The vulnerability of Africa's economy in light of the food and commodity price volatility caused by the developed world credit crisis came under the spotlight over the weekend at the G-20 Leaders' Summit on Financial Markets in the US.

South Africa's Presidency said in a press release after the meeting that while African economies were making progress, they are now threatened by the global financial crisis.

"As a result, the current crisis has the potential to exacerbate the impact of the recent volatility in food and commodity markets," said the Presidency.

In this regard, the G-20 Leaders' Summit agreed on a number of measures to ensure the fallout was limited and economic growth remained on track.

IMF and World Bank

A strengthened system of international financial governance, in which the IMF and World Bank play a central role, was proposed.

According to the Presidency, this must occur with a much more inclusive governance structure for both institutions, and for other relevant institutions, so that developing countries are effectively represented.

"This would entail far better representation for African countries in the international financial institutions than is currently the case. These institutions must be accountable and transparent," said the Presidency.

Then a coordinated initiative to support interventions in domestic economies, through expansionary fiscal and monetary policy, as is appropriate, was agreed to. South Africa has yet to cut rates, but there is some speculation it may do say at the next opportunity on 11 December.

"This will be done within a sound and responsible economic framework. In order for this to succeed, the international financial institutions must be properly funded so that they can support investment to maintain robust economic growth and poverty reduction of developing countries. In light of the damage already done to developing countries in Africa by volatile food and fuel prices, and the potential damage that might be done by the effects of the financial crisis, it is essential that the commitments to increase aid flows to Africa are fully fulfilled," said the Presidency.

Surveillance, oversight and supervision

A further point agreed to was that the international financial system should fall under proper surveillance, oversight and supervision, and this would involve a considerable reform of the current situation, and would require all countries to subject themselves to agreed and transparent roles.

"On the importance of making every effort to avoid any rise in protectionism and that we support the soonest possible balanced, fair and development-oriented conclusion of the Doha Development Round of multilateral trade negotiations," was the last agreed point pertaining to Africa at the Summit.

South African President Kgalema Motlanthe, supported by the Finance Minister Trevor Manuel and a high-level delegation, concluded deliberations at the Group of 20 (G-20) Leaders' Summit on Financial Markets in Washington DC, on Saturday 15 November.

South Africa, as the only G-20 member country from Africa, was asked to convey an African perspective by the African Finance Ministers, who recently met in Tunis, to consider the impact of the crisis for the continent.

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