Professor Kevin Chika Urama, Vice President for the Economic Governance and Knowledge Management Complex, African Development Bank (AfDB), has asked African Governments to focus on building their economic fundamentals through domestic solutions.
This includes increasing domestic revenue mobilisation, building strong internal relationships and trade, and patronising made in African products.
In addition, African countries must boost productivity and shift from being mainly producers of raw materials, create and indigenous stabilisation Fund and address leakages in its public financial management systems.
Prof Urama, who is also the Acting Chief Economist at AfDB, said, these would make African economies resilient against global shocks like the COVID-19 pandemic, Russia-Ukraine conflict and future shocks.
It would also make Africa, which is the second-largest and second-most populous continent in the world, have sustainable development, create jobs, particularly for its teaming youth and reduce poverty and inequalities.
He said this in an exclusive interview with the Ghana News Agency on the sidelines of the just ended AfDB annual meetings hosted by Ghana.
He said: “The fundamentals of our macroeconomic policy management are ones that we must look at. If you look at our economy, it is structured in a way that global shocks impacts on us significantly.”
Therefore, Africa must increase its domestic revenue mobilisation and not rely more on external financing.
The continent should also boost intra Africa trade for through the African Continental Free Trade Area (AfCFTA).
“We also need to build more inter Africa relationships. Nigeria trading with Ghana, and Ghana trading with Kenya, and so on, and so forth,” the Acting Chief Economist added.
Prof Urama said the implementation of the African Continental Free Trade Area was crucial in ensuring sustainable intra-African trade as it would serve as a way of opening up Africa’s economies for both internal and external traders.
“We need to ensure that we’ll have an industrial policy that allows Africa to produce the goods that we need. As Africans, we need to start consuming African products; buy the Africans clothes and reorient our tastes to the things we produce locally,” he stated.
He indicated that when such things are done: “That way when there is a global shock, we don’t have the impacts as severely as we have seen it now.”
He also said that there was the need for a Stabilisation Fund, which would help push Africa’s fiscal space by providing enough liquidity to countries when it was hit by any crisis.
“Africa is the only region that doesn’t have that…that’s why the African Development Bank has proposed an African Financial Stabilisation Mechanism, to handle debt and re-engage in pro-growth investments through financial buffers,” Prof Urama said.
The United Nations Conference on Trade and Development (UNCTAD) in a 2020 report showed that Africa loses about US$88.6 billion through illicit financial flows including trade mis-invoicing and tax evasion and corruption.
Commenting on this, Prof Urama said: “If we’re able to improve transparency and accountability in our financial mechanisms, and financial systems, we will be able to address some of these issues.”
Before the COVID-19 struck, the International Monetary Fund (IMF) in 2019 observed that four out of the top 10 fastest growing economies were African, and estimated that it would increase to six by 2020.
The African Union (AU), however, reported that due to the pandemic some key sectors of the African economy experienced a slowdown, including tourism, air transport, the oil sector, and loss of jobs.