African Caucus 2011
The Summit for African Development
by Paul Trustfull

As the developed world reels from the lingering effects of the 2008 financial crisis, the emerging markets of Africa are meantime on the fast track to growth. In early August, Congolese Finance Minister Matata Ponyo led the African Caucus summit in Kinshasa, the Democratic Republic of Congo (DRC), to discuss the progress made in economic development and the steps necessary to further improve the African continent's economy.

The conference, arguably one of the most important events since the 2010 South Africa World Cup, brought together finance ministers from the African continent, leaders of the International Monetary Fund (IMF) and the World Bank, and representatives from the United States and the European Union.

Each of these participants has an important role to play in the future of Africa. According to Minister Ponyo, they must "find the necessary and sustainable resources to assure food security and at the same time guarantee the regular supply of oil products, without compromising the stability of the macroeconomic framework. "

Developing Capital Markets

From the early stages of the meeting, the message was very clear: Africa would lead the next growth cycle of the global economy, and all of the delegates in the room would play an important role in that cycle. Speaking of the developing capital markets in the DRC and in Africa as a whole, Minister Ponyo reiterated the importance of global economic strength, specifically addressing the financial health of the United States.

Commenting on the recent S&P downgrade of U.S. credit and its effects on Africa, he noted, "The United States remains the most dominant economy in the world, and no downgrade will ever change that. For that reason, the United States and the U.S. dollar will remain prime players in African growth through the future."

African development, although it is already occurring on a mass scale, needs to improve in terms of speed and efficiency, noted many participants at the conference. Teamwork between countries is of the utmost importance, said President Joseph Kabila of the DRC as he spoke about energy projects. He discussed expansion of the Inga Dam as a means of bringing electricity, integration and infrastructure to neighboring countries.

Samir Jahjah, the IMF's resident representative to the DRC, spoke positively of the region's economic condition. "The region is performing quite well," he stated. "The economy is growing, inflation is down and microeconomic balance is in order." This stability, he said, explains the current flurry of interest among foreign multinationals interested in investing in Africa. Heineken, for example, recently invested US$1 billion dollars in the DRC.

Securing foreign investment is vital to the future expansion of Africa and its global recognition by established capital markets. "The key ingredients to further investments are peace, stability and potential," Minister Ponyo emphatically stated. His ongoing plans are to decrease the bureaucracy currently hampering the private sector and to further improve the justice system so as to protect private enterprise.

Welcoming Global Business
Within the DRC, Minister Ponyo has a simple mandate: to efficiently utilize tax revenue and promote job creation as a means of addressing poverty. Combining this with a transparency initiative to streamline business formation creates a formula for attracting global businesses.

His agenda has been successful. According to Deloitte Touche Tohmatsu, the DRC saw its GDP grow from US$7.17 billion to $13.08 billion from 2005 to 2009, a 78% growth in nominal terms and a 30% growth in real value. Also during this time period, GDP per capita increased by 58% in nominal value and inflation decreased from a staggering 21.3% to a manageable 7.7%.

These improvements are largely due to the government's leadership in managing public revenues, its macro-stabilization policies and reconstruction aid from international support organizations.

"It is up to the leadership of this country to help transform our nation from a burgeoning nation to a global powerhouse. Under President Kabila, many reforms in the way we as a nation conduct business and provide stability have put us on a path to becoming the best in Africa," said Minister Ponyo.

Among the numerous ministers and governing board leaders at the summit, representatives from Rethinking Bretton Woods—an organization that promotes reforms of international financial institutions—spoke encouragingly of what they have observed in the DRC.

"It is up to the leadership of this country to help transform
our nation from a burgeoning nation to a global powerhouse."

Finance Minister Matata Ponyo, Democratic Republic of Congo (DRC)

For Aldo Caliari, one of the Washington, D.C.-based coordinators of Rethinking Bretton Woods, this summit was his first trip to Kinshasa. He said of the regional cooperation between African nations: "The organization of this conference has really impressed me. The signs that Africa is moving forward, its nations depending on each other, rather than relying solely on the West, are evident throughout this summit."

These are encouraging signals of the marked change in this continent plagued by poverty and corruption, but much more must be accomplished to achieve its potential. Improving infrastructure and transparency, as well as expanding the trade channels between African nations, will benefit the region tremendously, say many leaders.

A New Day
At the conclusion of the summit, participating world leaders and decision-makers walked away with a favorable impression of the new Africa. Speaking with veracity and power, Ponyo outlined his case for Africa's better tomorrow. With the necessary cooperation in place and new solutions for the issues plaguing the continent, Africa will see a new day. Shifts in the global financial arena open an avenue for Africa to play a sizable role in crafting the economy of tomorrow.