African economy at its best

By Paul Busharizi

Africa’s economy is in the best shape it has ever been and is attractive to international investors. However, the continent should not squander this with over borrowing and poor management of that debt.

“As international aid money becomes a challenge, African governments need to work harder to tap international markets for funds. The appetite is there, Africa’s risk profile is better,” said African Development Bank (AfDB) president Donald Kaberuka ahead of his talk at a Bank of Uganda-sponsored public lecture at the Kampala Serena Hotel on Tuesday.

“The challenge will be to build domestic debt market capabilities and manage this debt prudently, if not, there is the risk of going the way of the Asian crisis of 1997.”

In the 1997, an Asian crisis erupted after a series of currency devaluations made it difficult for southeast Asian countries to service their hard currency loans, sending their economies into a tailspin that they are yet to recover from.

Kaberuka, who was to deliver the key note address at the event yesterday, said the continent’s challenge is to transform economic growth into improved welfare for its citizens.

“The single most decisive factor in economic transformation is the provision of quality education, especially for the children of the poor,” he said.

Kaberuka argued that quality education for the poor would ensure that there is no trans-generational transmission of poverty and that the new generation will be better able to benefit from the coming explosion in economic development on the continent, driven by the jump in the capacity to consume when a new productive class comes of age in coming years.