The Director-General of the World Trade Organisation (WTO), Dr Ngozi Okonjo-Iweala, has said Africa needs more fiscal stimulus to engender economic growth and recovery.
Okonjo-Iweala spoke at the UBA Africa Conversations 2021 with the theme: “Africa to the World,” held virtually to commemorate Africa Day on Tuesday in Lagos, noting that other developed countries were employing fiscal stimulus for economic recovery.
According to her, developed countries are recovering very fast because they have been able to implement a massive amount of fiscal stimulus.
She said, “On catalysing recovery and economic growth, aside from health investments, the next few actions, is to see on the short-term economic side, how we can get more fiscal stimulus into our economy.
“For the rich countries, 29 per cent of the Gross Domestic Product, for the emerging markets, 6.9 per cent and for poorer countries, just about two per cent.
“This is the reason for the whole discussions on restricting debts and giving African economies fiscal space to breath so that they can invest not only on the health side but also on the economic side, this will help us recover.”
She noted that the good news was that all African presidents like President Kagame of Rwanda, have been pushing for the issuance of new Special Drawing Rights at the International Monetary Fund (IMF), while $650 billion has now been agreed.
Out of the $650 billion, Africa will get $34bn but more may be allocated. We can use this to help prevent more fiscal stimulus so that our economies can have the ability to recover, of that we should use some for liquidity for the private sector,” she added.
She also said there was a need to revive the services sector such as tourism, logistics, and others to help the recovery plan of the continent.
“We need to look at how to revive the services sector, many of our countries depend on tourism, logistics and how to get those services to revive using these resources is very important.
“In the long or medium term, we need to diversify our economy, we are too vulnerable to movement in commodity prices and it was evident during the pandemic, too many fluctuations in oil and gas and other sectors.
“Some countries in the continent that did better during the pandemic were those that had diversified economies. Also, we must take advantage of the Africa Continental Free Trade Area (AfCTA) agreement. Movement of goods and people should be made easier to get the AfCTA to work,” Okonjo-Iweala added.
By Victor Uzoho