caleb m fundanga : employing african resources for african development speech by dr caleb m fundanga, governor of the bank of zambia, at the 2009 africa investment forum, istanbul, 5 october 2009. * * * introduction i feel particularly honoured and grateful to be a discussant at this important forum, whose theme is “ employing african resources for africa ’ s development ”. this forum could not have come at a more opportune time than now when all our economies are faced with the challenges emanating from the impact of the global financial and economic crisis. this seminar is also timely in that the fiscal policy response is going to play a large role in determining how well african economies emerge from the financial crisis. this is because africa must sustain and enhance investment flows in infrastructure, energy, health and education if it is to accelerate the growth momentum achieved prior to the crisis. the question of resource mobilisation for development, whether this is at a national, regional or international level, is thus something that policy makers in africa are grappling with. global financial crisis and africa ’ s development for most of the current decade, several african countries have been registering positive economic growth rates averaging 5. 3 percent between 1999 and 2008, with growth in subsahara africa slightly higher at an average of 5. 6 percent over the same period. 1 this growth has contributed to rising income levels in several african countries leading increased investments in education, health, water sanitation and general infrastructure development. however, despite improvements in growth witnessed since 1999, significant reductions in poverty will not occur without a significant increase in growth rates to above 7 % on a sustained basis. one of the ways in which growth can be scaled up is through the employment of the vast african resources for the development of the continent. prior to the global financial and economic crisis, the african continent experienced a surge in investment flows in many sectors including mining, manufacturing, tourism, transport and construction. this inflow of foreign capital helped to finance the development registered in africa over the past decade. the inflow of foreign capital coupled with high prices of commodities on the global market led to high international reserve accumulation in most commodity exporting countries, including those in africa. however, following the global financial and economic crisis the accumulation of international reserves declined as commodity prices plunged and foreign capital inflows, both private and public slowed significantly or were reversed. this has had a negative impact on the availability of resources to finance africa ’ s development. the challenge going forward is recovering,

built each year and between 30, 000 and 40, 000 units a year need to be renovated. activity may then grow rapidly in certain regions. now that construction is recovering, the increased concentration among construction companies and producers of construction materials, as well as the shortages in certain categories of skilled labour, are liable to push costs and wages up. certain problems with bottlenecks are already discernible ; in the business tendency surveys from the national institute of economic research, labour shortages are reported by 7 per cent of construction firms as against 2 per cent in march 1998. these shortages are accompanied by a high overall level of unemployment among construction workers ; part of the explanation is that unemployment is high in certain regions and those who are unemployed there are reluctant to move a long way to regions where labour demand is stronger. bottleneck problems in the construction industry are being studied on behalf of the government by industry representatives. this construction sector group has found that approximately one - third of unemployed construction workers lack occupational experience and around 6 per cent also lack formal training. in that the average age of construction workers is rising and young people do not find construction work attractive, the bottleneck problems may become even greater in the future. in order to prevent this from leading to sizeable problems, proposals have been put forward for increased mobility, improved competence and marketing of construction courses, for example. construction costs are measured by the factor price index ( fpi ) ; the largest item is wage costs. the price of completed dwellings, on the other hand, is measured by the building price index ( bpi ), which also includes the construction companies ’ productivity and profit margins. these indexes do show relatively large price increases but there are no actual signs of any direct risks of an inflationary development in sweden in the coming years, provided that the bottleneck problems do not increase. the rising costs associated with earlier upswings in activity have been connected with the contemporary subsidy systems as well as the high degree of concentration in the construction market. the revised system for financing residential construction has appreciably reduced one of these problems : construction companies as well as consumers are exposed more directly to production costs. but the problem of concentration in the construction market still remains and may be a future cause for concern. future monetary policy in the main scenario in the december inflation report, the 12 - month change in the cpi was projected to be 1. 2 per cent in december 1999 and 1. 4 per cent in december 2000. inflation ’ s underlying