maintaining and sustaining the economic gains and macroeconomic stability that african countries experienced before the crisis hit. in view of the anticipated reduction in aid flows and foreign direct investment, african countries need to give domestic savings mobilisation as much attention as the other foreign sources of development finance. in this respect, african countries may have to consider the utilisation of domestically generated resources such as international reserves ’, pension funds as well as the enhanced use of stock markets in raising financial resources required to finance development in africa. however, it is important to stress that the effective utilisation of imf world economic outlook database, april 2009. resources will be dependent on the credibility of the institutional frameworks within which these resources are deployed and the quality of the projects themselves in terms of their economic and social returns. sources of development finance ( a ) international reserves the global economy has witnessed an unprecedented accumulation of foreign exchange reserves in the last ten years, particularly in developing countries and africa has been no exception. according to the imfs currency composition of official foreign exchange reserves ( cofer ), between 2001 and 2008 total world reserves increased by 227 percent from us $ 2, 049. 6 billion to us $ 6, 702. 3 billion while emerging and developing country foreign reserves grew by 418 percent from us $ 818. 1 billion in 2001 to us $ 4, 237. 7 billion in 2008. the rapid build up in foreign reserves resulted mainly from high commodity prices and increased portfolio and foreign direct investments in emerging and developing countries. most developing country central banks approach foreign reserve asset allocation with a view of preserving capital and liquidity. this normally means that central banks invest in low risk, highly liquid assets with short - term investment horizons. it is noteworthy that the majority of the foreign reserves, which are held outside the african continent, entail an opportunity cost for developing countries as these resources are not used to finance development. in addition, the global crisis has brought to the fore the inherent risks in the placement of reserves with international fund managers with the collapse or near collapse of some of the worlds ’ leading asset managers such as lehmann brothers, bear stearns and fortis, threatening the safety of the continent ’ s international reserves. further, with the reduction in interest rates in developed economies where most of the foreign reserves are held, the returns on these investments have declined drastically, thereby increasing the opportunity cost of these reserves. these developments present an opportunity for african countries to consider foreign exchange reserves as a possible source

bank has been providing fully funded scholarships to five outstanding economics students at third and fourth year levels. this support is also expected to shift to postgraduate economics programmes as soon as the modalities are agreed between the two institutions. vice chancellor, we are aware that the supplementary funds provided by boz cannot meet all your requisite needs with regard to enhancing your research capacity. i therefore urge you to forge other linkages that promote research. i have in mind the african economic research consortium ( aerc ) whose principle objective is to strengthen local capacity for conducting independent, rigorous inquiry into problems pertinent to the management of economies in sub - saharan africa. aerc was established in 1988 as a public not - for - profit organization devoted to advanced policy research and training in economics. however, it is rare to find zambians utilizing the facilities which are offered by this organization. our hope is that with this information, we will see more papers by unza academicians on the aerc website in the near future. in order to encourage research on local issues by our own researchers, i am contributing an book to the unza library by professor paul collier, the director for the study of african economies at oxford university. the book, “ the bottom billion ” provides an example of the sort of issues which we expect our own authors to be able to elucidate on more clearly from their own experiences. in the book, collier analyses the causes of failure by fifty failed states, pointing to a set of traps that snare these countries. these traps include civil war, a dependence on extraction and export of natural resources, being land - locked, and bad governance. surely our experience with some of these “ traps ” should make us better experienced to explain the issues. this is what we expect of unza. vice chancellor, on our part, we will continue to assist unza as guided by the mou. we are very confident that the support that unza is receiving from partners such as boz will go a long way in furthering academic excellence and uplifting the levels of morale among faculty members. i thank you!