Africa needs to reverse its declining share of global trade — Sufian

Africa needs to reverse its declining share of global trade — Sufian


MR Sufian Ahmed is one of the main figures that contributed to the smooth transition to the current administration under the leadership of Hailemariam Desalegn.

The government’s decision to continue the good works started by Meles Zenawi via the home-grown economic blue-print Growth and Transformation Plan (GTP) portrays Sufian in the best of light as a tried and tested technocrat with the added advantage of the right political savvy. Having launched Ethiopia on the path of sustainable growth and irreversible march towards a full free market economy, Sufian now concentrates his energies in helping the Hailemariam administration achieve the vision of Ethiopia making the ranks of middle-income economies over the next decade.

Along the way, the veteran policy-maker hopes to expand his horizon and give the benefit of his experience and long years of serving his fatherland to other Africans by leading the continent’s premier development institution — the African Development Bank (AfDB) — in its mandate to help move Africa.
Mention the name Sufian Ahmed in top financial circles where global policy-makers and economic players ply their trade or jaw-jaw and you’ll note the look of recognition and deference to Ethiopia’s Finance and Economic Development Minister.

It couldn’t be otherwise. Mr  Sufian has been in and around the main arena of global financial and economic discourse over the past 20 years representing his country and by extension, Africa, which his country solidly projects as one of its iconic faces. Ethiopia’s capital, Addis Ababa, is home to the African Union, the umbrella organization that hopes to weld the huge continent of over one billion people into one United politico-economic force in the geopolitical order.

Starting out as the Chief economy planner under the late modernizer of Ethiopia, Meles Zenawi, and continuing his strong support for the country’s rapidly growing economy, the global economic arena has a main player as the East Asian countries have done.

This interview draws out some of Mr Sufian’s ‘secrets’ on how he has remained relevant in the scheme of things over the years and how he may help build a more prosperous Africa. Excerpts:

What do you consider as your greatest achievements as finance and economic development minister of Ethiopia?
We have been able to lay a solid foundation for strong and sustainable economic development of Ethiopia. We have introduced and implemented reforms that not only enabled us to transit from the state-command economic structure to a market-oriented federal system, but also facilitate successful liberalization of the financial sector and privatization of state-owned enterprises among other initiatives that have set the path for our overall economic growth momentum. I am particularly proud of the way we have transformed our infrastructure and the agricultural sector, which have had multiplier effects on economic growth over the last decade.

Our focus on poverty-reduction and human capital development has enabled the overall transformation Ethiopia has witnessed in recent times. We have worked hard and strictly to uphold good budget performance, stable macroeconomic environment, development of efficient financial system, as well as reliable infrastructure, effective/efficient administrative and governance structure in our bid to ensure that Ethiopia transits from a low-income and struggling economy to a prosperous one by the year 2025.

During the past several years, commitment of the government went beyond designing programmes and strategies. It placed high premium on implementing programmes that could help transform our infrastructure and human capital for sustainable development. Education and roads, for instance, took 45 percent of total government spending. Infrastructure development, particularly in roads, airport construction and expansion, hydropower plant construction and irrigation dam building, telecoms, and water supply progressed as quickly as never before in the country’s history. Don’t forget, the overall objective of our development effort is to eradicate poverty and develop a strong economy which can sustain itself and the people of Ethiopia.

How would you assess government’s growth projections for this year and next?
We expect to grow by 11 percent this year. Going by the pre-harvest estimates from the Central Statistical Agency, agricultural production, mainly cereal, has very good output this year. Thus, the agriculture sector is the main contributor to overall economic growth. However, the services sector is also a determinant. More so, banks’ loan disbursement, trade, including retail and import-export are healthy. In this light, I believe we can achieve the 11 percent growth this year.

Do you think Ethiopia is making progress in meeting the MDGs?
Yes. As a matter of fact, there is a deliberate policy on ground to ensure that the country meets its targets of the Millennium Development Goals by 2015. Certainly, the world has changed fundamentally since the adoption of the Millennium Declaration 13 years ago. It faces new challenges and opportunities, many of which require collective actions. Therefore, a renewed global partnership for development must respond to new challenges and the changing development landscape and provide effective support for implementation of any post-2015 global development agenda.  The MDGs have helped to galvanize support for the Goals agenda and to mobilize resources by highlighting the responsibility of traditional donors. In addition, the growth of South-South cooperation has offered viable opportunities for developing countries, and countries with economies in transition in their individual and collective pursuit of sustained economic growth and sustainable development.

In the past decade, several developing countries have registered impressive level of economic growth and transformation. For instance, Ethiopia has registered double digit growth during the last decade which makes the country one of the few non-oil producing countries experiencing such rapid economic growth. We are on a hugely promising trajectory and transformation which will help the country to achieve most of the MDGs as well as realize our vision of becoming low carbon emission middle-income country within the coming 10 years. Our Growth and Transformation Plan (GTP) is designed to propel our nation to that destination which has eluded our people for so long, but which is now within reach. None of this would have been achieved without our effective cooperation with our development partners.

In spite of the good progress we have experienced, there is still a huge deficit in international cooperation for the development of low-income countries and those, which are the least developed. Without ignoring other impediments to development, the major bottleneck for countries such as Ethiopia to ensure sustainable development and successfully achieve the MDGs is related to shortfalls in development finance. In this connection, we have said a lot in the Paris Declaration and the Accra Agenda for Action, and recently, in the Bussan partnership for Effective Development Cooperation. But the results have been few and far between.

The current global economic situation, in our view, should never be allowed to distract attention from the critical need for development finance of low-income countries. Our challenge in this area is compounded and made even worse by the challenges of climate change, which is a global phenomenon calling for responsible and wise leadership at the international level. This should rest on full commitment to the principle of common but differentiated responsibilities with respective capabilities.

In addition, the MDGs also had important gaps and systemic shortcomings, and there is a large discrepancy between its initial level of ambition and its implementation. It is also important to note that MDG 8 perpetuated a “donor-recipient” type of relationship and did not pay sufficient attention to mobilizing development financing other than aid.

The Goals also suffer from weak political commitments on the range of issues covered, including aid, trade, debt relief, access to essential medicines and ICT; and its lack of a robust accountability mechanism associated with the Goals to ensure delivery on commitments, is also another area of its weakness. For many developing countries, aid remains an important source of development finance, and the international community should reaffirm and set clear timelines for achieving its official development assistance (ODA) targets, especially for least-developed countries and countries with special needs.

In what ways can Africa overcome its development challenges?  
Surmounting the development challenges is one of our major concerns. We are aware of the marginalization of our continent in the current globalized world. Globalization implies more dynamic international trade and capital flows, but in these, Africa is lagging. Obviously, it is time we reverse Africa’s declining share in international trade, which is below 2 percent. We must also considerably improve our savings and investment rates in comparison with those of other regions, and must attract more foreign direct investment to raise the continent’s share of capital flows to the African region. Indeed, this should be possible as African governments have, through the implementation of structural adjustment programmes, set their economies on the path of macroeconomic stability.

Furthermore, knowing that the sustainable growth of our economies and the improvement of the living standards of our population are dependent on more efficient management of our resources, governments are giving the highest priority to good governance, efficient and transparent management of public resources.

We believe the active support of the international community and the Bretton Woods institutions should enable Africa to achieve its overall goal. We expect the advanced countries to further open their markets to the continent’s goods and services and support our economic reforms through concessional bilateral and multilateral financing.

Indeed, we are very much encouraged by the recent G-7 declaration in Denver (U.S.A.) emphasizing the need for the international financial institutions to reinforce their support to reforming sub-Saharan African countries towards wider participation in the world economy.

What are the efforts to attract foreign direct investment inflow to Ethiopia?
Given the scale of public investment needed to meet GTP targets, Ethiopia needs significant inflows of foreign direct investment. The government of Ethiopia is creating conducive business environment in the country. In recognition of the role of the private sector in the economy, government has revised the investment law to make it more transparent, attractive and competitive. Obviously, the contribution of additional external resources is crucial in strengthening and improving the financing of our development projects in priority sectors. We believe that the international community has an important role to play in this process, particularly in helping Ethiopia to create conditions that favour the mobilization of external capital. We deeply regret the steady decline in official development assistance (ODA), which is marginally compensated with private capital inflows. This decline makes it difficult for us to successfully complete the ambitious reform programs being implemented in the priority areas of our economy. As for ODA resources, we are firmly committed to redoubling our efforts to ensure that these resources are mobilized and used effectively. In this regard, we must once again thank donors for their efforts to replenish ODA resources and their intention to explore long-term financing mechanisms for ODA. Going forward, we are aware of the need to accelerate the mobilization of our internal resources to finance development projects.

How would you describe government’s efforts at reining in inflation?
Reining in inflation, which once hovered over 30 percent, is at the heart of government’s policy. Inflation still remains a challenge for Ethiopia’s economy. However, the government has taken a number of measures to bring the inflation to a single digit. Part of these measures is government’s pledge not to borrow from the National Bank of Ethiopia and to go into importation of food items that are in critical short supply. It is expected that these measures will reduce inflation to a single digit. Ethiopia’s year-on-year inflation rate slowed slightly to 7.3 percent in June from 7.4 percent in May this year. Although food prices continued to rise, we are confident that we have put in place monetary and fiscal measures to control inflation. These include measures requiring banks to keep 15 percent of deposits in reserve and restricting money supply growth to nine percent. In addition, the national budget deficit has been reduced to 1.5 percent of gross domestic product to curb government’s spending.

Why are you vying for the presidency of the African Development Bank?
All my life, I have been interested in the issues of development. Perhaps, this is what led me to study Economics. After my studies, I tried to impart knowledge to the younger generation and later became part of the economic implementation think-tank in Ethiopia. So, from both the theoretical and practical aspects of economic development, I can say that I have been involved in Africa’s development issues. I consider my vying for the AfDB presidency as another opportunity to impart the knowledge and experience I have acquired to a continent-wide constituency, which is Africa. And as Finance and Economic Development minister, I have travelled to every part of the continent. I have also participated in almost every economic decision on Africa in the last 20 years and I can comfortably say that I know the issues. The African Development Bank, being the continent’s premier development institution, will therefore provide me a platform to serve at another level. And I have enough theoretical and practical experience to hit the ground running from even the first day on the job.

How would you perceive the role of the AfDB in the development of the African continent?
I believe that as Africa’s premier financial institution, the African Development Bank institution has been fulfilling its mandate in terms of helping to reduce poverty, improving the living conditions of Africans and mobilizing resources for the continent’s economic and social development. Over the years, as the needs of the continent have grown, the Bank has responded positively around those areas critical to Africa’s needs such   as infrastructure, promotion of the private sector, economic integration governance, human capital development and rendering support to fragile states and those coming out of conflicts. While the Bank does not engage in political activities in its member-countries, it has helped to minimize conflicts in Africa through dialogue with governments and other stakeholders whenever such a situation had arisen.

It is on record that through the support of the African Development Bank, 20 African countries are currently growing at over 6.5 percent. Indeed, for the first time in history, 20 of the fastest growing economies in the world are in Africa with some racing along in double-digits. Across the continent today, there is a renewed sense of optimism that gives meaning to the now familiar phrase of “Africa Rising”.  There is no doubt that the AfDB has been largely responsible for the current robust growth trajectory Africa has attained. Through the Bank’s Ten Year Strategy which focuses on inclusive growth, the AfDB will continue to finance Africa’s development and consolidate the strong macroeconomic foundations of our economies. I am quite optimistic that the AfDB will contribute greatly towards propelling Africa toward the desired transformation in the next 50 years. The continent will be truly integrated. There will be no need for visas to travel around Africa. From projections, growth will be phenomenal.


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