Ethiopia: AU Commissioner warns of ‘silent financial crisis’ in Africa

Addis Ababa, Ethiopia (PANA) - A “silent financial crisis” is sweeping across Africa, ignited by sluggish prices of major exports and an increment in the amount of foreign debt owed by African countries due to the rapid weakening of national currencies, according to the African Union (AU) Commission.

AU Commissioner for Economic Affairs Anthony Maruping warned Wednesday that a fall in the production of a wide range of products, including farm produce, commodities such as cocoa and oil, due to weak international demand was likely to cause a major humanitarian crisis in Africa.

“All external debts denominated in the U.S. dollars have increased. This has brought us challenges of debt sustainability,” Dr Maruping told a news conference in Addis Ababa on the sidelines of the African Union Summit due to open here this week.

African foreign ministers kicked off a preparatory meeting in the Ethiopian capital Wednesday ahead of the Summit.

Maruping said government revenues across Africa were sliding downwards. As a result of the slowdown in government earnings, most countries faced the risk of their credit ratings being downgraded. Poor ratings will impact commercial banks which borrow from international markets.

The AU said if not dealt with, the financial crisis woul lead to a humanitarian crisis.

Apart from the high costs of debt repayments, there is also drought and flooding in parts of the continent. Serious drought effects have been experienced in Ethiopia, Malawi and Zambia.

Maruping said the drought has affected hydro-power electric generation in the copper mining  regions. This has also contributed to a slowdown in the pace of manufacturing in Zambia.

“It is a crisis we need to deal with. There must be humanitarian interventions. There are insufficient rains in some areas and floods in others. The drought will test the efficiency of the safety nets,” Maruping said.

According to the AU official, the drought in Zambia has forced firms involved in the mining sector to cut shifts, which has lead to high unemployment.

“Skillful macroeconomic management is required to deal with the silent crisis. The AU Agenda 2063 is a solution. We urge our member states to integrate it in their plans,” he said.

African leaders endorsed the Agenda 2063, a long-term vision of shared prosperity and well-being, for unity and integration the continent.

Maruping said there are 12 major projects identified in the plan, which include power generation, aviation, issues of tax evasion and illicit financial flows and a continental free trade area.
-0- PANA AO/AR 27Jan2016

27 january 2016 17:36:22

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