By Kabanda Chulu and Mutale Kapekele in Livingstone
Tuesday August 14, 2007 [15:42]
FORMER Mozambican President Joachim Chissano has urged African countries to devise good policies that will translate economic indicators into real development. And Vice-President Rupiah Banda said that despite the strong macroeconomic performance, African countries still faced a huge challenge of economic shocks as a result of globalisation.
Speaking during the Chartered Institute of Management Accountants (CIMA) Southern Africa conference held in Livingstone last week, Chissano also observed that globalisation has had negative impacts on developing countries that have continued to remain at its periphery because of the inequality that comes with it.
However, Chissano said that developing countries should not sit idle and blame globalisation for being in a state of backwardness and failures to move forward.
He further noted that economic growth was not equal to economic development.
“For regional business to prosper we need to create and sustain a robust indigenous business community because our countries are challenged today, more than ever before, to adopt and implement bold policies aimed at developing a domestic private sector in each of our nations through the facilitation of access to the relevant knowledge, capital and technologies,” Chissano said.
“And in most cases we are succeeding especially with the positive macroeconomic indicators obtaining on the ground but we should not continue deceiving ourselves that economic growth is economic development. It is just a tool to indicate the level of progress and in the absence of good policies the indicators will not translate into meaningful development for our people.”
He noted that peace, stability and security were fundamental to the requirements for the growth of regional economies.
“But they are not sufficient and they need to be supported by a sound macroeconomic environment that is conducive to business and this implies a functioning transport and communications infrastructure, a stable and predictable economic framework, an enabling regulatory environment and a well managed and effective public administration and service delivery, particularly in health and education,” Chissano said.
He observed that globalisation has brought growing inequality across and within nations.
Chissano said that majority of developing countries had continued to remain at the periphery of globalisation.
“Globalisation brings to developing countries risks, challenges but also opportunities such as greater access to developed countries’ markets and technology transfer but it also brings growing inequality across and within nations and another negative aspect of globalisation is that the majority of developing countries remain at its periphery and they therefore failing to reap benefits while feeling the brunt of this powerful force,” Chissano said.
He said that in the globalisation process, Africa had suffered severely from the flight of human capital, commonly referred to as brain drain, in poor countries and brain circulation in developed countries.
“Clearly the impact of globalisation is more felt on business and it is more visible in Southern Africa where the rather weak economic base featured by its countries makes them more dependent on extra-regional economies and thus more vulnerable to global shocks,” Chissano said. “And our inability to generate domestic savings forces our economies to rely on foreign capital flows for investment and our obsolete and less competitive technologies compel our countries to look for their pertinent replacement outside the region and our knowledge and business practices remain inadequate to the high speed the global economy is moving through.”
Nevertheless, Chissano said that African economies could not move forward if they failed to take advantage of the opportunities offered by globalisation.
“I believe we can do it and we can put globalisation to the benefit of regional business and we can do it better under the following pre-conditions such as peace, stability and appropriate macro economic policies that simultaneously fulfill the role of promoting indigenous business and attract foreign investment,” said Chissano.
“But this must be compounded with strong political will to cooperate with one another and all of us must develop and defend a common agenda for development which goes beyond a mere economic growth.”
And Vice-President Banda said that African countries have the huge challenge of remaining economically vigilant in the light of volatile oil prices and unpredictable weather.
“The main challenges we face are sustaining broad-based economic growth and making further inroads in alleviating poverty reduction strategies,” Vice-President Banda said.
He said the economy of the continent could only improve by boosting macroeconomic activities and reducing the cost of doing business.
“This will entail persevering with macroeconomic stabilisation efforts, reducing the cost of doing business and continuing to address governance issues directly, including enhancing the legal framework and strengthening the transparency of natural resource management,” said Vice-President Banda.
And CIMA Zambia president Emmanuel Mbambiko observed that the current economic situation in the country has created an appetite for people to attain greater heights in businesses.
“The economy is moving in the right direction and this position has created an appetite for competitiveness hence businesses are looking forward to attain greater heights,” said Mbambiko.
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