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(NYASATIMES) Economist hails continental banks’ creation

Economist hails continental banks’ creation
By Nyasa Times
March 30, 2010

Press Corporation has no room for northerners – Chikaonda

Economists in Malawi have welcomed a proposal by the African Union (AU) to set up financial institutions to mobilise resources for national development initiatives. The proposal was made on Monday at the on-going AU meeting of finance and economic planning ministers.

AU is in the process of creating three African financial institutions, namely the African Investments Bank, the African Central Bank and the African Monetary Fund.

The development also comes at a time, when most African countries, rely on funds from Western financial institutions, like the International Monetary Fund (IMF) and the World Bank to implement their development programmes. Documents about the establishment of the institutions have already been adopted by the AU heads of states.

Commenting on the proposal, Collen Kalua, who is a social economist from University of Malawi at the Chancellor College in Zomba, said authorities had to utilise the opportunity, in order to develop the economic stability of the country. Kalua told Capital Radio that idea was a welcome development, saying it would promote inter-dependency among African countries.

“The benefit is there will be efficient disbursement of loans,” said Kalua.

“It will be easy for government to borrow from that institution and that will be within African and then that loan will trickle down to local businesses in time depending on the conditions that will put now by the government for the loans,” he said.

He urged government and indigenous entrepreneurs to utilize the opportunity when it comes into effect to boost their exports through access to loans from the institutions.

Meanwhile, the AU conference of finance and economy ministers winds up in Lilongwe with revelations that Africa lost over $1.8 trillion in illicit financial outflows from 1970 through 2008.

Titled “Illicit Financial Flows from Africa: Hidden Resource for Development”, the new study focussed more on illicit financial outflows from just one source: trade mispricing. It .however. did not take a look into outflows from mispricing of services and smuggling.

According to the study, the “massive flow of illicit money out of Africa is facilitated by a global shadow financial system comprising tax havens, secrecy jurisdictions, disguised corporations, anonymous trust accounts, fake foundations, trade mispricing, and money laundering techniques.”

It stated that “the impact of this structure and the funds it shifts out of Africa is staggering. It drains hard currency reserves, heightens inflation, reduces tax collection, cancels investment, and undermines free trade.

“It has its greatest impact on those at the bottom of income scales in their countries, removing resources that could otherwise be used for poverty alleviation and economic growth,” he said.

Labels: AGRICULTURAL MARKETING AUTHORITY, BANKING

posted by MrK @ 6:13 PM