Last Updated- Mar 2, 2009 9:25 - - 0 Comments


IMF says Tanzania’s economic growth is impressive

Tanzania is among eight countries in the Sub-Saharan Africa whose economic growth is taking off impressively with the private sector playing key role, according to the International Monetary Fund (IMF).

IMF Senior Advisor in African Department David Nellor said recently that economic transformation that was taking place in the eight countries resembled that of the Eastern Asian emerging markets in the 1980s which brought about huge economic development.

Nellor mentioned other countries that have managed to attract institutional financial investors thereby promising to become part of what he called `second generation of emerging market` as Botswana, Ghana, Kenya, Mozambique, Nigeria, Uganda and Zambia.

“The same crucial developments that presaged the arrival of institutional financial investors in emerging markets in the 1980s are taking place in parts of Sub-Saharan Africa today—growth is taking off, the private sector is the key driver of that growth, and financial markets are opening up,“ Nellor said

The term emerging markets started to be used in 1980s to refer to developing countries with stock markets that were beginning to demonstrate the features of the mature stock markets in industrial countries.

It is used to describe a nation`s social or business activity in the process of rapid growth and industrialization while economic growth referred to the increase in the amount of the goods and services produced by an economy over time.

The IMF economic expert said that criteria for an emerging market–economic growth, private sector–led growth and investible markets—could be identified in the eight sub-Saharan African countries which together account for about 40 percent of the region`s population.

However, the expert warned that the new generation faced a more complex, more integrated global environment than did emerging markets of a quarter century ago when institutional investors accessed emerging economies largely through equity markets and in some cases, foreign currency debt issues.

Today, the expert underlined, these investments are but a part of the picture as the investors were immersed in a wide range of financial activities, including domestic bonds and foreign exchange market instruments.

Since 1980s the financial markets have gradually become more sophisticated and complex and they are currently characterized by financial technology which is being transferred to African emerging markets more or less simultaneously as it is developed in sophisticated markets.

Today, institutional investors are entering Africa`s markets through a variety of instruments—equity and local currency fixed income, as well as in both physical and derivative instruments although the technology transfer from emerging markets elsewhere into Africa`s nascent emerging markets seems to be limited only by market depth and regulatory and market infrastructure.

Source: Guardian

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