Ngirente made the appreciation yesterday as he officiated the opening of the 2019 Symposium of the Association of African Central Banks (AACB) taking place in Kigali since 28th July 2019.
Established in 1965, the association comprises 41 banks that meet every year to discuss Africa’s economic integration.
The Symposium is aimed mainly at promoting exchanges among economic policy-makers and other participants. Discussions include appropriate strategies for sovereign debt management, drawing on lessons learned in Africa and other regions of the world.
The exchanges also focus on the challenges faced by African countries, with a view to keeping the public debt at a sustainable level, while financing the development agenda.
Fifty-four years ago, the Association of African Central Banks was established to promote cooperation in the monetary, banking and financial sphere in the African region.
It was also meant to assist in the formulation of guidelines along with future agreements between African countries. Since then, African economies have gone through significant mutations despite numerous challenges.
Premier Ngirente said that the growth path has generally been sustainable for the last two decades, amid economic diversification and financial sector development and played a critical role in addressing challenges.
As the global economy continues to evolve, at a higher pace, he said, policymakers and Central Banks are key players to address new challenges to ensure that Africa continues its transformation journey in line with the Agenda 2063.
“Currently, with the modern financial ecosystem, we are dependent on Central Banks to safeguard our individual country’s monetary policy and financial systems. They also help to set standards and protocols that make it easier to have intercontinental transactions of goods and services,” said Ngirente.
“Therefore, despite numerous challenges like recurrent commodity price shocks, other external shocks and external imbalances in some cases, African Central Banks have contributed to ensuring macroeconomic stability. Association’s role in bringing these central banks under the same umbrella to work together under a common goal should be applauded,” he added.
The African Continental Free Trade Agreement (AfCFTA) is aiming to create a tariff-free continent that can grow local businesses, boost intra-African trade, promote industrialization and create jobs.
Premier Ngirente said this is one of the many solutions that can come from a united Africa collaborating to address the health of the economy of the region.
“Further to this, countries and regions have signed different treaties, developed cooperation models in order to trade with each other, share knowledge, experiences, and support in solving various economic challenges. As policymakers, we should work towards implementing our commitments and treaties,” he stressed.
This year’s Symposium was organized under the theme “The Rising African Sovereign Debt: Implication for Monetary Policy and Financial Stability”.
The Governor of the National Bank of Rwanda and the Vice-Chairperson of AACB, John Rwangombwa said that Africa’s rising sovereign debt should be not be taken as a unique problem to Africa noting that many Global economies are facing the challenge of rising sovereign debt as data from the International Monetary Fund (IMF) shows.
In 2017 sovereign debt in advanced economies was averaging 266% of GDP, while that of emerging markets was at 168 percent of GDP.
In the same year, the average public debt for the African continent was at 45 percent of GDP, with 19 countries above 60%, the then threshold set by the African Monetary Co-operation Programme.
“ Looking at the numbers, one would wonder why we had to dedicate a whole day discussing debt when Africa’s debt seems to be very low compared to that of the rest of the world,” wondered Rwangombwa.
“As central bankers, we intend to mainly focus on how rapidly increasing sovereign debts may affect the effectiveness of monetary policy as well as the financial stability in our economies,” he said.
Last week the IMF announced that it had revised downwards the global GDP growth numbers for the years 2019 and 2020 because of the likely negative impacts of the trade wars between the US and China plus the uncertainties surrounding Brexit.
It is against this background that Governor Rwangombwa said that Africans would suffer if they don’t cooperate.
“We have a saying in Kinyarwanda which literally translates; ‘when two elephants fight it’s the grass that suffers’. It would not be farfetched to say that if we Africans don’t put our act together; we will easily be the grass at the mercy of the feet of the two global giants fighting each other,” he said.
Abebe Aemro Selassie, the Director of the African Department at IMF said that the most acute challenge with respect to debt distress is being faced by countries that were hit by the shocking decline in oil prices and others.
“We need to think about how central banks can tackle high debt to GDP ratios in Africa,” he recommended.