Post date: Mar 10, 2011 7:2:36 PM
Africa's economic growth will remain largely driven by commodities but there is an urgent need for governments to diversify their economies against sudden fall in world prices, the Nigerian central bank governor said on Monday.
LAGOS, NIGERIA REUTERS - Africa's economic growth will remain largely driven by commodities but governments needed to diversify their economies incase of market prices falling, the Nigerian central bank governor said on Monday.
Lamido Sanusi, governor central bank of Nigeria, said many African countries would experience growth in the years coming as long as China's and India's thirst for commodities existed but warned of the vulnerability of such economies."I don't think commodity prices will tumble, but I have always said that any growth that is driven by the primary sector is vulnerable, because it is too much dependent on terms for trade of commodities and commodities can be very fecal, now if you look at Nigeria for example our 7 percent growth has been driven by agriculture, and sometimes by oil and gas. That is both are primary sectors, until we have a structural adjustment that increases the secondary and tertiary increase in the GDP growth, that growth will remain vulnerable, so long as oil prices remain high and commodity prices remain high, we are likely to see high growth in Africa, and that is going to continue so long as China and India and other commodities consuming countries grow," said Sanusi.
Sanusi is credited for leading Nigeria's largest banking reforms which saw the take over of several poorly run banks and the arrest of the bank chiefs and charges brought against them.
Sanusi said his office will keep tightening monetary policy in a steady and stable manner as government spending and the resolution of the banking crisis and inflationary risks.
"What I would expect is a little bit of caution especially in African countries that are in election year, we have elections coming up in April, I do suspect that some of the sell down we have seen on the stock market today is basically a result of some jittery investors in the run up to the elections ,if we do have a free and fair and peaceful elections and the government is also committed to that, investors will come back," said Sanusi
Nigeria's monetary policy committee raised its benchmark interest rate by 25 basis points to 6.5 percent at its last meeting in January and took aggressive measures to tighten liquidity as it seeks to get inflation down to single digits
Elsewhere, Kenya Commercial Bank's (KCB) Chief Executive Officer Martin Oduor-Otieno has said that African governments have finally started making the right steps on the fight against corruption.
Talking to Reuters at the the inaugural Reuters Africa investment summit in Nairobi, he said the passage of new constitutions and creation of new relevant institutions were finally easing the fears harbored by investors.
"The concerns around governance and corruption still remains and it's also true that governments have tried to address some of these issues in the last decade the fact that there is more frequent elections, the opening up of democratic space in many countries in Sub-Saharan Africa are positive points," said Martin Oduor-Otieno
Kenya Commercial Bank (KCB) is Kenya's biggest bank by assets and is planning to expand to Zambia and Ethiopia and could consider acquisitions in
its goal of spreading in Africa, its chief executive said.
Ranked first in east Africa's biggest economy with assets of $3 billion, KCB operates in Tanzania, Uganda, Rwanda and South Sudan.
It has already said Burundi and the Democratic Republic of Congo are on its sights in the short-term expansion plans.