It is often said that when America sneezes, Africa catches flu. The credit/economic crunch in America and later in Europe started as an isolated case. However, Africa – an innocent bystander – is feeling the pinch and heat. Latest report released by ActionAid said the financial crisis and global recession will see African economies lose up to $49bn by the end of this year.
The report added: “About $27bn of this was a fall in aid, export earnings and income from richer recession-hit nations said the charity. The lost income is equivalent to a 10% pay cut for the continent.”
The ActionAid, according to the BBC, found that countries which liberalized their markets, and were large enough to attract significant investment would be most affected by the financial crisis. South Africa would be among the hardest hit, as it was likely to see income from abroad plunge to around a fifth of the country's economic output.
Conversely, Africa – the world's poorest continent – is paying dearly for the problems of the affluent nations. It is unfair as Africa has too many issues to grapple with for more to be added. Africa is yet to find lasting solutions to poverty, sanitation, high mortality rate and illiteracy among others.
As African leaders prepare to meet UK prime minister Gordon Brown to discuss the effect of the recession on their economies, they should not mince words but tell the second most powerful man in the world that we can't pay for their mistakes. America and Europe would have gone wild on Africa and propose some funny conditionalities on us through their World Bank and International Monetary Fund (IMF) if we had created this mess.
Inasmuch as Africa must look within to build shock absolvers around its economic borders to mitigate the crisis, America and Europe must extend a brotherly hand to stimulate our economies too.
The IMF has warned that 26 world's poorest countries including nine African countries are highly vulnerable to ravaging effects of the global economic down-turn, Africanews.com reported recently.
Among the 26 countries are Zambia, Vietnam, Angola, Ghana, Burundi, Cote d'Ivoire, Haiti, Honduras, Liberia, Nigeria, Mongolia, Moldova, Papua New Guinea, Sudan, Albania and Kyrgyzstan.
The IMF has cautioned in its latest projections posted on its website that the global financial crisis has shifted to the world's poorest nations and said those countries need as much as $25 billion in additional funding in 2009 to cope with the economic downturn.
We hope South Africa – the only African country attending the upcoming G20 summit – will be bold enough to champion the course of Africa.
by Kent Mensah