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AU Finance Ministers on economic transformation

Mar 28, 2011, 1:31 PM | Article By: Baboucarr Senghore in Addis Ababa

Over 60 ministers from across the continent are currently gathered in the Ethiopian capital, Addis Ababa, discussing, among others, the Role of the State in Economic Transformation.

The ministers are taking part in the 4th Joint Annual Meeting of the African Union Conference of Ministers of Economy and Finance and ECA Conference of African Ministers of Finance, Planning and Economic Development.

The ministerial meeting, under the theme “Governing Development in Africa: The Role of the State in Economic Transformation”, followed the meeting of economic, financial and development experts, whose recommendations have been tabled before the ministers for discussion.

Experts examined the role of the state in the context of globalization and free enterprise, and concluded that state intervention in the economic development process is not tantamount to nationalization of the private sector, which in any case, remains an essential driver of the development process.

After three days of meeting, a draft consensual framework on the role of the state in governing development in Africa by experts emerged.

In one of the marathon sessions on Friday, two leading African economists used historical perspectives and concrete modern day examples, to allay the concerns expressed by some participants as to the “dangers” inherent in what they called “too much state power” in the productive sector of the economy.

Messrs Emmanuel Nnandoze and Dr. Réné Kouassi, respectively Director of Economic Development and NEPAD Division at the UN Economic Commission for Africa (ECA), and Director of Economic Affairs at the African Union Commission, explained that in the context of scarce investment resources that characterize most African economies, sustained economic growth would be impossible without the state taking the lead, or at least playing a major role.

But that was not the central argument Nnandoze pushed through, to justify calls for state participation in development initiatives.

In a highly applauded presentation, he outlined a number of key areas in which no other stakeholders could play a better role than the state – infrastructural transformation, the formulation of suitable taxation laws, public/private partnerships, the use of national development plans, as well as a judicial system in which investors and citizens have faith.

This, he noted, is why he underscored the key facilitation role of the state, while cautioning that “we are not recommending copying exactly what China, South Korea or Malaysia did, because the historical and contemporary conditions are not necessarily the same.”

Although Africa grew on average by 4.5 percent in 2010 up from 2.3 percent in 2009, and will most likely maintain steady growth of about 5 percent in 2011, governments and development partners, including the ECA, are worried about the sustainability of that growth, observers say.

Whether this will become a reality or not, experts are of the view that the deliberations and decisions of the conference will certainly be critical for continental economic performance, especially as we approach the 2015 target date for achieving the Millennium Development Goals.

The theme of the conference builds on one of the outcomes of the 2010 conference, which underscored the role of the state in creating the required institutions and making the requisite investment based on a disciplined planning process for the transformation of African economies.

In a statement issued ahead of the meetings, the Chairperson of the African Union Commission, Dr Jean Ping, and Abdoulie Janneh, United Nations Under Secretary General and the Executive Secretary of the Economic Commission for Africa, underscored the need for structural economic transformation as a condition for sustainable development in Africa.

The two noted that to  achieve structural economic transformation, African states must provide a clear vision, coordinate change through a planning process, manage distributional conflicts, mitigate investment risks and, in the case of Africa, promote regional integration to overcome the limitations of small, fragmented economies.