1 / 23

Global Financial Crisis and East Africa - The Way Forward

Global Financial Crisis and East Africa - The Way Forward. Harpreet Duggal Councillor Confederation of Tanzania Industries. East African Business Council’s Regional Conference on Global Financial Crisis 4 th March 2009 Arusha. 危 机 W ēi + jī

hamlet
Download Presentation

Global Financial Crisis and East Africa - The Way Forward

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Global Financial Crisis and East Africa - The Way Forward Harpreet DuggalCouncillor Confederation of Tanzania Industries East African Business Council’s Regional Conference on Global Financial Crisis4th March 2009 Arusha

  2. 危机 Wēi + jī Crisis = Danger + Opportunity

  3. Objectives: What are we looking for? • Ensure the Region is adequately prepared to weather the global financial crisis • Ensure the vulnerable sectors of the economy are not effected by the impact of the crisis • Ensure the Region is geared up to take advantage when the economy recovers

  4. Presentation Structure • Objective • SWOT Analysis • The Way Forward • What can the Government do? • What can the Central Bank do? • What can the Private Sector do? • What can the International Community do? • What can the World Bank / IMF do? • The Next Steps

  5. SWOT Analysis for East African Economies

  6. SWOT Analysis for East African Economies

  7. What can the Government do? • Stimulate the economy for growth • Increase credit to private sector • Ensure self sufficiency in food • Attract FDIs (More important: Retain FDIs) • Facilitate South – South Trade • Special support to sectors hit by the global crisis

  8. 1. Stimulate the Economy for Growth FISCALMEASURES • Increase infrastructure spending • Power , ports, rail, road, water • Create jobs • Increase public works spending • Incentives for employing more – remove disincentives • Cut tax rates • Subsidies for fertilizers, irrigation and modernization • Special “Crisis” tax rebates for the effected sectors • Incentives for local value addition • Protect local business - Promote “Buy East African”

  9. But where will the Government get the money to stimulate the economy? • Increasing internal taxes not a option – it would further slow down the economy and push us to the brink • Maintain pressure on Donors for budgetary support • Reduce the size of Government – reduce recurrent expenditure • Widen tax base, improve tax admin • Cut tax exemptions - Control tax evasion • Temporarily increase EAC Common External Tariffs on products prone to dumping • Access internal borrowings through a domestic bond • Increase fiscal deficit

  10. 2. Increase Credit to Private Sector MONETARYMEASURES • Ease monetary policy • Reduce key lending rate and treasury bill rates • Assist banks / FIs to offer cheaper financing • Reduce statutory Government deposit for banks Increase credit to private sector • Ease SMR (Statutory Minimum Reserve) requirement • Incentives for banks to lend more to priority sectors infrastructure agriculture & SMEs • Maintain day to day surveillance of banks balance sheet • Strengthen capacity of Government institutions and crisis management ability

  11. 3. Ensure Self Sufficiency in Food • Subsidies for fertilizers, irrigation and modernization • Assist banks to lend to agriculture • Remove nuisance taxes • Remove VAT on agricultural products, duty on fuel, abolishing of corporate tax on agricultural production • Streamline local government • Improve of infrastructure like roads, railways, electricity • Develop agro-based clusters • Incentives for investment in large scale farming

  12. 4. Attract FDIs / Retain FDIs • Reduce cost of doing business • Improve performance of the public utilities • Maintain policy predictability • Reform labour laws • Ensure Contract enforcement • Simplify bureaucratic procedures • Remove corruption

  13. 5. Facilitate South-South Trade • Remove non tariff barriers on intra regional trade • EAC member states to enhance economic cooperation, harmonize taxes and macro economic policies • Speed up EAC - SADC – COMESA free trade area • Instead of focusing on AGOA and EU-EPA, look at partnerships with emerging markets • Introduce credit lines for trade with emerging markets

  14. 6. Special support to sectors hit by the global crisis • Tourism • Agriculture exports • Fish exports • Cut-flower exports • Gem exports

  15. Tourism • Reduce visa fees, park entry fees, concession fees • Reduce aircraft landing charges • Special ‘Crisis’ tax rebate on tour operators • Reduce cost of doing business • Improve infrastructure • Incentives to promote domestic and regional tourism

  16. What can the Private Sector do? • Reduce costs • Improve productivity • Pass on drop in raw material / fuel prices to consumers • Look at new markets • Be innovative – think out of the box • Be ready with Plan B

  17. What can the Central banks do? • Promote inter bank liquidity • Vigilant financial supervision of banks • Reduce Banks reliance on foreign capital (specially short-term) • Step in to guarantee debt – underwrite long-term investment lending • Recapitalize stressed but healthy banks

  18. What can the International Community do? • Do not cut aid! • Heed and solicit views of African countries when conferring on the issue of how to address the global financial crisis • Reduce subsidies in developed countries • Facilitate trade financing • Take steps to improve effectiveness of aid delivered • More spending on action rather than seminars!

  19. What can World Bank and IMF do? • Comprehensive reforms to adequately reflect changing realities • Increase allocation / voting rights for Africa and developing countries • Identify need of client economies in wake of the crisis • Review bank’s programmes and projects in the region • Takeover privately funded infrastructure projects facing financial distress • Create emergency liquidity facilities • Reduce red tape – speed up loan processing time • Greater scrutiny of MNC banks / FIs

  20. Conclusion: The Way Forward • Stimulate the economy for growth • Increase credit to private sector • Ensure self sufficiency in food • Attract FDIs (More important: Retain FDIs) • Promote value-addition of local resources • Special support to sectors hit by the global crisis

  21. The Next Steps • Form a Economic Crisis Management Committee responsible for monitoring the Crisis and recommending corrective actions. It would consist of: • Central Bank Governor • Permanent Secretaries from the relevant ministries • Chairpersons of private sector associations – Industry, agriculture, banking, mining, tourism etc • Private Sector associations to spur debate within its members and submit proposals to the Committee. • Agreed decisions to be forwarded to the cabinet for implementation • For regional interventions, the existing EAC structure consisting of High level task force, PS, Council of Ministers and the Summit can be used

  22. Objectives: What are we looking for? • Ensure the Region is adequately prepared to weather the global financial crisis • Ensure the Region is geared up to take advantage when the economy recovers • Ensure the vulnerable sectors of the economy are not effected by the impact of the crisis

  23. We can do it We must do it

More Related