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Developing countries suffering capital outflows - Manuel
CAPE TOWN: The global economic recession, affecting the United States in particular, is causing significant outflows of capital as investors retreat to pump money into their domestic markets, says Finance Minister Trevor Manuel.
"Increasingly, African states are encountering significant fiscal pressures as our revenue sources dry up, as expenditures rise to meet the most elementary levels of service provision and as we battle to retain expenditure levels in the face of significantly reduced GDP growth.
"We are witnessing that the export markets developed with enormous sacrifice are suddenly closed to imports from our countries, as a result of falling consumer demand and increased protectionism," Manuel said at the Committee of 10 (C10) on Friday, 16 January, 2009.
The C10 is a meeting of African Finance Ministers and Central Bank Governors who are gathering to take stock of the impact of the current global economic recession on Africa.
The minister said South Africa and Africa were living through intense liquidity pressures as the domestic banking sector battles to secure finance.
Many countries are witnessing the drying up of remittance flows which have, over the past number of years, been a reliable source of finance which offsets impact to the skills drain.
"We are seeing the first wave of unemployment as many foreign direct investors scale back or shut down their operations.
"We are likely to witness a continuing decline in Overseas Development Aid flows to support, among other things, the delivery of the Millennium Development Goal's.
"Already there is a cumulative shortfall of $240 billion on the Gleneagles commitments," said Manuel.
The effect of recent developments in sectors such as tourism is already declining the number of tourists traveling to Africa, he said.
South Africa, he said, has not yet recovered from the severe impact of high food and fuel prices that has been present in the market for over 15 months.
"Ours is a history of a battle for a fairer, more equitable world.
"This period is one where we must amplify the call - neither for alms nor charity, but for an opportunity to deliver to our citizens that which they deserve," Manuel said.
To attain this, he said, South Africa and Africa must evaluate every aspect of what is done, each institution that takes decisions that affect people's lives and make the case for fairness and opportunity.
Article published courtesy of BuaNews
