Accra, Sept. 20, GNA - A two-day workshop for economists from the Economic Commission for Africa (ECA) on how to balance import spending and export earnings opens in Accra for 60 African policy makers on Wednesday.
Participants would discuss issues surrounding capital flow, especially, direct foreign investment and its relationship to current accounts.
A statement by the United Nations Economic Commission for Africa said the capital inflow for investments in Africa could contribute greatly to its development efforts, adding that current account sustainability was of major importance to Africa, particularly as it related to investor confidence.
"The structure of African economies and the nature of the global economic system are not likely to lead to current account surpluses for the majority of countries. But, reversing the trend away from unsustainable deficits is crucial to reducing economic risk and instability, in order to provide Africa with the building blocks for growth."
The statement said in recent years, the number of African countries with current accounts deficits of more than 10 per cent of Gross Domestic Products (GDP) decreased from 16 in 2001 to seven in 2004. Fourteen countries were running surpluses in their current account; however, eight out of the 14 countries were oil-producing nations, which have largely benefited from higher international oil prices and robust oil production levels, hence it was unclear as to how sustainable the short-term surplus was.
The statement said a country's current account was the segment of its balance of payments that recorded its current transactions with the rest of the world, including trade income from international investments and transfers.
"For most African countries, the amount spent on incoming trade in goods and services is higher than their export earnings, causing current account deficits," the statement said.
It mentioned Foreign Direct Investments (FDI) as a major contribution to economic success, but said FDI to Africa remained low at about 1.7 per cent of global FDI inflows.