(HERALD) ‘Tap Asia’s financial surplus’

‘Tap Asia’s financial surplus’
From Sifelani Tsiko in ADDIS ABABA, Ethiopia

AFRICA must come up with innovative strategies to promote the flow of surplus savings from emerging economies for infrastructural development and the creation of labour-intensive manufacturing industries on the continent, Ethiopian prime minister Meles Zenawi said yesterday.

Zenawi said this at the opening of the 4th African Economic Conference where more than 300 policy-makers, development experts and economists were meeting to discuss strategies to mitigate the impact of the global financial and economic crisis on African economies.

"We need to design strategies to encourage the flow of some of the surplus savings in Asia for infrastructural development in Africa and to promote relocation of labour-intensive manufacturing to our countries," he said.

The International Monetary Fund has found that since 2000, the number of sovereign wealth funds has nearly doubled from 20 to 40, managing assets with an estimated value of between US$1,9 trillion and US$2,9 trillion.

Many of the wealthiest and most active of the funds are in Asia and the Gulf.

China’s surging trade surplus was estimated to be US$24 billion in October, compared with $13 billion in September, bringing the total for the year so far to US$159,23 billion.

Financial asset management companies forecast that if global growth and market expansion continue, sovereign wealth funds could control assets worth as much as US$12 trillion by 2015.

Zenawi said if Africa designed strategies to tap into these funds, it could help to transform continent’s economy and capitalise on the possibilities opened by the current "global conjecture".

"It is going to require more than one conference to do so but I am confident we will make significant progress in that direction during this conference," he said.

Zenawi felt strongly that countries such as China, Japan, India and some Gulf states which had amassed surplus savings can use these resources to finance infrastructural development in Africa once the continent maps out sound strategies to attract such funds.

"If a significant part of this relocation were destined for Africa there would be a massive spurt in industrialisation reversing the trend of de-industrialisation that has taken place in Africa since the 80s," he said.

"We would begin to become part of the global chain of production and consumption rather than the continental ghetto on the periphery of the chain that we currently are."

China offered Africa concessional loans worth US$10 billion as part of a host of new measures aimed at improving African economies.

The announcement was made recently at the Forum on China-Africa Co-operation in Sharm el-Sheikh, Egypt.

China pledged to encourage its firms to invest in Africa, while both sides would work together to improve the tourism, telecommunications and finance industries.

The Asian giant announced that it would write off the debt of Africa’s poorest countries, build 100 African green energy facilities and systematically lower import duties on 95 percent of all African products exported to China.

Another promise is a loan of one billion dollars aimed at small and medium-sized businesses in Africa.