Official Opening Address by Hon. Chinamasa at the MEFMI 2014 Combined Forum

OFFICIAL OPENING ADDRESS BY HONOURABLE PATRICK CHINAMASA (MP), MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT, ZIMBABWE, DURING THE OPENING OF THE MEFMI COMBINED FORUM FOR MINISTERS, GOVERNORS AND SECRETARIES OF FINANCE AND OF ECONOMIC PLANNING: 6^TH OCTOBER 2014, HAMILTON CROWNE PLAZA, WASHINGTON, DC, USA.

• Honourable Ministers;

• Central Bank Governors;

• Permanent Secretaries;

• Executive Director of MEFMI, Dr. Caleb Fundanga;

• Chief Executive Officer of Investec Asset Management, Mr. Hendrik du Toit;

• Senior Officials of Ernst & Young;

• Representatives of the donor community;

• Distinguished Speakers;

• Ladies and Gentlemen.

It is a great pleasure for me to preside over the opening ceremony of this year’s MEFMI Combined Forum for Ministers, Governors and Secretaries of Finance and Economic Planning from the MEFMI region. I would like to welcome you all to Washington DC and to this Forum in particular. May I extend a special welcome to those colleagues who are attending this event for the first time! I am sure you will appreciate the diversity of thoughts and the rich debates that characterize this Forum. We look forward to your contributions in this regard.

Before I proceed further, allow me to also welcome two private partners, Investec Asset Management and Ernst & Young, who are co-hosting this event with MEFMI. On behalf of the MEFMI member state Ministers, I would like to thank the two partners and their officials for this positive gesture and I look forward to valuable interactions with them during and after this event.

Distinguished Delegates, Ladies and Gentlemen, it is exactly a year ago when we met here in Washington DC for this annual Forum. This year’s Forum is special because it coincides with the 20^th Anniversary of the founding of MEFMI. In 1993, MEFMI’s founding Ministers of Finance and Governors of Central Banks met in the Bahamas, discussing strategies for dealing with the challenges of the growing external debt burden and dwindling foreign currency reserves in the Eastern and Southern Africa region. The outcome was the formation of the Eastern and Southern Africa Initiative for Debt and Reserves Management (ESAIDARM) in 1994, whose mandate was expanded when MEFMI was formed in 1997 to include macroeconomic and financial management issues.

Honourable Ministers, Governors and Secretaries, our region has witnessed significant progress since the formation of MEFMI, including the reduction in external indebtedness and improvement in reserves in most of our countries. There is also improved human and institutional capacity in macroeconomic and financial management in general. It would take me the whole day to enumerate the progress made by member states and achievements made by MEFMI in this regard.

Despite these achievements, there are still numerous challenges that affect the attainment of our shared goals of economic growth and poverty reduction in the region. We live in an environment where attainment of poverty reduction is not only shaped by our own national policies but also regional and international factors. It is against this background that the theme for this year’s Combined Forum is “Stimulating Opportunities for Growth and Development in Eastern and Southern Africa”. I find this theme to be very pertinent for our region considering the numerous constraints to economic growth and development being faced by our countries.

Distinguished Delegates, Ladies and Gentlemen, allow me briefly to reflect on a few topics to be discussed in this forum:

The first topic of our discussion is on “Opportunities and Constraints for Cross Border Infrastructure Development”. By way of background, infrastructure has played a significant role in Africa’s recent economic recovery, and will continue to be important if the continent’s development targets are to be reached, according to a recent World Bank report. However, our countries are currently facing significant challenges to develop infrastructure in key sectors such as energy, roads and railways. Simulations by the World Bank suggest that if all African countries were to step up their infrastructure development agenda to the levels attained by countries such as Mauritius and South Korea, per capita economic growth in Africa could increase by between 2.2 and 2.6 percentage points per year respectively.

However, the financing requirements for implementing large infrastructure projects are too large to be met by each individual country. Therefore, there is the need for our countries to step-up efforts of jointly implementing projects, particularly those that improve connectivity between countries so as to boost trade in goods and services. The pooling of resources among the countries to implement such projects is a viable and cost effective option for addressing the infrastructure challenges in the region. Certainly, this strategy provides enormous potential to stimulate economic growth and development within the region as well as across the borders.

In this regard, I urge you, dear colleagues, to share the experiences, lessons and opportunities accruing from cross border infrastructure development in Eastern and Southern Africa and elsewhere. These experiences should also include the strategies for mobilising domestic institutional savings to catalyse infrastructure development.

Distinguished Delegates, Ladies and Gentlemen, the other topic of our discussion is on Policies for Attracting and Managing Foreign Direct Investment. You may be aware that Africa’s share of global foreign direct investment (FDI) reached about 5.7 percent in 2013, which is the highest level in a decade, according to Ernst and Young’s 2014 Africa Attractiveness Survey. The main factors behind this improvement are strong macroeconomic growth and outlook, improving business environment, rising consumer class, abundant natural resources, democratic dividend and infrastructure development.

Despite this improvement, the FDI flows to other emerging markets are much higher than those going to Africa. It is also noted that that companies with a presence on the continent perceive Africa to be the most attractive investment destination in the world. In stark contrast, those with no business presence in Africa still view the continent as the world’s least attractive investment destination. In this regard, I urge you colleagues to deliberate on the policies and strategies for improving the attractiveness of our region as a destination for foreign direct investment.

Another emerging issue in our region is the sovereign bond issuance. Many of our countries have started accessing the international bond markets for issuance of sovereign bonds. Until the last decade, there had been few African countries with regular access to the global capital markets, namely South Africa, Morocco and Tunisia. However, following the easing of their external debt burdens through HIPC and MDRI and the subsequent improvement in the credit ratings, there have been a number of MEFMI member states tapping the global capital markets for the first time, including Namibia, Zambia, Rwanda and more recently Kenya.  It is, therefore, opportune for us to consider not only the benefits but also the risks associated with this mode of development financing.

Distinguished ladies and gentlemen, it is my hope that by the end of this Forum, we will have shared, in great depth, the possible solutions to these issues that confront our nations. I have no doubt that this Forum will make its appropriate contribution in fulfilling MEFMI’s mandate of enhancing economic management capacity in the region and enable the economies meet the numerous economic and social challenges. 

With those remarks, it is my singular honour and privilege to declare the 2014 MEFMI Combined Forum, officially open.

I THANK YOU.