NAIROBI, Kenya, Mar 17 – African countries are yet to experience the worst of the negative effects of the global economic crunch, analysts said on Tuesday.
African Development Bank (AfDB) Chief Economist Lois Kasekende said the bank is forecasting a reduced growth of 2.5 percent for the region as opposed to the 5.8 percent that had earlier been predicted.
“This is really taking us back to the 80’s and to the early 90’s when Africa registered those growth rates. We have recently enjoyed growth rates of about 5.6 on average,” Mr Kasekende said.
He revealed that the region would lose $634 billion in terms of projected export revenues.
AfDB’s predictions come just a day after the Central Bank of Kenya Governor Professor Njuguna Ndungu predicted a 3.6 percent GDP growth for the country.
Speaking during a forum on the global financial crisis, Mr Kasekende said according to statistics collected by AfDB, most African countries grew at less than one percent in January of 2009.
“For most of the countries in the region there is transition from an economic to a development crisis,” Mr Kasekende said.
He said use of fiscal instruments may not necessarily improve the situation as the effects have more to do with the loss of confidence.
Mr Kasekende is recommending the introduction of stimulus packages in the various African countries to mitigate these effects.
“Regional banks need to show some flexibility as regards countries not meeting their targets (on repayment) of loans,” he said.
These revelations come as Finance Minister Uhuru Kenyatta sought to reassure the public and private sectors that the government was working to cushion the economy from these negative repercussions.
“Every crisis has the benefit of giving that silver lining and as we actually go out there and say what we have to face the challenges we face,” he said.
“We must also look at this as an opportunity to one; rectify that which we need to rectify so that we can withstand further shocks but also to take advantage,” Mr Kenyatta said.
He cited the Sh5 billion youth employment plan recently launched as a stimulus package while revealing that two more board members for the new Capital Markets Authority Board had been picked.
“I will reveal the names of these two in due course,” he said.