PM Bemoans Africa’s Economic Status


By Mbatjiua Ngavirue WINDHOEK The African continent as a whole remains a marginal player in world economic affairs especially in terms of trade and investment flows, says Prime Minister Nahas Angula. He said this as he officially opened the 30th Ordinary Meeting of the Assembly of Governors of the Association of African Central Banks (AACB) in Windhoek on Friday. Angula noted that Africa’s share of merchandise exports fell from a high of 6.3% in 1980 to 2.5% in value terms in 2000. Africa’s share of world manufactured exports remained unchanged at 0.8% during the last two decades, while that of Asia grew from 7.1% in 1980 to over 21.5% today. In terms of Foreign Direct Investment inflows, Africa’s world share only grew from 1.8% in 2002 to 3% in 2004 while that of developing Asia grew from 12% to 21% during the same period. There are a host of reasons that explain Africa’s inability to trade itself out of this situation, he said. These include supply side constraints, infrastructure bottlenecks and above all a narrow industrial base and shortage of appropriate skills. Africa therefore has to develop its capacity in order to become a competitive producer for the world market, and there is no doubt governments have the primary responsibility to address these issues. “In Namibia, our government has already embarked on initiatives to address the issues of skills training, export diversification, export competitiveness and development of infrastructure as some of the priority intervention areas,” Angula said. Turning to the role of central banks, he said that as specialised arms of government they had crucial special responsibilities in the macro-economic management process. The best way in which central banks could contribute to economic growth and employment would be to improve long-term growth prospects through maintaining and keeping low levels of inflation. The objective of low inflation stemmed from the belief that high inflation generates harmful effects on the economy. These include difficulties in generating higher growth rates and employment in the long term, as well as uncertainties for cash projection leading to increased investment risks. Inflation, he said, not only erodes purchasing power but also serves as a disincentive to saving. “Low and stable inflation allows people to make spending and investment plans with a greater sense of confidence about the future. “Keeping inflation low and stable is thus essential to keeping the economy on the path for long-term growth and employment creation,” Angula stated. He expressed support for the African Monetary Co-operation Program (AMCP) though which many African central banks had achieved, or were making good progress towards achieving, a single digit inflation target. “From the fiscal side, we as government will do our utmost best to minimise the adverse effect of fiscal policy on monetary targets agreed on in the context of AMCP, such as single digit inflation,” Angula promised. The Prime Minister praised the significant progress made by the Bank of Namibia in collaboration with domestic banks in reforming and modernising the national payment system. This initiative was aimed at ensuring the soundness, safety, efficiency and integrity of the system. The reforms entail the introduction of a real-time settlement system at the Bank of Namibia, which is a modern and secure way of concluding financial transactions. He said the automation of the cheque clearing process in particular has benefited many people. It had resulted in a reduction in the period within which cheques are cleared from three weeks to less than seven days, thus reducing risks and facilitating transactions.