka says the world's economic performance has not yet warranted a revision Africa's growth rate as a whole but it is likely to affect some countries more than others, especially the ones that have very open economic policies.
"I am analysing region by region. Group of countries by group of countries. I think one simple average is not a terribly helpful number," he said.
Kaberuka said AfDB's planned infrastructure fund, designed to use African savings as a base for debt issuance to finance regional infrastructure projects would go ahead despite changes to any inflows from outside funding caused by the economic slowdown of donor countries.
Aid to Africa from the developed world has been cut for the first time in 10 years and the continent needs to look for ways to make that money go further.
AfDB is looking for up to 50 billion US dollars to be issued using the financing vehicle dubbedAfrica 50.
"Unless you can close quickly the infrastructure gap, cut down the number of energy outages, power problems, transport, maritime ports, which are creating huge pressures on the economy, it will be very difficult to maintain 7 percent and above. And so we need to figure out how to finance it differently. For far too long it has been dependant on public funding from rich countries and I think the fund you mentioned, Africa 50, the idea is to leverage the capital markets with transformational projects which enable us to keep making the progress we are making," he said.
In June, Kaberuka told Reuters that developed world mining and energy companies operating inAfrica should pay more taxes to help the world's poorest continent climb out of poverty, sayingAfrica had been "ripped off big time".