Managing Director of the International Monetary Fund
This week, I’m on my third visit to sub-Saharan Africa within a year. And what a difference a year has made!
This time last year, Africa was swept up into the vortex of the global financial crisis. The global recession struck Africa through several channels—exports collapsed, banks ran into trouble as non-performing loans grew, and investment diminished. Average growth in sub-Saharan Africa fell to 2 percent in 2009 from 5.6 percent the previous year.
But improved policies in the face of the crisis helped the continent get through the storm better than expected and at the IMF we anticipate that Africa will see a relatively quick recovery, with average growth bouncing back to 4½ percent this year and 5½ percent in 2011. African countries were able to take appropriate measures to mitigate the turbulence because policies before the crisis were good, allowing them to build reserves, cut debt, and open up fiscal space to combat the recession.
The achievement is Africa’s, but the IMF and the international community played a role as well—small but important. We, and others, provided assistance during the turbulence and stepped up cooperation through policy advice and analysis.
An advocate for Africa
The IMF’s close partnership with Africa is symbolized by a historic conference that we organized with the Government of Tanzania this time last year that focused on building successful partnerships to meet Africa’s growth challenges.
At that conference, the IMF committed to improving its policies and operational approaches in Africa. And I pledged to ensure Africa’s concerns would be taken into account during the meetings of the Group of Twenty (G-20) industrialized and emerging market countries and be an advocate for Africa. Now, as I visit Kenya, South Africa, and Zambia on my third trip to the region in the past 12 months, I’d like to present the scorecard of how the IMF has delivered on our promises.
- Evenhandedness. We are working to ensure that our policy advice speaks to the needs of all our member countries and we are assisting the G-20 in a process of mutual assessment of their economic policies.
- Sharp jump in lending. We vastly increased our commitments to sub-Saharan Africa, signing new arrangements—or augmenting existing ones—with some 20 countries. In 2009, we committed $3.6 billion in zero-interest lending to Africa, more than three times greater than in 2008. Our total commitments amounted to $5 billion.
- Revamped lending terms. We have revamped our lending, moving toward less intrusive conditionality, focusing on core policy measures that are critical for stability, growth, and poverty reduction. And we make sure lending programs have sufficient measures to protect social spending and pro-poor initiatives.
- Supplementing reserves. To relieve concerns about whether countries would be able to ride out the global financial crisis, IMF members approved a general allocation of Special Drawing Rights, or SDRs—an IMF international reserve asset. The new allocation pumped some $250 billion into the world economy, spread across our 186 members, including African members.
- Better representation. We are working to reform our own governance in part so that our members in Africa and other countries have a larger say in what the IMF does.
- More technical assistance. The IMF will add two new regional technical assistance centers in Ghana and Mauritius to supplement our three well-established regional centers in Tanzania, Mali, and Gabon.
- Catalytic role. We are moving quickly to adopting a more flexible approach to looking at debt dynamics that will help countries, where infrastructure needs are so great, to access the financing they need to meet their development goals.
More challenges ahead
African policymakers met the challenges of the global financial crisis head on, but they still have a daunting to-do list. The region will remain highly vulnerable to commodity price shocks, natural disasters and, in some cases, political instability. How to combat climate change is also a major consideration here in Kenya and elsewhere in Africa.
Over the course of this week, I look forward to discussing with and listening to a broad range of African partners—from heads of state to students, from trade unionists to aid workers, and leaders of civil society as well. Yes, we have come a long way over the past year. But we have still a very long way to go in the task of helping Africa meet the challenges of the 21st century. I will report on my discussions—and my observations—in my next post.