Business
Intra Africa trade can help Africa reduce impact of Europe’s downturn
(Reuters) – African countries can prepare for the impact of the euro-zone crisis that threatens to derail economic growth on the continent by improving trade between their countries and fighting inflation, a top World Bank economist said on Sunday.
World Bank’s Vice President for Africa, Obiageli Ezekwesili said the traditional partners of Africa in Europe were likely to be affected by the fallout of the European debt crisis, which would squeeze remittances, curb trade and tourism.
Ezekwesili said Africa’s economic growth forecast for this year stood at 5.3 percent and 5.6 for 2013, but a recession would likely lead to a 1.7 percent contraction in 2012.
“When you talk about Greece, Portugal, Ireland and the other countries, you then look at African countries particularly linked to them. We keep our eyes on countries like Cape Verde, Guinea, Nigeria, Sierra Leone,” Ezekwesili told Reuters on the sidelines of an African Union summit in Addis Ababa.
She said the Ethiopia summit would discuss boosting intra-regional trade in Africa to ease the impact of the recession.
“In Cape Verde, remittances constitute a very important part of its balance of payment, its current account. Its linkage with Portugal has a huge implication for remittances,” she said.
“Tourists receipts from Europe can have a serious impact, as will the foreign direct investment (FDI). The export of merchandise to Europe will be affected.”
Remittances — money sent home by workers abroad, are a key source of foreign exchange in Africa after revenue from traditional sources such as tourism, agricultural products and minerals.
