Speaking at the 2nd Annual Southern African Metals and Engineering Indaba currently taking at the IDC Conference Centre, Mr Schimmelpfenning said the slowdown in demand from China for commodities, the decline in commodity prices, particularly oil, and the slowdown in investment trade call for a response in the form of prompt and robust policy interventions if SADC countries are to survive the economic storm.
“The difficult economic conditions are going to prevail for some time. It is, therefore, important to reset key economic policies to ensure that Africa does not cease to rise,” Mr Schimmelpfenning said.
He said Africa still had in place underlying drivers of strong economic growth. He said that the exchange rate was the first line of defence as far as monetary policy was concerned. Mr Schimmelpfenning said governments of SADC countries need to advance the economic diversification agenda and strengthen revenue mobilization to create fiscal space.
Commenting on the importance of infrastructure development, Mr Schimmelpfenning said that SADC countries need to think very carefully about the challenge of infrastructure, which can be a major bottleneck to economic growth.
“SADC communities need to make sure that when growth picks up again, infrastructure does not become a bottleneck,” Mr Schimmelpfenning said.
He said that basic infrastructure such as electricity and roads were critical in unlocking any country’s economic growth.
Speaking on the same panel, which focused on Southern Africa’s huge infrastructure backlog and how to finance it, IDC Head of Basic Metals and Mining Mazwi Tunyiswa said without basic infrastructure, it is very difficult to grow the economy.
“In South Africa, we have experienced the impact of the shortage of electricity. When Eskom was unable to meet demand for electricity, economic growth was severely hampered. It, therefore, goes without saying that we need to invest heavily towards infrastructure development,” Mr Tunyiswa said.
He added that it was important for both the public and private sectors to work together in order to fund the approximately R560 billion required to invest in infrastructure within the SADC region.
“Governments should take lead in funding infrastructure projects, but the private sector also has an important role to play. Public-private partnerships will, therefore, be very important going forward,” he said.
He also said that it was equally important for SADC countries to integrate their economies and pull their resources together to fast-track the building and maintenance of much-needed infrastructure in the region.
In addition, Mr Tunyiswa urged South Africa to drive the SADC infrastructure agenda and not to be too dependent on international finance institutions to do so.
Responding to a question from a delegate about the role of the newly- established BRICS Bank, Mr Schimmelpfenning said the IMF welcomed competition and did not see the BRICS Bank as a threat.
“Given the huge infrastructure backlog in SADC, bringing another bank that has a mandate to finance infrastructure development is welcome. There are enough opportunities for everyone,” he said.
In addition to Mr Schimmelpfenning, the 2016 conference line-up also includes other international speakers such as:
- Executive Chairman of the EU Chamber of Commerce and Industry in Southern Africa Mr Stefan Sakoschek;
- US Embassy Economics Minister Mr Laird Trieber;
- International Labour Organisation Acting Director Dr Joni Musabayana; and
- Zimbabwean industrialist Mr Ian Conolly.