UNDP Africa Chief warns African countries of
dangers of complacency, inflationary pressures
and the potential for political instability
31 October, 2011 | By Keffyalew Gebremedhin
--------------------------------------------------------------------
performers in terms of economic growth. Nevertheless, he stressed
that, in spite of this improved performance underpinned by strong
domestic demand, political stability and avoidance of major conflicts,
the region needs to be watchful of the downside risks to growth.
While the external environment is generally favorable to Africa
especially taking into account the high commodity prices helping net
exporters of oil and minerals, as well as exports of some agricultural
products (especially cocoa, coffee, and cotton), he pointed out that,
“Two other risks – not continent-wide but affecting several African
countries – relate to inflationary pressures and the potential for
political instability.”
In explaining this, he underlined, “Political instability remains a threat
to the economic performance of the continent, as the events in North
Africa and elsewhere in the continent this year illustrated so
dramatically. Risks are often heightened at the time of elections, and
next year there will be at least 15 countries with either presidential,
parliamentarian, or local elections.”
In respect of the green economy, that Meles dwelt on at length in his
welcoming speech on behalf of the host country of the Sixth Economic
Conference (October 25-28), Gettu stressed:
FULL TEXT OF TEGEGNEWORK GETTU’S SPEECH AT
THE SIXTH AFRICA ECONOMIC CONFERENCE
“As we enter the second decade of the 21st century, there is much to
celebrate about the recent economic performance of African
economies. According to the African Economic Outlook, which we
produce jointly with the co-organizers of this conference and the
OECD, Africa grew on average 5% per year for nearly a decade
prior to 2009, compared with stagnation and even reversals in income
per capita during the 1980s and 1990s. The region is now consistently
ranked among the top performers in terms of generating economic
growth. The AEO projections suggest that robust growth for this year.
In sub-Saharan Africa, the AEO projects 5.7 percent growth for
2011 – excluding Ivory Coast, up from 5 percent in 2010. For the
continent as a whole, the AEO projects 5.8 percent growth for 2012.
The good economic performance projected for this year and next is
underpinned by strong domestic demand, the continuation of
improved economic policies in most African countries, and an
expectation of political stability and avoidance of major conflicts. The
external context is also generally favourable to the continent, with high
commodity prices helping net exporters of oil and minerals, as well as
exports of some agricultural products (especially cocoa, coffee, and
cotton).
Yet, we cannot be complacent. Among the downside risks to growth
in Africa is the prospect of worsening economic conditions in
developed economies. Concerns remain about the European debt
crisis and growth has yet to pick up steam in North America.
Emerging economies are doing well, but they still do not represent
enough of the global economy – and of the trade and financial
transactions with Africa – to compensate fully for an eventual sharp
drop in demand from developed countries.
If these downside risks materialize, the continent may be facing some
of the same challenges it encountered during the 2008-2009 global
recession. While many African countries fared well – those less
integrated through trade or finance into the global economy – others
were hit hard, especially middle-income and oil-exporting economies.
Two other risks – not continent-wide but affecting several African
countries – relate to inflationary pressures and the potential for
political instability.
Inflation is high and increasing in a number of countries, especially in
East Africa. Rapid demand growth is coming against supply
constraints and high commodity, especially food, prices driven by
external and local factors (for example, the drought in the Horn of
Africa) are adding to inflationary pressures.
Political instability remains a threat to the economic performance of
the continent, as the events in North Africa and elsewhere in the
continent this year illustrated so dramatically. Risks are often
heightened at the time of elections, and next year there will be at least
15 countries with either presidential, parliamentarian, or local elections.
This conference is looking beyond the shorter term economic
prospects for the continent and into one of the biggest issues facing
Africa and the world today: How to promote structural transformation
for sustainable development?
The timing of the conference is particularly timely. The Africa regional
preparatory conference for the UN Conference on Sustainable
Development was held yesterday and today. African leaders debated
how to take a common position to Rio +20 that effectively integrates
the economic, social and environmental pillars that make up
sustainable development. This carries forward already on-going
initiatives by the African Union and the NEPAD Agency.
The transition to a green economy needs to be managed in such a way
that growth is sustained, and that the benefits from the growth process
we have seen in terms of falling poverty levels in Africa in recent
years, are further enhanced. As we discuss in detail in the African
Economic Outlook—economic growth in Africa is less effective in
terms of reducing poverty than in other regions. Making the growth
process more green and making it more inclusive are two objectives
that must go hand in hand.
No doubt a green global economy is critical for advancing the well-
being of current and future generations especially in Africa. Countries
that have the highest levels of human development also have the
largest ecological footprint and the highest carbon emissions. But for
Africa the opposite is the case; the continent has the lowest level of
human development of all regions and contributes the least to the
impacts of unsustainable global practices, yet the continent is also the
most vulnerable to climate change.
African countries must achieve much-needed advances in human
development without replicating the unsustainable practices of those
already there. And they need to improve the utilisation of their natural
resources, including the new discoveries of minerals and hydro-
carbons, such that critical environmental systems functions that are
preserved and so that the human development of current and future
generations is maximised.
The move towards more sustainable development will need to
consider the short and long term social development and
environmental costs of some current economic activities.
If necessary, direct regulation must be applied and mechanisms for
compliance put in place. This will mean that the costs of environmental
degradation and pollution are internalised and borne by those who are
responsible for it, that utilisation of natural resources is done at
sustainable rates, and that critical thresholds are not crossed.
It is particularly important to create a stable regulatory environment
that gives the right signals to the private sector to avoid unsustainable
practices, and to stimulate new technologies and businesses. Public
and private investment will need to flow to these activities, but it will
be more difficult to mobilize private financing in a context of regulatory
uncertainty.
It is important to recognize that there will be costs and that some
segments of the population will need support during the adjustment
process. It will therefore be critical to put in place mechanisms that
cushion especially the most vulnerable during the transition to more
sustainable economies.
The longer term impacts on human development from this transition
are likely to be substantial. For instance, universal access to clean
energy will cause less stress on the environment on which the poor are
so dependent, free-up valuable time such as that spent by women and
children collecting fire-wood, reduce illnesses from indoor respiratory
diseases, and generate the power needed by small businesses.
More efficient management of natural resources is particularly critical
for Africa. With demand growing for raw materials and high prices of
commodities, with improved techniques for survey and exploration,
and with more political stability, more and more African countries are
looking to develop their extractive industries and to mine their natural
resource wealth. Managing the risks of natural resource extraction
means that countries will need to first effectively capture the rents and
then make wise use of these rents.
In a sustainable and inclusive growth process this will imply spending
some of the rents on the pressing consumption needs of the poorest,
while investing substantially in other types of capital, especially in
health, education and infrastructure that can expand and diversify the
productive sector of the economy.
It is a particular challenge for policy makers and experts at this
conference to come together with practical tools and empirical
evidence on how to strengthen regional, national and sub-national
policies to stimulate this transition.
From the side of UNDP and other sister agencies, we remain
committed to working with African countries to meet the national
needs and priorities for sustainable development in Africa. We will
leverage our experience in supporting countries in measuring human
development, tracking the MDGs and support the work on new and
better measures of sustainable development.
Our role as knowledge-broker and facilitator of South-South
solutions, in partnership with colleagues at the African Union, AFDB,
UNECA and other institutions, will remain essential in our support to
develop country-owned strategies for achieving agreed sustainable
development goals and targets.”
(http://transformingethiopia.wordpress.com/)
---------------------------------------------------------------------------------
The writer was a former civil servant and diplomat in the Ethiopian
government. Later he served as International Staff with the United Nations
and is currently in retirement, devoting his time for research and writing.
He can be reached at kef730@gmail.com.
dangers of complacency, inflationary pressures
and the potential for political instability
31 October, 2011 | By Keffyalew Gebremedhin
--------------------------------------------------------------------
- In a prepared remark on behalf of
the UNDP Administrator at the
opening of the Sixth Africa
Economic Conference on 25
October 2011, UN Assistant
Secretary General and UNDP
Director of the Regional Bureau for
performers in terms of economic growth. Nevertheless, he stressed
that, in spite of this improved performance underpinned by strong
domestic demand, political stability and avoidance of major conflicts,
the region needs to be watchful of the downside risks to growth.
While the external environment is generally favorable to Africa
especially taking into account the high commodity prices helping net
exporters of oil and minerals, as well as exports of some agricultural
products (especially cocoa, coffee, and cotton), he pointed out that,
“Two other risks – not continent-wide but affecting several African
countries – relate to inflationary pressures and the potential for
political instability.”
In explaining this, he underlined, “Political instability remains a threat
to the economic performance of the continent, as the events in North
Africa and elsewhere in the continent this year illustrated so
dramatically. Risks are often heightened at the time of elections, and
next year there will be at least 15 countries with either presidential,
parliamentarian, or local elections.”
In respect of the green economy, that Meles dwelt on at length in his
welcoming speech on behalf of the host country of the Sixth Economic
Conference (October 25-28), Gettu stressed:
- The transition to a green economy needs to be managed in
such a way that growth is sustained, and that the benefits
from the growth process we have seen in terms of falling
poverty levels in Africa in recent years, are further
enhanced. As we discuss in detail in the African Economic
Outlook—economic growth in Africa is less effective in
terms of reducing poverty than in other regions. Making
the growth process more green and making it more
inclusive are two objectives that must go hand in hand.
No doubt a green global economy is critical for advancing
the well-being of current and future generations especially
in Africa. Countries that have the highest levels of human
development also have the largest ecological footprint and
the highest carbon emissions. But for Africa the opposite is
the case; the continent has the lowest level of human
development of all regions and contributes the least to the
impacts of unsustainable global practices, yet the continent
is also the most vulnerable to climate change.
African countries must achieve much-needed advances in
human development without replicating the unsustainable
practices of those already there. And they need to improve
the utilisation of their natural resources, including the new
discoveries of minerals and hydro-carbons, such that
critical environmental systems functions that are preserved
and so that the human development of current and future
generations is maximised.The move towards more
sustainable development will need to consider the short
and long term social development and environmental costs
of some current economic activities.
FULL TEXT OF TEGEGNEWORK GETTU’S SPEECH AT
THE SIXTH AFRICA ECONOMIC CONFERENCE
“As we enter the second decade of the 21st century, there is much to
celebrate about the recent economic performance of African
economies. According to the African Economic Outlook, which we
produce jointly with the co-organizers of this conference and the
OECD, Africa grew on average 5% per year for nearly a decade
prior to 2009, compared with stagnation and even reversals in income
per capita during the 1980s and 1990s. The region is now consistently
ranked among the top performers in terms of generating economic
growth. The AEO projections suggest that robust growth for this year.
In sub-Saharan Africa, the AEO projects 5.7 percent growth for
2011 – excluding Ivory Coast, up from 5 percent in 2010. For the
continent as a whole, the AEO projects 5.8 percent growth for 2012.
The good economic performance projected for this year and next is
underpinned by strong domestic demand, the continuation of
improved economic policies in most African countries, and an
expectation of political stability and avoidance of major conflicts. The
external context is also generally favourable to the continent, with high
commodity prices helping net exporters of oil and minerals, as well as
exports of some agricultural products (especially cocoa, coffee, and
cotton).
Yet, we cannot be complacent. Among the downside risks to growth
in Africa is the prospect of worsening economic conditions in
developed economies. Concerns remain about the European debt
crisis and growth has yet to pick up steam in North America.
Emerging economies are doing well, but they still do not represent
enough of the global economy – and of the trade and financial
transactions with Africa – to compensate fully for an eventual sharp
drop in demand from developed countries.
If these downside risks materialize, the continent may be facing some
of the same challenges it encountered during the 2008-2009 global
recession. While many African countries fared well – those less
integrated through trade or finance into the global economy – others
were hit hard, especially middle-income and oil-exporting economies.
Two other risks – not continent-wide but affecting several African
countries – relate to inflationary pressures and the potential for
political instability.
Inflation is high and increasing in a number of countries, especially in
East Africa. Rapid demand growth is coming against supply
constraints and high commodity, especially food, prices driven by
external and local factors (for example, the drought in the Horn of
Africa) are adding to inflationary pressures.
Political instability remains a threat to the economic performance of
the continent, as the events in North Africa and elsewhere in the
continent this year illustrated so dramatically. Risks are often
heightened at the time of elections, and next year there will be at least
15 countries with either presidential, parliamentarian, or local elections.
This conference is looking beyond the shorter term economic
prospects for the continent and into one of the biggest issues facing
Africa and the world today: How to promote structural transformation
for sustainable development?
The timing of the conference is particularly timely. The Africa regional
preparatory conference for the UN Conference on Sustainable
Development was held yesterday and today. African leaders debated
how to take a common position to Rio +20 that effectively integrates
the economic, social and environmental pillars that make up
sustainable development. This carries forward already on-going
initiatives by the African Union and the NEPAD Agency.
The transition to a green economy needs to be managed in such a way
that growth is sustained, and that the benefits from the growth process
we have seen in terms of falling poverty levels in Africa in recent
years, are further enhanced. As we discuss in detail in the African
Economic Outlook—economic growth in Africa is less effective in
terms of reducing poverty than in other regions. Making the growth
process more green and making it more inclusive are two objectives
that must go hand in hand.
No doubt a green global economy is critical for advancing the well-
being of current and future generations especially in Africa. Countries
that have the highest levels of human development also have the
largest ecological footprint and the highest carbon emissions. But for
Africa the opposite is the case; the continent has the lowest level of
human development of all regions and contributes the least to the
impacts of unsustainable global practices, yet the continent is also the
most vulnerable to climate change.
African countries must achieve much-needed advances in human
development without replicating the unsustainable practices of those
already there. And they need to improve the utilisation of their natural
resources, including the new discoveries of minerals and hydro-
carbons, such that critical environmental systems functions that are
preserved and so that the human development of current and future
generations is maximised.
The move towards more sustainable development will need to
consider the short and long term social development and
environmental costs of some current economic activities.
If necessary, direct regulation must be applied and mechanisms for
compliance put in place. This will mean that the costs of environmental
degradation and pollution are internalised and borne by those who are
responsible for it, that utilisation of natural resources is done at
sustainable rates, and that critical thresholds are not crossed.
It is particularly important to create a stable regulatory environment
that gives the right signals to the private sector to avoid unsustainable
practices, and to stimulate new technologies and businesses. Public
and private investment will need to flow to these activities, but it will
be more difficult to mobilize private financing in a context of regulatory
uncertainty.
It is important to recognize that there will be costs and that some
segments of the population will need support during the adjustment
process. It will therefore be critical to put in place mechanisms that
cushion especially the most vulnerable during the transition to more
sustainable economies.
The longer term impacts on human development from this transition
are likely to be substantial. For instance, universal access to clean
energy will cause less stress on the environment on which the poor are
so dependent, free-up valuable time such as that spent by women and
children collecting fire-wood, reduce illnesses from indoor respiratory
diseases, and generate the power needed by small businesses.
More efficient management of natural resources is particularly critical
for Africa. With demand growing for raw materials and high prices of
commodities, with improved techniques for survey and exploration,
and with more political stability, more and more African countries are
looking to develop their extractive industries and to mine their natural
resource wealth. Managing the risks of natural resource extraction
means that countries will need to first effectively capture the rents and
then make wise use of these rents.
In a sustainable and inclusive growth process this will imply spending
some of the rents on the pressing consumption needs of the poorest,
while investing substantially in other types of capital, especially in
health, education and infrastructure that can expand and diversify the
productive sector of the economy.
It is a particular challenge for policy makers and experts at this
conference to come together with practical tools and empirical
evidence on how to strengthen regional, national and sub-national
policies to stimulate this transition.
From the side of UNDP and other sister agencies, we remain
committed to working with African countries to meet the national
needs and priorities for sustainable development in Africa. We will
leverage our experience in supporting countries in measuring human
development, tracking the MDGs and support the work on new and
better measures of sustainable development.
Our role as knowledge-broker and facilitator of South-South
solutions, in partnership with colleagues at the African Union, AFDB,
UNECA and other institutions, will remain essential in our support to
develop country-owned strategies for achieving agreed sustainable
development goals and targets.”
(http://transformingethiopia.wordpress.com/)
---------------------------------------------------------------------------------
The writer was a former civil servant and diplomat in the Ethiopian
government. Later he served as International Staff with the United Nations
and is currently in retirement, devoting his time for research and writing.
He can be reached at kef730@gmail.com.
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