The Director-General of World Trade Organisation (WTO), Dr Ngozi Okonjo-Iweala, has disclosed that Africa needs additional fiscal stimulus to engender economic growth and recovery.
Okonjo-Iweala disclosed this while speaking at the UBA Africa Conversations 2021 titled: “Africa to the World.” The event was recently held virtually to mark Africa Day in Lagos. She noted that other developed countries were embracing fiscal stimulus for economic recovery.
According to the DG, developed countries are recovering very fast due to their ability 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 percent of the Gross Domestic Product, for the emerging markets, 6.9 percent and for poorer countries, just about two percent.
“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 made it known that the good news was that every African President like President Kagame of Rwanda, has been requesting for the issuance of new Special Drawing Rights at the International Monetary Fund (IMF), while $650 billion has been agreed.
She added that “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.”
Also, she said there was a need to revive sectors like tourism, logistics, and others to support the recovery plan of the continent.
She said: “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.”
