Zack Gross
Zack Gross

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Global Recession Hitting Africa Particularly Hard

Brandon Sun “Small World” Column, Sunday,  April 5  / 09

Zack Gross

When the United Nations Development Program (UNDP) announced its Millennium Development Goals (MDGs) campaign in 2000, designed to turn the corner on global poverty, disease, illiteracy and gender discrimination in fifteen years, it wasn’t counting on a worldwide recession taking place along the way! 

In the lead-up to this week’s G-20 economic summit, experts were predicting that Africa would lose $50 billion (10%) in income due to the downturn, and steady gains made in recent years to raise up Africa’s economy would be reversed, plunging  that continent further into poverty.

Ethiopian Prime Minister Meles Zenawi, Chair of the New Partnership for African’s Development (NEPAD), warned that some African countries “could go under, meaning total chaos and violence.  In the United Kingdom, the fear is unemployment – in Africa, it is less access to food which could trigger death”. 

African leaders argued that stimulus spending in Africa would have more impact than similar amounts being invested in the developed world. 

The Liberian President, Ellen Johnson-Sirleaf, Africa’s first elected women head of state, added that it would be cheaper now to support economic development in Africa than later to pay for peacekeeping when conflict breaks out.

The economic crisis has hit Africa due to the falling prices of such commodities as oil, gold, zinc and copper, and drops in tourism, foreign aid and money being sent home by workers in wealthier countries.  Another concern raised by African leaders was the recession causing a new wave of Africans to migrate to developed countries, causing social tensions in the North and a brain-drain in the South. 

Africa also called for more of a say in the deliberations of international financial institutions such as the International Monetary Fund (IMF).  Currently, South Africa is the only country officially part of the G-20.

Oil accounts for 85% of Nigeria’s economy, as Africa’s largest producer.  However, the price has dropped 65% in recent months from a high of $150 per barrel, causing the local currently, the naira, to drop in value by one-third.  This drives prices on consumer goods up in an economy where already 70% of people live on less than $2 per day.  Inflation is now over 10% and many prices have risen 20%. Where oil exports once balanced all imports, now imports far outweigh exports in value.

African nations say that the global recession is not in any way their fault, but caused by bursting housing bubbles and bank liquidity crunches in the largest economic powers.  Finance ministers and central bankers at the G-20, which represents 80% of the world economy, agree that the need is urgent and the obligation present to respond to Africa’s need. 

British Prime Minister Gordon Brown, long a champion of African development, has said: “We have got to build a new consensus on economic development.  Doing nothing is no longer an option.  The Washington consensus on economic policy is over…the old world has gone.”

UN Secretary-General Ban Ki-moon has also spoken out on “the challenges facing the most vulnerable poor countries”.  Ban has pledged to be a strong advocate for the African cause, fearing that economic losses will plunge politically fragile areas of the continent back into conflict. 

Losses in development assistance would be devastating after recent economic and political gains, such as shared power in Zimbabwe’s government and the first functioning government in many years in Somalia.  Said Ban:  “Africa needs good roads, schools and hospitals;  reliable and efficient water services, electricity grids and telecom networks, and regional approaches to shared resource belts and infrastructure.”

As the G-20 prepared to meet, figures were released showing that overseas aid has hit record amounts despite the worsening financial outlook.  About $120 billion were given in development assistance by the world’s richest nations in 2008, a 10% increase from the year before.  The Organization for Economic Co-operation & Development (OECD) said that rich nations were on target, based on the Gleneagles Agreement of 2005, to give 0.56% of GDP in aid by 2010 and 0.7% by 2015.  However, aid NGOs responded that while Britain, Germany and the Nordic countries had increased their aid giving admirably, many other countries were lagging behind their promises.  Britain’s current figure is 0.48%, while Canada stands at 0.32%. 

It will be interesting to see, amidst the hoopla of visits to the Queen and the media feeding on the window-smashing of London banks, whether the G-20 will come up with a unified plan to deal with our global financial crisis, and whether that plan will respond to the concerns of the most vulnerable of our world.  If altruism and justice are not mixed in with self-interest, Africa may be condemned to fall back into greater poverty and conflict, exacting a shameful toll in human lives.


Zack Gross coordinates a provincial fair trade outreach program for the 
Manitoba Council for International Co-operation (MCIC), a coalition of 38 international development organizations.
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