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The Standard Bank Group of South Africa says increased focus on good public finance management by African governments could activate commercial banks to offer long term finance to the private sector.
The group’s economist Robert Bunyi made these remarks at an economics journalists meeting in Johannesburg, South Africa on Monday.
“Sustainable budgets will lead to rapid growth in the debt markets,” he said.
Analysts say Malawian companies fail to access long term capital for investments because commercial banks prefer quick and risk free profits from short term loans to the government through treasury bills.
They blame government demand for money to fund its above budget spending for raising interest rates to more than 30 percent, which pushed businesses out of the lending market.
In his paper entitled “trends and issues in Africa’s economic development” presented at the fifth annual economics editors conference, Bunyi said long term financing to businesses could help boost national out puts on the continent.
Africa’s Gross Domestic Product (GDP) growth is this year estimated between five and six percent, according to forecasts from the International Monetary Fund (IMF).
Bunyi said the IMF led structural adjustment programmes, which he claimed are beginning to show positive signs on African economies, could be the reason behind the steady growth.
Malawi’s GDP, which the National Statistical Office say rose 3.8 percent in 2003, is projected to grow by more than four percent, a rate commentators say is still too low to have a dent on the country’s poverty levels.
About 65 percent of Malawi’s 12 million people live below the US$1 poverty line, according to the World Bank.
Bunyi said Africa must have stable and high economic growth rates over longer periods for the continent to reduce poverty.
Meanwhile, the Standard Bank economist said private investment on the continent is expected to increase as African economies continue to attract more foreign direct investment.
“Rapid growth in emerging markets over the past years has spawed new sources of foreign direct investment into Africa,” he said.
The three-day editors conference is reviewing coverage of business and economics news over the years and is expected to chart the way forward for better reporting on the continent.
Meeting under the theme “reporting integration and governance in Africa”, the conference also covers topics like reporting wealth creation, governance and health.
The gathering also discussed ethics, problems that African women journalists face and papers by some of South Africa’s leading corporate executives and media scholars.
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