Economists: African Recovery Tied To West's
Top economist: â€œThe crisis has already disrupted the lives of people in virtually all nations in Africa. Instead of an extended period of progress and growing prosperity following decades of reforms, we now face the prospect of another of Africaâ€™s â€˜lost decadeâ€™ for development.â€
ADDIS ABABA, Ethiopia—The recovery of African economies from the global financial crisis will depend strongly on turnaround in industrialized countries in the North.
These are the key drivers of the demand for the continent’s mineral and agricultural commodities, the continent’s major income sources, a top African Development Bank (AfDB) economist said yesterday in a major conference here in Ethiopia.
“The global financial and economic crisis is receding but the recovery of African economies would be based on the recovery of the economies in developed countries. These countries are the prime drivers of demand for the continent’s products which in return drive Africa’s economic growth rate,” AfDB economist Abdul Kamara told journalists at the 4th annual African Economic Conference which opened yesterday.
Africa’s economy has not been spared from the damaging impact of the global economic and financial crisis which was not of their own making.
Prior to the crisis, Kamara, said the continent had posted growth rates of up to 6 percent on the backdrop of increased demand for the continent’s natural resources by China. “When the crisis hit, we revised Africa’s economic growth rate first to 3 percent, then further down to 2.3 percent and by May this year the figure was down to about 2 percent. As of now, the figure is now hovering around 1.3 percent,” he said.
More than 300 policy-makers, development experts and economists were participating at the three-day annual African Economic Conference organized by the African Development Bank and the United Nations Economic Commission for Africa (ECA).
The theme of this year’s conference is: “Fostering Development in an Era of Financial Crisis.” The conference aims to promote knowledge sharing, foster dialogue and promote the exchange of ideas among economists and African policy-makers as well as to encourage research on economic issues and to provide an opportunity for regional organizations to share and exchange information on many challenges facing African economies.
Budget deficits for most African countries ballooned as falling commodity prices and demand from Western countries took their toll at the height of the global financial crisis. The meltdown tossed many people back deeper into poverty, a major setback in the struggle for African countries to attain Millennium Development Goals by 2015.
Several African countries sought aid packages from international lenders as governments grappled with falling export income and lower remittances from Africans working abroad. "Africa has been hit and it has been hit hardest," said African Development Bank chief economist Louis Kasekende. “There is need to get Africa back onto a growth trajectory necessary for achieving the MDGs, attaining the poverty reduction objective and ensuring that key public services are made available for the most needy in our society.”
He added: “The crisis has already disrupted the lives of people in virtually all nations in Africa. Instead of an extended period of progress and growing prosperity following decades of reforms, we now face the prospect of another of Africa’s ‘lost decade’ for development.”
In March this year, the AfDB set up a $1 billion trade finance facility to help Africa cope with the effects of the downturn. The bank offered $1.5 billion in non-concessional financing and devised a plan to speed up the disbursement of previously agreed loans.
Africa is reeling from falling demand for commodities, reduced foreign investments, retreating remittances as well as declining tourism and tax earnings. Ben Ouedraogro, a UNECA economist called on African governments and the private sector to diversify their economies so that the African continent becomes resilient to the vagaries of the globalized economy.
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