African countries sharing the Euro-pegged CFA franc could see their economies slowing and shedding jobs as a result of lower world demand for their products and higher oil prices, their ministers said last Tuesday.
Meeting in Yaounde, Cameroun, the ministers from the 14 West and Central African states and the Comoros Islands outlined the dangers from the international financial crisis that had engulfed the economies of the developed world.
"They observed that the financial and monetary stability of the zone remained solid but the slowdown of world demand and the current level of oil prices could negatively impact on activity and employment," the ministers said in a statement.
Africa's CFA zone is split into eight countries in West Africa and six in central Africa, each group with its own central bank and notes. Both versions of the CFA are pegged at 655.957 CFA francs per Euro.
The Comoros Islands are also part of the franc zone.
Economists and analysts say that with the turmoil gripping international financial and banking sectors, they expect to see a reduction in flows of investment and aid from the developed world to Africa, the world's poorest continent.
"As I am talking to you, there is already a significant decline in international financial aid to sub-Saharan Africa and things will surely get worse with the present financial crisis," Cameroon's Finance Minister Lazarre Menye Essimi told Reuters.
He said African countries needed to increase and diversify their economic production and seek to process their raw materials, such as oil and minerals, in a way which made them more valuable and created more jobs.
"This is the only way we can reduce our dependence on international financial aid and play a more important role in the global economy," he said.
Essimi added: "We will continue to depend on assistance from the West, while also opening our doors to aid from other regions, not leaving out Asia, principally India and China."
The African franc zone ministers urged the international community to respect aid commitments to Africa. They said growth in the eight-nation West African franc zone was set to increase to 3.9 per cent in 2008 from 3.2 per cent last year. That was thanks to a good agricultural performance and the resumption of international development support to Cote d'Ivoire, Guinea-Bissau and Togo.
Benin, Burkina Faso, Mali, Niger and Senegal are the other members of the Economic and Monetary Union of West African States (UEMOA), which saw its inflation level surge at the end of June to an annual 7.2 per cent, from 4.8 per cent three months earlier, according to recent figures.
The double shock of fuel and food price increases could hurt public finances and growth, the ministers said.
Growth in the six-nation Central African Economic and Monetary Community (CEMAC) was seen rising to 5.8 per cent in 2008 from four per cent in 2007.
CEMAC brings together Cameroon, the Central African Republic, Chad, Congo Republic, Equatorial Guinea and Gabon.— Reuters
Credit - Reuters