The power was ultimately in the hands of each individual African country to take control of its destiny, as the US had done, US Secretary of Treasury Jacob Lew said on Wednesday.
Addressing delegates at the Gordon Institute of Business Science (Gibs), in Sandton, he said countries such as South Africa had to take steps to build institutions in their own economies, as well as build trust and cooperation for these institutions to work.
“There is a path here for many countries in the region to do better, but the challenge [lies in] taking on domestic hurdles that are difficult and that reflect old ways of doing business,” he said.
Lew added that, while demand for commodities and the flow of macroeconomic policy in other regions had a significant impact on the economies of African countries, it would be a mistake for the leaders of these countries, to use that as an excuse for not taking adequate steps in terms of institutional reform.
Further, he noted that, while it could be said that the strong US dollar had a negative effect on other countries with weaker currencies, this was in effect not a case of the strong dollar hurting those countries, but rather a case of poor economic conditions around the world having a negative impact.
Therefore, countries should work on strengthening their own economies to combat the effects of a strong dollar.
Lew said a combination of fiscal and structural policies was needed to ensure a stronger domestic economy.
“One has to keep an eye on what your total debt is and whether that is sustainable, [and] one has to keep an eye on the path that the short-term deficit is running, as the two are much related.
“But it can’t begin and end there. There also has to be sensible internal policies in terms of building infrastructure, both human capital and physical, for a sound financial future,” he noted.
Lew stated that South Africa’s National Development Plan did address most of these issues; however, the challenge would now be to effectively implement this policy.
Meanwhile, in response to questions about the fact that statistics show that trade between the US and Africa had declined between 2011 and 2013, while trade between China and Africa had increased over the same period, he said there was potential for many different relationships to contribute to Africa’s development.
“It is not a question of should we be here [or] should China be here. We both should be here,” he said, stating that there were good reasons for both countries to be investing in the continent’s development.