AFDB Sees Africa Growth, Fears Climate Change
Date: 13-Dec-07
Country: UK
Author: Peter Apps
Donald Kaberuka said there had been a colossal change in investor sentiment towards the world's poorest continent and that despite global credit problems African countries were finding it easier to borrow money.
"The current economic growth in Africa... will continue for some time because of commodities and Chinese and Indian investment," Donald Kaberuka told Reuters in an interview. "Next year we should have 6.5 (percent) or I hope 7 percent."
Economic growth is expected to be around 6.5 percent this year, he said.
But he warned this concealed a huge variation within the continent ranging from double-digit growth in oil producers such as Angola to economic contraction in the poorest economies such as Guinea-Bissau.
Citing the success of Ghana's recent international bond issue, he said many African countries were sufficiently appealing to investors that they would continue to find it easier to borrow money despite the global credit crunch.
"In terms of second-round effects -- the wider effect on the global economy -- there may be some impact on Africa," he said. "But in terms of first-round effects they should not be much because there is not so much exposure to world capital markets."
A NEW INDIA?
Ghana sold a US$750 million Eurobond in September to huge demand, and former Rwandan finance minister Kaberukasaid he expected further good investor interest in Kenya's planned US$300 million Eurobond due to be sold next year.
Foreign direct investment was also growing, he said, not only in oil and gas on the back of rising crude prices but also in mining, telecommunications and other fields.
He said he believed the total figure was likely around US$46 to 47 billion a year, but was difficult to estimate given a lack of exact figures on how much China -- now one of the largest players in Africa -- was investing.
"in some ways, we are maybe where India was in the early 1990s," he said. "We are at the point where Africa is no longer an object of just pity and aid."
While risk in Africa was seen to have fallen and conflict was now largely restricted to Somalia, Sudan's Darfur region and the eastern Democratic Republic of Congo, he said poor infrastructure continued to deter many investors and was therefore a priority for the bank, which makes soft loans to the continent's poorest countries on relatively easy terms.
Corruption was also down, he said, and could be tackled further by helping build stronger institutions.
But in the longer run he said climate change could slash gross domestic product (GDP) in some countries by as much as 20 percent, with agricultural economies worst affected.
"If you look at where the new investment is going it is in mining, telecommunications and the commercial sector," he said. "The countries that develop those may be able to manage but those based on agriculture will be hit very hard."
Boosting Africa's ability to adapt was therefore another key goal for the bank, he said, which this week received pledges of US$8.9 billion for its next three year concessional lending cycle.
"Look at Bangladesh," he said. "As the waters rise there rice farmers are switching to things like shrimp. We need to do the same."
(reporting by Peter Apps; Editing by Ron Askew)
