Sunday, October 26, 2008

Invest in Africa to beat bank crisis:Senegal's Wade

By Diadie Ba, Sun 12 Oct 2008, DAKAR (Reuters) 

European countries should spend money on African infrastructure projects as a means of boosting production and alleviating the global financial crisis, Senegal's President Abdoulaye Wade said on Saturday.

By buying infrastructure-building equipment from European firms for use in Africa, Europe would benefit from greater industrial production, and Africa would benefit from better roads, Wade said.

"For example, a billion dollars could be taken from the budget of Germany or France and invested in Africa to build roads," Wade told Senegalese academics in the capital Dakar, which frequently suffers power cuts, and where some roads disintegrate in heavy rain.

"That billion would go to the (European) companies who invest in Africa by buying equipment from them, and they will build roads using African workers," he said.

"We will benefit because we would have roads, but the profit would go back to Europe, to those who have invested, and go back into the production cycle in Europe."

After global stock markets fell to a five-year low on Friday, the International Monetary Fund warned on Saturday that debt-laden banks were pushing the global financial system to the edge of meltdown and measures taken by rich nations had so far failed to restore confidence in that system.

Wade said spending money in order to build physical assets such as roads would be more constructive than shifting money across ailing financial markets.

"In today's financial crisis ... people should invest in Africa in order to create real goods from that largely inflationary money which moves from one stock exchange to another," he said.

Earlier this year Wade sacked his Budget Minister Ibrahima Sarr for allowing government departments to overspend by 109 billion CFA francs, according to a Finance Ministry official, and the octogenarian ruler has been criticised by opponents for funding prestige projects in the face of rising food import bills.

The IMF has warned that tighter credit markets may crimp funding for projects and for aid in Africa, while West African regional bloc ECOWAS said earlier this month that economic growth will suffer because foreign investment will dry up as a result of the crisis.

Wade, whose country is one of Africa's top recipients of aid, said the continent was not immune to the financial crisis, but the major concern for Africans remained survival.

"I'm not saying that there will not be an effect on Africa, above all on aid to Africa, but the impact on Africa will be minor because for our populations, for our farmers, having enough to eat is what's important," Wade said.

"I don't know whether tomorrow I will be able to import a tie or a suit, but that's marginal compared to fundamental problems," he said.