Africa must find a way to put an end to the persistent cycle of foreign aid and debt, noted Donald Kaberuka, the Chairman and Managing Partner of Southbridge Group. The former President of the African Development Bank (AfDB) was speaking during a panel discussion that explored how to navigate economic turbulence, considering central bank strategies for inflation control and future resilience. ALSO READ: Central banks must adapt to modern realities to remain relevant - Rwangombwa That was as Rwanda’s central bank marked its 60th anniversary, on June 7, since its establishment in April 1964, and a journey of playing a pivotal role in the economic development of the country. During the ceremony themed ‘the Evolving Role of Central Banks’, Kaberuka said that ending a cycle of aid and debt is the only way to get long-term macro stability which will lead to economic growth and prosperity. While there are reasons for economic shocks to push African economies to foreign assistance, he said, there is no country that has suffered shock like Rwanda did during the 1994 Genocide against the Tutsi when GDP declined by half and inflation reached 64 percent and institutions were shambled. “The solution was not an easy option. The policies taken by the government then were not dictated by donors, they were developed domestically,” he said. Many African countries are still relying on external agents of restrain instead of locally tailored policies in terms of timing, sequencing, and phasing, he added. ALSO READ: Central bank, financial institutions must boost stance against emerging risks - PM Ngirente According to Kaberuka, countries should be able to take advice from the International Monetary Fund and implement it to have sustained macro stability to a point where looking for external assistance becomes a rarity. “Once you have reasonable macro stability, don’t allow it to consume you because our leadership must take a broad view of what matters for Africa.” Commenting on why many international banks have been leaving Africa, Jean Claude Kassi Brou, the Governor of BCEAO (central bank of West African States), said that it is a normal process and vacuum continues to be filled with national, regional, and continental banks. “During and after independence, the main existing banks were internationals and their share gradually declined. It is normal and the important part is ensuring that the African banks are strengthened and respect regulations, after all, they understand the market and needs of the continent.” The economic experts agreed that to achieve a sustained economic growth, macroeconomic and fiscal policy have to go together but independently.
