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The African economy has experienced a notable trend break in recent years – the “average” story is now no longer that of abject poverty and escalating conflict, but rather of how best to attract investment, including in new technologies, to buttress growth and sustain and share its benefits with the population. Still, being in this situation is relatively new for Africa. In past decades the continent had lurched from crisis to crisis without respite and was lauded for its resilience, while its core challenges remained unresolved.
Every second week of February, downtown Cape Town turns into a milling sea of humanity as serious looking chiefs of mining companies, those of their suppliers, and other personalities closely related to the industry stream from one lecture hall to the other and one exhibition to the next in search of new ideas, new machines, and new sources of financing.
It has sometimes been said, unkindly, especially as memory of the G20’s contribution to resolving the global financial crisis recedes into the past, that close to 15 years since its establishment, the G20 is still a movement in search of a cause. The argument continues that the G20 is mainly a means for middling powers to exercise some global influence, while the annual attention paid them during their presidencies lasts. The last couple of years have seen Mexico, Russia, Australia and Turkey take the reins of this far-flung organization.
On the evening of March 16, 2015, I had a very insightful meeting with a high-level delegation of business executives from Japan on the sidelines of the Africa CEO Forum held in Geneva. Together they represented all the top brand names of that industrious country – the trading giant Marubeni, Toyota, Nippon Signal, Daiwa Institute of Research, Green Earth Institute, and Ernst & Young ShinNihon, accompanied by their Associates. The Group was also accompanied by the head of the Bank’s External Representation Office of Asia (ASRO), Masayuki Tamagawa.
On March 18, 2015, the Fed indicated that it could consider raising rates during its June 2015 meeting. However, the market is skeptical, far from convinced of the possibility for faster policy normalization given the fundamentals. Investors are still betting on low interest rates for the longer term that is about 1.8% by 2017, while the Fed’s median projection is about 3%.
The Ivorian Government, with support from the United Nations Development Programme, the African Development Bank and the World Bank organized a well-attended International Conference on Emerging Africa that took place in Abidjan from March 18-20, 2015. The issue of the developmental state and the role it could play in Africa’s emergence took centre stage.
Trade finance is essential for international trade. This financial intermediation helps firms to manage risks inherent in international transactions, improve their liquidity and enable them to optimally invest to enhance their growth. In 2013, the African Development Bank (AfDB) approved a US $1-billion trade finance (TF) program to provide financing to underserved African-based financial institutions and enterprises. Apart from the fact that the need for financing must be acute, there is a great deal we do not know about the trade finance market in Africa due to data limitations.
Africa’s growth resurgence during the past decade and its persistence have taken many watchers of the continent by surprise. The international media have been busy coining labels to match this unexpected turn of fortune – “Africa rising” being the commonest and most misleading label to date. Interestingly, Africa’s recent high growth has also revived general interest in its administrative and planning processes, with national development plans and visions, all but abandoned in past decades, coming back into vogue.
I. Africa’s Growth-Debt Nexus