## Africa's Future: Responding to Today's Global Economic Challenges - Speech By Christine Lagarde, Managing Director, International Monetary Fund _IMF News, December 20, 2011_ ## Source details **Canonical URL:** [Africa's Future: Responding to Today's Global Economic Challenges - Speech By Christine Lagarde, Managing Director, International Monetary Fund](https://www.imf.org/en/news/articles/2015/09/28/04/53/sp122011) ## Other formats - [Markdown version](/en/news/articles/2015/09/28/04/53/sp122011/index.md) - [Structured JSON version](/en/news/articles/2015/09/28/04/53/sp122011/index.json) - [Bundle manifest](/en/news/articles/2015/09/28/04/53/sp122011/bundle-manifest.json) ## Bibliographic details - Authors: Christine Lagarde - Published: December 20, 2011 --- ### Global Outlook and Policies - Current assessment: world economy "poised in a dangerous phase." - IMF last forecast saw global growth at 4 percent for this year and next; outlook "much dimmer" now with "severe downside risks." - Core problem identified as a "collective crisis of confidence" linking adverse developments in the real economy and the financial sector. - Advanced economies, especially the Euro Area, are "at the center of the crisis" and must lead the solution. - Policy priorities: - Strike an appropriate balance between fiscal and monetary policy to promote growth and stability. - Forge ahead with structural policies to boost competitiveness, growth, and jobs. - Strengthen financial sector regulation to ensure a safer and more stable financial sector that supports growth. - Risk statement: without action, the world could be swept into a downward spiral of collapsing confidence, weaker growth, and fewer jobs; no country or region is immune in an interconnected global economy. ### Implications for Nigeria and the Region - Positive baseline: - Growth across Sub-Saharan Africa averaged 5-6 percent or more over the past decade. - Poverty rate declined from nearly 60 percent to just over 50 percent in the 10 years up to 2005. - Past resilience: during the 2008 food and fuel crisis and the global financial crisis, most countries maintained critical spending on health, education, and infrastructure and recovered quickly. - Nigeria-specific observations: - Reforms initiated 6-7 years ago helped mitigate the impact of the global crisis. - Nigeria’s economy continued to grow by 6 percent despite the crisis and "above the current regional average." - Growth looks set to continue at a healthy pace into next year, but spillovers from advanced economies threaten that outlook. - Channels of vulnerability: - A sustained slowdown in advanced countries will dampen demand for Africa’s exports. - Continued financial market uncertainty could inhibit private financing flows, remittances, and concessional financing. - Greater volatility in commodity markets could produce winners and losers; "the risk of a drop in world oil prices" is a key watch point for Nigeria. - Policy trade-off: - Need to defend against the near-term global slowdown while preserving fiscal resources for infrastructure investment to promote employment and growth. - Importance of restoring fiscal buffers that helped during the last downturn; many countries have less capacity to absorb shocks now than three years ago. ### Nigeria’s Transformation Agenda - Overall assessment: confidence that Nigeria is "on the right track"; government goals aim for a "more inclusive society" with equal access to economic and developmental opportunities. - Key domestic challenges: - Infrastructure gaps, particularly in power. - Nigeria’s electricity generation capacity is just 10 percent that of South Africa’s, while Nigeria’s population is more than 3 times greater. - High unemployment, especially among youth: unemployment rate over 35 percent for young people. - Three crucial aspects of the agenda: 1. Better managing Nigeria’s natural resource wealth - Establishing the Sovereign Wealth Fund and emphasizing the use of oil revenues for stabilization and investment. - Rebuilding fiscal buffers and channeling resource revenues toward infrastructure and social safety nets (including maternal and child care) to meet Millennium Development Goals. 2. Structural transformation - Promote a more diversified economy to better withstand shocks and deliver broad-based growth and jobs. - Nigeria as a large market with "huge, untapped potential" (telecommunications example: mobile phone subscribers grew from 60,000 in 2000 to 125 million today). - Improve business environment through investment in infrastructure, education, and agricultural development; provide more reliable policies for macroeconomic stability and investor confidence. 3. Financial sector reform - Background: 2009 banking crisis left over one third of banks insolvent or seriously undercapitalized. - Reforms have been "impressive" and actions to resolve the banking crisis are nearly complete. - Continued refinements in regulatory and supervisory practices should focus on preserving financial stability and improving access to credit. - Emphasis: the reform agenda is driven by Nigerians and is broad and challenging but essential to inclusive, lasting growth. ### Role of the Fund - IMF commitment: support Nigeria and be a better partner through deeper, more fruitful dialogue and listening more carefully to country needs. - Institutional reforms: IMF governance reforms to give emerging market and developing countries a greater voice and be more representative. - Lending and technical support: - Boosted concessional lending capacity and more flexible lending instruments with greater protections for social spending. - Redoubled efforts to provide quality technical advice and an active program of technical assistance with Nigerian public institutions. - Facilitation of expertise sharing via IMF regional technical assistance centers in Africa: currently four, and soon to be five. ### Conclusion - Call to action: policymakers should "stand up" to the global economic storm clouds and act with African and Nigerian leadership to sustain and spread growth. - Final message: with continued action, Nigeria can be a source of growth for itself, for the continent, and for the world. *Speech by Christine Lagarde, Managing Director, International Monetary Fund, Roundtable Discussion with Stakeholders, Eko Hotel, Lagos, Nigeria, December 20, 2011.* --- ## Content in this bundle - [122011apdf (PDF)](/-/media/websites/imf/imported/external/arabic/np/speeches/2011/122011apdf.pdf){rel="external" type="application/pdf"} - [122011cpdf (PDF)](/-/media/websites/imf/imported/external/chinese/np/speeches/2011/122011cpdf.pdf){rel="external" type="application/pdf"} - [122011jpdf (PDF)](/-/media/websites/imf/imported/external/japanese/np/speeches/2011/122011jpdf.pdf){rel="external" type="application/pdf"} - [122011rpdf (PDF)](/-/media/websites/imf/imported/external/russian/np/speeches/2011/122011rpdf.pdf){rel="external" type="application/pdf"} --- ## References - [Nigeria and the IMF](http://www.imf.org/external/country/NGA/index.htm) - [Speeches](https://www.imf.org/en/news/searchnews) - [Christine Lagarde](https://www.imf.org/external/np/omd/bios/cl.htm) - [Press Release: IMF Managing Director Christine Lagarde Calls For Policies to Shield African Economies from Global Crisis and Promote Job-Creating Growth](https://www.imf.org/external/np/sec/pr/2011/pr11477.htm) - [PRESS CENTER](http://presscenter.imf.org/) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/sp122011_