Addressing the heads of state summit of the Southern African Development Community (SADC) in Maputo, Kaberuka said that the total African reserves held outside the continent currently amount to about 207 billion US dollars. With interest rates in the developed countries hitting record lows, he had learnt from that the returns on some of these assets were now negative.
He suggested that five per cent of these reserves should be invested in “African investment bonds”, to be used for major infrastructure projects on the continent.
Better infrastructures (roads, railways, electricity, telecommunications) were crucial “for unlocking Africa’s internal market”, Kaberuka said. He urged African governments to use their own resources to do this unlocking rather than relying on foreign aid and capital flows.
SADC is now seriously considering setting up a regional development fund, which would have an initial capital of 1.2 billion US dollars. SADC Finance Ministers presented a proposal for the fund to the Council of Ministers, which met on Wednesday and Thursday. The Council gave the Finance Ministers the green light to flesh out the proposal, and suggest a detailed shareholding structure for the fund.
“The fund will be used to carry out decisions of the summit and other SADC institutions concerning regional integration”, the SADC Deputy Executive Secretary, Joao Cohulo told reporters. The priority would be to finance key infrastructure projects, though there could also be windows to finance trade, agriculture and other areas.
The proposal from the Finance Ministers, he said, is that the SADC member states should be the main shareholders in the fund, but it should also be open to participation by private investors, particularly from the region, but also from SADC’s international partners.
Kaberuka also warned the summit that the international financial crisis “is not over, it has only changed its focus. The world is still cleaning up the debris of 2008. America and Europe are still going through a slowdown, if not a recession”.
He noted that Africa “has managed to avoid contagion in the banking sector”, and suggested that African banking regulators should be congratulated for that.
Kaberuka also urged African leaders to take care in handling recent discoveries of mineral resources. If properly used, those resources could prove an enormous asset in the fight against poverty. But where mismanaged, they produced quite the reverse effect, increasing inflation and poverty.
“We must ensure that the resources are beneficial to the present and future generations”, he said.
Post published in: Africa News