African Finance Ministers Speak on Africa's Potential

Published on 3rd May 2010

Mr. Gilbert Ondongo, Minister of Finance, Budget, and Public Portfolio for the Republic of Congo; Mr. Augustine Ngafuan, Minister of Finance of Liberia and  Syda Bbumba, Minister of Finance of Uganda  take questions during the IMF press briefing Webcast. 

Question: The World Bank President recently gave a speech in which he envisioned Africa as a global source of growth, and particularly, he envisioned an Africa which would attract industries, industrial activities, with low added value that can come from China. Is it a view that you share, or not?

Minister Bbumba: Thank you very much. On the issue which has been raised on Africa having the potential to be the source of growth, I think it is there. Africa is highly endowed. In fact, it's the most endowed part of the world in terms of natural resources. The only problem is that we did not have our own capital and we were not allowed to develop our own ideas. If we had been allowed to continue where we are during the pre-independence time, today Africa would be a super industrial state because all the materials required are available in Africa. When you talk about industrialization, the main product for industrialization is steel. There is iron ore in the whole of Africa. There are oil reserves in Africa but they have neither been explored nor exploited. If only our partners could engage us in a more business manner, I think Africa has the potential.

Right now, one of the reasons why Africa is the limping member of the globe is because what we produce is expected as raw commodities. We don't add primary value.

If I can talk about the coffee I'm familiar with, whenever we send a kilo of coffee, we give away 300 percent of the profits and the farmer gets less than 50 percent of the profits. So, if we are able to put up primary industries, certainly Africa would become a source of growth to the entire world. And secondly, we've got human resource. It's untapped. With the introduction of universal education, primary and secondary, we have seen that there has been a sleeping potential. It's not yet fully tapped because the African youth lack skills to be employed and whenever investors are coming to our country, in addition to the equipment and the capital, they also import labor into our country, skilled labor, whereas we have got high unemployment in our countries. So, really, if we are able to address those and get funding and continue with the support we are getting from our partners and others yet to come, I think we'll get there.

Question: My question is following up from the Minister of Uganda on regional and Pan-African ability to negotiate trade agreements. One of the biggest problems, I gather, is the bilateral trade agreements with the EU, U.S. and others, and that's causing a lot of disparity within the African market. How can you have a more regional force or Pan-African force when you deal with the trade people? This goes from South Africa to Ghana, to everybody, and I gather it's a real--it's a big problem, and also for cross regional trade.

Minister Ondongo: We have today on the table the negotiations with the European Union and the framework of the partnership with European Union. It so happens that in Africa and Central Africa, we have a precise negotiating method that has to be regional. The Ministers of Commerce, especially, in the sub-region of Central Africa, have met to have a common negotiating position. This negotiation centers on the fact that EU wants our borders completely open to the European products and vice versa. Obviously, we import more than we export from Europe.

We told them that this is possible, we are not against it. It is something that the World Trade Organization wants but on condition that this be done progressively because nowadays many of our countries depend on the income to function.

Up until now the EU has not been very attentive, the negotiations are still going on, but the good thing is that we all think the same and it's not good only for Central Africa, this goes for all of Africa because we have a common position to negotiate and with the good training of labor in Africa, we have--the proof is that with the WTO and with Europe we negotiate in a respectable way and we have more and more respect about this in Europe and Africa.

Question: Africa needs a stronger focus on regional trade and growth in Africa. Do you think that this is a broader experience from the crisis and could you give us one or two examples how governments can strengthen this?

Minister Ngafuan: From the earlier question concerning what Africa can do, well, one thing that is a fact is that we have huge resource endowments and we've had those endowments for ages, but it's a contradiction that Africa still remains undeveloped. So, it is a question as to whether Africa has gotten fair prices for its resources. Each African country engaging with a partner, a western partner, is like an ant versus a 900 pound gorilla, so coming together, collectivizing strategies in regional integration or trade agreements only makes Africa to have a stronger position. So, we support that heavily because as we proceed, we still have a huge natural resource endowment, especially Liberia--iron ore, rubber, we've--now we still have one of the remaining rainforests in the world, in the face of this--of the climate crisis. But as we exploit these resources, we need better prices. Liberia facing our partners alone may be shortchanged so, it is in every African country's interest to collectivize in these regional blocks, in these trade blocks, in these economic blocks, in order to make sure that we get value for our commodities.

Courtesy: IMF



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