African countries facing challenges

The integration of African nations into the global economy has enhanced their prospects for growth, according to Michel Camdessus, managing director of the International Monetary Fund.

Even so, he says much remains to be done, especially by the African nations themselves.

“The very diversity of their individual situations and of their progress to date implies the need for a diversity of strategies, which each country should devise for itself, with our support,” Camdessus said during a recent address to the United Nations Economic and Social Council. “But despite such diversity, there are five key challenges that must be addressed in virtually all countries.”

The first task is to reduce fiscal imbalances in most countries, which means intensified efforts are required to improve tax collection and to cut back on unproductive government spending. Specifically, he pointed to the need to reduce the public sector’s pre-emption of scarce national savings to the detriment of the productive sector, “the only source of job creation in the long term.”

Second, Camdessus calls for stronger efforts to boost private-sector saving, as well as domestic and foreign private investment. This will require the establishment of a stable macro-economic environment, the restructuring of public enterprises, and all the structural reforms needed to create an attractive climate for business expansion.

Third, the liberalization of exchange and trade regimes must be accelerated, Camdessus says. This would foster closer integration into the world economy and boost confidence for investment.

Fourth, there is a need for a more responsible approach to population growth. Africa, the world’s poorest continent, has the fastest population growth in the world and, at present rates, its population would double in fewer than 25 years. In order to raise the standard of living, governments must bring about improvements in education, health care, and employment opportunities for women.

Finally, Camdessus says, there must be improvements in government. “Governments must be held accountable and participatory; laws must be transparent; nonessential regulations must be eliminated; and the competence and impartiality of the legal system has to be ensured,” he says. “In all these areas, there has clearly been progress in Africa; there is widespread recognition of the need to fight corruption. But doing so is a difficult task, requiring courage and perseverance. Progress must continue; it will profoundly strengthen the development process.”