Kaberuka warns of EAC economic melt down

The President of the African Development bank (AfDB), Donald Kaberuka has predicted that economic growth in the East African Community zone will fall by 2 percent or more this year. He told an EAC Heads of State Summit in Arusha on Tuesday that he expects economies in the region to shrink from the current 7 percent economic growth. “I still expect economic growth to recede to 5 percent in 2009 and probably below. But even then, there remains serious uncertainties,” Kaberuka said. He added that at the start of the financial crisis last year, AfDB had expected that the crunch would take about eighteen months to spread to low income economies, but that it came much sooner; in six months. He further predicted that Africa has not seen the full effects of the crunch, which he said would unfold slowly. The AfDB President, who is also a former Rwandan Minister of Finance, decried the waste of resources by African governments on rehabilitating physical assets, saying the funds should be used to build new ones that can last longer. He told the gathering that in October last year, the bank approved a $150million project for constructing and upgrading power interconnection lines between the five East African Community countries. Kaberuka said the region which is the size of Western Europe with a population of 120 million grew by 7 per cent last year “in spite of the hostile global economic environment,” besides impressive strides in investment and integration. He welcomed the development of the region’s port capacity particularly pointing to the Mombasa and Dar- es- Salaam ports and the ongoing appraisal of the Tanzania-Burundi-Rwanda railway project, a venture in which the continental bank is involved. Ends

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Kaberuka warns of EAC economic melt down