Cape Town - African governments should be planning for the recovery that
would follow the current global economic slump, President Jacob
Zuma said on Wednesday.
He was speaking in Cape Town at the World Economic Forum on
Africa, at the end of a day of proceedings dominated by the
downturn.
Zuma said that though people were losing jobs in many parts of
the developed world, rich governments were able to respond with
stimulus packages and by deploying existing social welfare systems.
"For most African countries, that are still highly indebted and
dependent on aid for their revenues, the continuation of the
current crisis will mean increased starvation, poverty and child
mortality," he said.
"We must cushion our people against the impact of the crisis as
best we can, but we also need to respond in the spirit of planning
for a recovery."
He said South Africa viewed the economic downturn as providing
both challenges and opportunities for the continent and the
developing world in general.
Two issues that should receive special attention were the need
for a transformed global financial system, and the growing
protectionist measures being taken in developed countries.
A report released at the meeting earlier in the day, co-authored
by WEF, the World Bank and the African Development Bank, said
African governments would be wrong to conclude that free markets
caused the financial crisis and should for that reason be avoided.
"It would be catastrophic for them to backped[al] on policies
that facilitated improved economic performance over the past
decade," the report noted.
Instead, governments should focus on strengthening what was
needed for strong private sector-led development.
In a statement issued with the report, World Bank Africa region
vice president Obiageli Katryn Ezekweli said investing in
infrastructure would cushion the impact of the crisis and position
Africa to take advantage of the rebound in the economy when it
happened.
The countries that would reap the most benefit would be those
that sustained reforms, strengthened governance and modernised
local capital markets.
Reform essential
Speaking in a panel discussion following Zuma's address, former
United Nations secretary-general Kofi Annan echoed Zuma's call for
change in the global financial system.
He said reform of the International Monetary Fund and the World
Bank would be difficult, but was essential.
The world needed institutions that were universal and
democratic, and that therefore had greater legitimacy.
Countries currently on the boards of the two bodies would have
to consider how much power they were willing to give up to make
participation by emerging nations meaningful.
"Those with privileges will have to take a decision."
Annan said there was a risk that the economic crisis would lead
to social instability, just as rising food prices last year had
resulted in protests.
For this reason, foreign partners should not cut back on
development assistance.
- Sapa