COMMUNICATION OF THE RIGHT HONORABLE EMMANUEL SINZOHAGERA, SPEAKER OF THE SENATE OF THE REPUBLIC OF BURUNDI ON THE OCCASION OF THE 10th CONCERTATION MEETING OF ASSECAA

KINGDOM OF ESWATINI,

ROYAL SWAZI CENTRE EZULWINI

May 11, 2023

Theme: “Impact of multifaceted international crises on Africa and Arab world’s economies

Honourable Enaam Mayara, Speaker of ASSECAA and current Speaker of the House of Councilors of the Kingdom of Morocco;

Honourable Lindiwe Dlamini, Speaker of the Senate of the Kingdom of Eswatini;

Honourable Colleagues, Speakers of Chambers;

Honourable Secretary General of ASSECAA;

Ladies and Gentlemen,

1. I am pleased to express my sincere thanks and great appreciation to the Government, Senate and People of the Kingdom of Eswatini for the generosity, hospitality and warm welcome extended to me and my delegation since our arrival.

• I also have the honour to express my joy at this meeting organized to discuss “the importance of the green economy in achieving sustainable development in Africa and the Arab world “.

• The economies of Africa and the Arab world are strongly linked to global economies and are therefore vulnerable to international economic shocks such as financial crises, oil shocks, wars, including trade wars as well as global pandemics. These shocks have a significant impact on the economies of these regions, which often depend on raw materials exports and foreign capital flows to finance their development.

• The economic sectors most affected by international crises in Africa and the Arab world are generally agriculture, oil and mining industry, as well as tourism.

• Financial crises often lead to reduced foreign investment, increased financing costs and reduced demand for exports. This can bring about lower economic growth, higher unemployment and lower tax revenues for governments.

• For their part, oil shocks can lead to lower export earnings, higher production costs and lower demand for goods and services produced in these countries. An example is the oil crisis of 2014-2016 which caused a negative impact on the economies of oil producing countries in the region. Oil prices fell, resulting in lower export earnings and an increased budget deficit. Some countries have been obliged to cut public spending and raise taxes to compensate for lower oil revenues.

• We are also observing another category of crisis which does not spare the Africa and the Arab world’s economies. These are trade wars. Trade wars can lead to a decrease in demand for exports, an increase in production costs and a decrease in foreign investment.

• More recently, the world has experienced two major shocks: covid-19 and the Ukraine crisis.

• In Africa, the pandemic has caused the main evils: generalized recession (40 countries affected out of 54 in 2020), massive over-indebtedness (more than 60% of GDP in 17 countries in 2020) and worsening poverty (more than 30 million of Africans have thus fallen into extreme poverty in 2020 and 39 million others are expected to experience it in 2021 (Mbaye et al., 2020; African Development Bank, 2021a). Real GDP fell for the first time in more than thirty years (–2.6% in 2020) and the contraction in per capita GDP is even more marked (–4.7%), due to the region’s demographic dynamism. This recession raises fears of a sharp increase in poverty rates on the continent1.

1. The World Bank has reported that during the pandemic, economic activity in advanced economies is expected to decline by 7% in 2020 as a result of severe disruptions to domestic supply and demand, as well as trade and finance.

1. The Group of emerging and developing market economies is expected to experience its first contraction in sixty years, with an overall drop in GDP of 2.5%.

1. According to the report produced in 2021, through its Economic Commission for Africa, the results of the simulation showed that the pandemic has negatively affected economic growth in Africa. Before the pandemic, the GDP growth in 2020 was projected at 3%, but today African economies are expected to contract by 5.4%. This significant negative effect on GDP growth is largely due to the decline in investment, workforce and external demand.

1. African countries have also faced a decline in investment flows from emerging and developed economies. The global economic slowdown and supply disruptions are also impacting portfolio investment outflows from Africa, causing a decline in foreign exchange reserves that could lead to currency depreciation, which could, in turn, cause inflationary pressures in African economies. This should further affect consumption patterns due to the loss of household purchasing power.

1. With regard to the Arab world, the Arab Human Development Report (UNDP 2022) indicates that, during the first year of the pandemic, the existing large budget deficits widened further across the region, due to lower revenues, due to lower demand for oil, and increased financing needs to contain the pandemic and its economic impact on households and businesses. In 2020, the average overall deficit widened by 7% to 9.2% of GDP, while in 2021 the region’s average fiscal deficit narrowed to 2.3%, a deficit which , according to the IMF, should turn into a surplus of 4.1% of GDP in 2022.

1. Large budget deficits have increased public debt, aggravating an already vulnerable debt situation. Thus, in 2020, the region’s overall average public debt peaked at 60% of GDP, an increase of around 13% compared to 2019, and net foreign direct investment (FDI) flows to the region declined. 6% in 2020.

1. The Report mentions that in 2021, the unemployment rate reached 12.6% in the Arab States region, more than double the world average of 6.2%. The female labour force participation rate was among the lowest in the world, estimated at 20.3% in the Arab States region in 2019. The female unemployment rate remained at 24% in the Arab States region, three or  four times more than the world average.

1. Also, in 2021, the region had the highest unemployment rate for young people (15-24 years old) in the world, at 28.6%, a sharp increase compared to 25.3% in 2019. The unemployment rate among young women was also the highest in the world: more than double that of young men, reaching 49.1 in 2021 compared to 44.7% in 2019 (compared to 23.8% among young men in 2021 and 20, 8% in 2019).

1. Hardly had covid-19 been brought under control, the crisis in Ukraine arises and affects two major economies: Russia and Ukraine, two major producers and suppliers of several strategic commodities, notably grain and oil products. This global crisis has once again affected and continues to affect the economies of Africa and the Arab world, and its effects are increasingly being felt, particularly through the rising prices of basic necessities.

1. In Burundi, for example, inflation rose to 17.5% in November 2022. It was 28% in February 2023. And the food side is one of the most affected. In November 2022, the inflation rate for food products was 22.2% and about 40% in February 2023 according to data from the National Institute of Statistics in Burundi.

• In response to those economic crises, Africa and the Arab world governments have adopted different strategies to mitigate their negative impacts. Some have implemented austerity policies to reduce public spending, while others have opted for revival economy policies to boost growth. Governments have also sought to diversify their economies to reduce their dependence on commodity exports.

• As regards the future prospects for the economies of Africa and the Arab world after these crises, it is difficult to make exact predictions. However, it is clear that economic diversification remains the best way to reduce vulnerability to external shocks. Thus, governments are therefore encouraged to continue to invest in education and training to improve the skills of their workforce and stimulate innovation. Finally, increased international cooperation will be needed to help those regions overcome global economic challenges.

• It is obvious that international crises are hard to Africa and Arab world economies to the extent that the countries of these two spaces should develop common strategies to deal with them. We therefore endorse the words of Salim Abdelmadjid in 2004, during a conference on the historical relationship between Africa and the Arab world held in Paris. He said: “In difficult times for both Africa and the Arab world, these two worlds can be a strategic way out for each other”.

                                    Thank you very much.