Africa’s economic future is in jeopardy as the global economic meltdown affects its main donors and principal economic partners. The continent’s infrastructural gap has hampered intra-continental trade and forced it to develop economic partnerships on other continents. Contrary to exports to other continents, the high costs involved in transporting goods to neighbouring countries make “the continent’s exports less competitive on world markets and its imports more expensive for Africans” says Donald Kaberuka, President of African Development Bank. Intra-continental growth has long been compromised to the benefit of foreign trade partners.
These foreign partners are now battling with the economic downturn and as a result have committed colossal sums of money to bail-out their struggling multinational companies and ailing banks as Africa’s main export commodities hit rock bottom. Doubts on their promise to aid African countries have been expressed by some of the most prominent figures, including French Foreign Minister Bernard Kouchner, who last September, doubted his government’s promise to get “people more money for development”. But, according to UN Secretary General, Ban Ki-Moon, “we can find the much more modest amounts needed to sustain more than a billion lives”
Selected to represent Africa at the 2009 G20 summit in London, Ethiopian Prime Minister, Meles Zenawi, thinks that although aid should be addressed, the continent’s economy should be equally tackled as “our gains over the past decade could be washed away (…) Our exports are facing difficulties because demand is not there. Prices have collapsed. Foreign direct investments have been seriously affected; remittances are expected to be negatively affected; and even development assistance has been negatively affected (…) All the sources of funding for investment are beginning to dry up and demand for (…) commodities have been severely affected.”
Meles Zenawi, in a Financial Times interview, enumerates “two key issues” in the fight against a total African economic collapse as being “the availability of additional funds and ease of access to those additional funds”. He believes that to get out of this economic quagmire, Africa needs to convince their donors and economic partners to add them to their stimulus plans in addition to the usual talk of avoiding protectionism. “My hope is that (they) recognize that this is a global economy, therefore the stimulus package they have should be viewed as a global package” and that “every dollar spent should be evaluated as to how much stimulus impact it would have”.
He pointed out that whilst in “the United Kingdom the fear is unemployment”, the fear in Africa is “less access to food which could trigger death” on a large scale. This “could rekindle dormant conflicts and start new ones, precipitating political and social crisis, which could lead to the collapse of state.”
Ms Antoinette Sayeh from the IMF (director of the IMF’s Africa department) recently stated that “we know that times are hard in advanced countries as well and that often when times are hard the easiest place to cut is where there is a weaker constituency for aid … but that’s the wrong thing to do.”
According to Mr. Zenawi, “a dollar spent in Africa, would in my view, have a bigger global stimulus impact that a dollar spent elsewhere”.