Africa Sees Opportunity
in Enduring Global Financial Crisis
October 13, 2012
Africa, overall, is weathering the global financial crisis better than
other parts of the world. While finance ministers from the continent
express concern about uncertainties still ahead, they note the downturn
in North America and Europe has created investment and borrowing
opportunities for African nations.
Many African countries are expecting double-digit economic growth over
the next five years, hoping to launch themselves into the ranks of
middle-income countries, which would propel millions of people out of
Among such countries is Rwanda, which is a beneficiary of investors'
growing interest in purchasing sovereign debt of African countries with
Much of the money will be used for badly needed infrastructure projects.
Rwanda's finance minister, John Rwangombwa, dispels concern that African
countries with easier access to credit will once again fall into a debt
"The payback from these infrastructure projects is very high, to the
extent that, apart from its financial viability, it has also this
economic impact to the entire economy," he said. "So we don't see any
possibility of going back into the debt trap. Our debt numbers today are
very low. Today we are talking of Western countries being in 200 percent
of their GDP in terms of debt stock. For example, in Rwanda we are
around 22 percent. So the room is still very big.”
Namibia, with its lucrative diamond and uranium mines as well as recent
outside interest in offshore oil exploration, is still experiencing
growth. But since the global economic crisis began four years ago, it
has exhausted its fiscal surplus.
Namibia's finance minister, Saara Kuugongelwa-Amadhila, is concerned a
protracted eurozone crisis will further delay much-desired additional
foreign direct investment.
“That would have a negative dampening impact on the inflows of
investment. But we continue with our efforts in order to improve on the
attractiveness of the country. We continue with our capital market
reforms and the building of infrastructures, investment in skills
provision and generally making the environment conducive for those that
would want to invest in the economy,” said Kuugongela-Amadhila.
Yansane, the finance minister of Guinea, agrees the international
economic climate has not brought in enough investment to satisfy
peoples' expectations. But he notes Guinea is among developing countries
enjoying more flexibility when it comes to finding partners for
infrastructure projects and from which to borrow money.
Yansane says there is diversification now and no longer a need to rely
exclusively on the International Monetary Fund and the World Bank. Those
institutions now have competition from China, India and others.
The three African ministers are not alone in expressing the need for
African nations to boost trade with each other.
One major barrier to intracontinental trade is the lack of a
transportation network capable of moving large-scale shipments from one
country to another, reliably and quickly. African leaders agree that an
improved, integrated infrastructure would help their region become even
more resilient to costly fluctuations by the global economy.