African FinMins: Eurozone Crisis Hurting Exports,Fin Inflows

--Adv Econ Struggles Represent Opportunity To Develop Regional

Markets By Brai Odion-Esene WASHINGTON (MNI) - Finance ministers

from four African nations Saturday bemoaned the impact of the

Eurozone's struggles on their economies, underlining the

spillover effects from the euro area's woes on the continent's

export-reliant countries. However, in a press briefing during the

IMF spring meeting in Washington, the officials from Burkina

Faso, Burundi, Mauritius and Mozambique also sounded hopeful that

the crisis could further motivate African nations to develop

their domestic markets and regional trade, lowering their

vulnerability to international crises. Xavier-Luc Duval,

Mauritius vice-Prime Minister and minister of Finance and

Economic Development, told reporters that his country is highly

dependent on Europe, with 65% of its exports -- such as textiles

and sugar -- shipped there. The nation of 1.3 million people is

also heavily reliant on Europe to support its financial services

and tourism sectors. Duval noted that all these, with the

possible exception of sugar, are highly dependent on consumer

demand. "With the fall in consumer demand in Europe, we are

expecting a commensurate effect on the Mauritian economy," he

said, adding that the fall in the value of the euro is also

having an impact on exporters' income. "In addition, there will

be downward pressure on foreign direct investment," Duval said.

Mozambique's Minister of Finance, Manuel Chang, agreed: "We have

felt the impact of the international financial crisis." He told

reporters that the resource-rich nation has witnessed a drop in

foreign trade, a drop in the price of its commodity exports, and

a decline in FDI as well, not to mention remittances sent home by

Mozambique immigrants. Spain and Portugal are among Mozambique's

most important trading partners, and Chang said the economic

slowdown in those countries has meant a drop in their demand for

Mozambique's main offerings of wood, aluminium, sugar and coal.

He also emphasized the impact of the crisis on what he called the

"real sector" -- manufacturing, tourism, mining -- and on its

financial system, with banks less able to offer loans for

financing. Lucien Marie Noel Bembamba, Burkina Faso's Minister of

Finance, said the negative effect of the Eurozone crisis and

resulting recession will not be limited to impacting demand for

his country's exports, but may also impact the government's

budget, and financial inflows. The words of the finance ministers

are in keeping with the warnings from the IMF in its World

Economic Outlook published Tuesday, in which it said while

Sub-Saharan African is "relatively less exposed" to the slowdown

in the global economy, it is not immune to spillovers. "The euro

area crisis would negatively affect the region through its effect

on exports, remittances, official aid, and private capital

flows," the report said. While predicting growth of 5.5% in 2012,

and 5.3% next year, the IMF warned that commodity exporters and

middle-income economies in the region that are more integrated

into global markets "would be the most affected by an escalation

of the euro area crisis." Europe, however, is not the only factor

having a negative impact on African economies, as Burundi Finance

Minister Tabu Abdallah Manirakiza noted. The international crisis

is "seriously affecting" Burundi, he told reporters, although in

this case he was referring to high energy prices. Manirakiza said

the oil price shock is forcing his government to provide

subsidies to hold down prices, while the drop in oil imports due

to the sharp rise in prices means the government receives less in

way of taxes and excise. It appears, however, that African

countries are taking the lessons from the crisis to heart, and

are striving to bolster internal trade and become less reliant on

external demand. Mozambique's Chang said that regional economic

groups on the continent are making efforts with regards to

expanding intercontinental trade. "Africa is struggling to be the

Africa of the future but we can learn from the experiences of

China," he said. "We must see their experiences and see what are

the needs of the African countries." As for high oil prices,

Chang said it presents an opportunity for Mozambique to reduce

reliance on oil imports while increasing its own exports. "These

are our internal alternatives to counter rising commodity

prices," he said. Burundi's Manirakiza agreed, saying of Africa's

potential: "We have a very big market and we need to develop

this." The key is to continue growing wealth throughout the whole

population, he warned, as if growth is badly administered it can

produce distortions and benefit only a portion of the population.

"Our strategy for this year and future years will be to reduce

our dependence on Europe," Duval of Mauritius said. He noted that

his country is already exporting more and more of its textiles to

its African neighbors, and is developing tourism markets in

China, India and Russia. The opportunities for trade and the

supply of services are "enormous and relatively untapped," he

said. There is "tremendous potential" to increase regional

integration, Duval said. Burkina Faso's Bembamba agreed, telling

reporters that the international crises underscore the need for

greater union among African countries, arguing that it would

better insulate their economies from the knock-on effects of the

Eurozone crisis. Bembamba said stressed the need to work more on

strengthening cooperation, as it can attenuate the impact of the

crisis and create the potential for financials flows on a

regional level. "We need to mobilize domestic sources ... we need

to help ourselves," he said. ** MNI Washington Bureau:

202-371-2121 **