Africa's positive economic performances being put to the test due to various challenges: AU official

Africa's positive economic performance is now being put to the test in the face of the challenges posed by current circumstances, noted a senior official of the African Union (AU).

Speaking to the press on Wednesday in the framework of the 26th AU Summit in Ethiopia's capital Addis Ababa, Anthony Mothae Maruping, AU Commissioner for Economic Affairs, said drop in commodities prices, interest rate rise in the U.S., severe drought, floods and regional conflicts all have combined to cause harsh economic and social challenges in Africa.

He stated that sharp drop in the prices of a wide range of commodities produced and exported by most African countries has significant financial and economic adverse effects.

"Most African economies remain heavily commodity export dependent. Raising of interest rate by the United States has led to depreciation of currencies and so to an increase in dollar denominated external debt and inflationary pressures," said the commissioner.

The situation has been exacerbated by widespread and prolonged severe drought that has adversely affected agricultural production which constitutes a large share of Africa's gross domestic product (GDP), according to the official.

"As a consequence most African economies are currently navigating through stormy and rocky straits. The firm resilience that many African economies demonstrated during the global financial and economic crisis a few years ago is now being put to a much more rigorous test," he said.

The official emphasized that persisting remnants of armed conflicts and acts of terror continue to create developmental liabilities on the continent.

Under such circumstances, the commissioner said that prudent and skillful fiscal policies that include high quality public expenditure and meticulous management of debt, accompanied by complementary monetary policy measures should be among the first steps to be taken by African countries to maintain financial stability.

He added that AU member states should hasten to embrace the first 10-year implementation plan of the African Agenda 2063 as it offers the viable option of transformative approach on building stronger resilience to external and internal shocks and accelerating economic growth.

The commissioner noted the first 10-year implementation plan seeks to strengthen productive capacities, accelerate diversification, bring about value addition on a broad spectrum of production and improve competitiveness. Enditem