African consumers can rebalance trade

TOKYO – Development aid to Africa can boost domestic demand on the continent and help wean the global economy from over-reliance on personal consumption in the United States, a senior World Bank official said this week.

The world economy’s over-reliance on US consumption has been cited as one side of an imbalance in trade and investment flows, seen as among the key topics of debate when Group of 20 financial leaders meet in Scotland today.’We need to look at a multi-polar world, because the dependence on US consumption will have to shift,’ Ngozi Okonjo-Iweala, Managing Director at the international lender, told a news conference.’There are other countries that can provide consumption. When you look at Africa, it has around a billion consumers. When you invest in Africa you provide trade and services to these people.’The Group of 20 industrialised and emerging nations today to discuss ways to avoid the imbalances in trade and investment flows that played a part in the global financial crisis. Part of a US proposal is reducing trade surpluses in major exporters like China and increasing savings in debt-laden countries, including the United States.Okonjo-Iweala, a former Nigerian finance minister, said it was important to return African countries and other emerging economies to the growth rates they enjoyed before the global crisis to reduce poverty and contribute to rebalancing growth.Okonjo-Iweala, who met with Japanese Finance Minister Hirohisa Fujii and other government officials, also reiterated the Bank’s plan to increase its capital base so it can lend more.The bank will provide member nations with an assessment of its capital needs by spring 2010.France, Britain and Italy have said they were not convinced the increase was necessary, although the United States, Nordic countries, the Netherlands and Australia have voiced general support. – Nampa-Reuters