Globalization and Africa
Africa has not benefited as much as it should have from greater economic openness and sound macroeconomic management, Governor Charles Konan Banny of the Dakar-based Central Bank of West African States told IMF Executive Directors at a November 14 seminar at IMF headquarters.
“From the African standpoint, globalization—although perceived as unavoidable and irreversible—is frequently treated as an economic and financial phenomenon whose benefits and risks are unevenly distributed between rich and poor countries,” Banny said.
African countries recognize that opening up to the outside world is the basis for growth, prosperity, and development. A number of them have committed themselves to pursuing sound macroeconomic policies and liberalization since the early 1980s, but results to date have been mixed, at best.
Several domestic and international factors explain this state of affairs, Banny suggested. In Africa, he pointed to the impact of armed conflicts, political and social instability, neglect of human development, and an uncertain business environment that saps private investment. Elsewhere, protectionism in industrial countries, worsening terms of trade, and declining levels of official development assistance have also been important constraints to growth.
According to Banny, overcoming these challenges will depend on Africa’s own efforts and the support of the international community. Political leadership is required to implement a new generation of policies that can bring about prosperity, reduce poverty, and raise standards of living to acceptable levels. A longer-term perspective that goes beyond simply achieving short-term financial equilibrium is also needed. Trade liberalization in industrial countries, stronger governance and respect for the rule of law, greater capacity-building efforts, and additional debt relief and development assistance to finance investments in education, health, and infrastructure will all help Africa achieve its development goals.
In concluding, Banny stressed the need for new instruments in the international financial institutions to support integration projects and programs that could modernize economic structures and accelerate regional growth.